Episode 123: Economics with Hayek and Sen (Part One)

On F.A. Hayek's ""The Use of Knowledge in Society"" (1945) and Amartya Sen's On Ethics and Economics (1987).

Is economics a pseudoscience? Certainly, trying to model a phenomenon mathematically and so predict, for example, the consequences of proposed legislation is better than acting blindly, but given the complexity of the system, are the simplifications required to create a model just too immense?

Hayek argues that the whole idea of sitting back and contemplating how to plan an optimal economy is misconceived, because the planners are not in a position to know all the relevant details about supply and demand. Instead, this information is spread among many people, and the price system communicates what people actually need to know to make local economic decisions.

Amartya Sen discusses the many simplifying assumptions of economics, such as the claim that individuals are rational welfare-maximizers, and that ""welfare,""( i.e., ""the good"") is equivalent to pursuing one's desires or maximizing one's material gain.

Seth, Wes, and Mark are joined by economics guy Seth Benzell to try to figure out to what extent the two readings actually disagree, what the political upshot is, and whether philosophers can simply wander into the domain of this supposed science and say anything worth hearing.

If you can get to Pittsburgh on Sep. 25–26 and want to come see PEL live, for free, or just want to catch the live simulcast at 6:30pm Eastern, 9/26 of our recording of ep. 125 on Hannah Arendt, check out partiallyexaminedlife.com/PEL-Live. #economics #sen #hayek #welfare #benzell Go to the blog: http://www.partiallyexaminedlife.com/2015/09/07/ep123-1-economics/