The work of Friedrich Von Hayek contains several testable predictions about the nature of market processes. Vernon Smith termed the most important one the ‘Hayek hypothesis’: equilibrium prices and the gains from trade can be achieved in the presence of diffuse, decentralized information,...

Ludwig von Mises and Israel Kirzner are two of the most prominent scholars who have attempted to gain a richer understanding of how the invisible hand operates in coordinating the vast array of economic exchanges that occur on a daily basis in the actual imperfect world. These economists, among...

During the last phase of state socialism, the economic reforms attempted by these counties didn’t stop the collapse of communism. Neither did the free market economic reforms in the democratic West starting around 1975 bring progress and prosperity expected. The frustrations of both these...

Writing over 230 years ago, Adam Smith noted the 'juggling trick' whereby governments hide the extent of their public debt through 'pretend payments.' As the fiscal crises around the world illustrate, this juggling trick has run its course. This paper explores the relevance of Smith’s juggling...

The economics profession not only failed to predict the recent financial crisis, but has been struggling in its aftermath to reach a consensus on the cause(s) of the crisis. While competing narratives are being offered and evaluated, the narrow scope of the debate on strictly technical aspects...

Chang (2011) raises doubts about the effects of institutions on economic development and questions the positive effects of entirely free markets based on secure private property rights. We respond by stressing that institutions structure the incentives underlying individual action, secure...

In the midst of the current financial crisis the economics profession has seen a monumental resurrection of Keynesian ideas. The debate, which Keynes started back in the 1930s, is being picked up again, not where it left off, but in exactly the same place it started. While Keynesian theories...

James Scott has written a detailed ethnography on the lives of the peoples of upland Southeast Asia who choose to escape oppressive government by living at the edge of their civilization. To the political economist the fascinating story told by Scott provides useful narratives in need of...

Deirdre McCloskey’s Bourgeois Dignity (2010) represents another breakthrough work in her career, and the second volume in a multi-volume work on the economic and intellectual history of western civilization. In a sense, the subtitle of the book explains well what this volume is all about--why...

James M. Buchanan has argued that the primary role that the economist plays in society is a pedagogical one. The job of the economists is to teach students the principles of economics, most notably an understanding of spontaneous order and the role of the price system in generating that order...