Wednesday, December 12, 2007

#36 - Friedrich Hayek and Ron Paul

Friedrich Hayek

Before there was Robert Nozwick, there was Friedrich Hayek. I first heard of Hayek in an interview with Ron Paul on CNBC. In this interview they talked about Hayeks proposition of competing currencies and Ron Pauls support for such a plan.

I am also a fan of Hayek cause I'm generally a fan of anybody who speaks against Collectivism and how central planning leads to totalitarianism. He talks about this in the book, Road to Serfdom, which Ron Paul mentions in the interview. Another idea of his I found quite interesting was his views on the price system essentially being human nature in the same sense as Linguistic communication.

The best way to explain this is to understand human communication, in places where humans lack language usually language is developed. This is why the world all around us has languages albeit they may have developed different of the languages of your culture. Essentially, you'll see this trend everywhere humanity exists and it leads one to believe that language is a function of human nature.

Price is a function of the amount of value a person places on a good or service. Even in the the most primitive of cultures a hierarchy of value existed, even if currency did not. Even in barter there internal determination of value going on, so value is internally defined. If price derives from the internal valuations from the giver or receiver then it is also internal, or a function of human nature.

Great, so now we know I have authority over how much something is worth to me, so why is this important. Many will agree the more a system conforms to human nature, the better a system will be adopted. So if the ability have individuals determine the value they see fit is allowed then humans are more likely to adopt it than a system where prices and value are dictated (ala socialism/fascism). The system that best fits this description is of course a free market system, and even in a more pure sense, the free market system described by Ron Paul and Austrian Economists.

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