I thought Austrians were disequilibrium theorists? It's one of the only intelligent positions austrian economists actually take.
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The value of the umbrella is greater because of the rain.
Its more the buyer being motivated-- to stay dry.
"From the relationship of estranged labor to private property it follows further that the emancipation of society from private property, etc., from servitude, is expressed in the political form of the emancipation of the workers; not that their emancipation alone is at stake, but because the emancipation of the workers contains universal human emancipation – and it contains this because the whole of human servitude is involved in the relation of the worker to production, and all relations of servitude are but modifications and consequences of this relation."
- Karl Marx -
The Austrians are disequilibrium theorists but like most other neoclassical economists they see virtue in studying equilibrium analysis as they believe that prices tend towards equilibrium, except for Lachmann but he was a radical subjectivist as he was influenced by Shackle.
See Mises' fictitious Evenly Rotating Economy for an example of such a mental exercise.
"This is what I challenge. He doesn't show explicitly that any useful information is conveyed by price fluctuations; he just makes the claim, which he does many times, and, each time, he moves on without any effort to defend it. " Well there is a very simple concept I would like you to take a look at, no matter how cursory it may be. Supply and demand. Now, at this point, I'm assuming by price fluctuations you are talking about a change in supply/demand (which you in fact have to be). If prices go up at a certain quantity demanded, then demand has risen or supply has decreased. A successful capitalist, businessman, entrepreneur's job is to provide a service or good at a price in which there are no "shortages" or "surpluses" since both of these things result in an ultimate decrease in net profit.
TO use your example of a hurricane, lets say a bad businessman (in this case the businessman you used) is unaware of an imminent hurricane and does not raise prices to compensate for the inevitable increase in demand (if its very small, the shortage will be very small, if it is large the shortage will be very large). Suddenly there is a rush for his umbrella's and soon they are all gone, and many people/family's desires have gone unmet at the price he was offering his product. Part of this will be because a family will buy more than one umbrella to give to the rest of their family, or because a competitor bought out his stock to sell his umbrella's at closer to the equilibrium point (the point where profits are highest, where supply and demand meet, where price offered/price demanded are equal and Quantity supplied/demanded are equal). If this businessman continues this practice long enough he will either go out of business or be unable to grow his business/invest in his business to compete with other umbrella providers and they will either run him out of business or simply buy him out.
But it IS about innovation. You can't innovate through direct democracy. How would you determine what amounts to produce? How would you allocate them? Would be people have voted to have personal computers in the 1960's produced? The role of many successful entrepreneurs is to fulfill desires not yet known to consumers (Ipods for instance). You can't have people vote on something they don't know that they want yet.
lol, this is kind of funny. FYI, there is no price signals telling entrepeneurs to invent X new amazing product. They go into the market and offer up their products and then people buy them.
Particpatory planing works the same. Someone comes up with a new idea and offers it to the collective. People decide wether or not to buy it and the inventor gets social status and maybe a few benefits within the collective.
"From the relationship of estranged labor to private property it follows further that the emancipation of society from private property, etc., from servitude, is expressed in the political form of the emancipation of the workers; not that their emancipation alone is at stake, but because the emancipation of the workers contains universal human emancipation – and it contains this because the whole of human servitude is involved in the relation of the worker to production, and all relations of servitude are but modifications and consequences of this relation."
- Karl Marx -
That dodges the issue. The issue remains once the collective decides on a course of action, what is the most efficient and effective way carrying forth?
