'..The economic theory of equilibrium and the neoclassical-Walrasian model are the “opium of the economic scientist,” and they separate him from the reality he should study, infuse him with the most absolute complacence, and immunize him against most of his potential opportunities to detect his errors .. they completely overlook the paradigm developed by Austrian theorists in general .. In the Austrian paradigm, information is never assumed “given,” since it is constantly generated within a certain institutional context which permits the coordination of the maladjusted behaviors of human beings.'<blockquote>'..It is not simply that, as Mises indicates, “economic equilibrium theory” is an irrelevant intellectual game, but also (and this is much more serious) that it corrupts even the most brilliant scientific minds by obliging them to start from unrealistic assumptions and leading them inexorably to erroneous conclusions, and all in a manner that goes virtually unnoticed, except by the sharpest and most profound theorists. The economic theory of equilibrium and the neoclassical-Walrasian model are the “opium of the economic scientist,” and they separate him from the reality he should study, infuse him with the most absolute complacence, and immunize him against most of his potential opportunities to detect his errors. Lange attempted to show that economic welfare theory, developed within the neoclassical-Walrasian paradigm, was the most important theoretical foundation possible for the socialist system. The fact that most equilibrium theorists have agreed that his analytical model can be applied to both a capitalist and a socialist system, and the fact that this model can serve as a basis for justifying the possibility of economic calculation in the latter, in our opinion robs most of neoclassical price theory of all scientific credibility. One of the most important theses of this book is precisely that the theoretical-critical analysis of socialism which it contains, and which is embodied in actual, historically significant events in the countries of the former Eastern bloc, implies the collapse and total loss of prestige, in theoretical and practical terms, of both socialism as an economic and social system, as well as much of neoclassical economic theory as a serious scientific paradigm worthy of consideration.
Moreover, it is not surprising that Lange, and most of the authors of neoclassical economics, fail to understand how Mises can affirm that economic calculation is “theoretically impossible” in a socialist economy. This is so, because to the above authors, “theory” means simply their own, and as we have seen, they base it on assumptions which from the beginning eliminate precisely the need for any economic calculation. That is, from the neoclassical perspective, socialist economic calculation is always, by definition, theoretically possible. These authors cannot conceive of any theory but the one they themselves have built on the concepts of equilibrium and maximization. Specifically, they completely overlook the paradigm developed by Austrian theorists in general, and Mises and Hayek in particular, a paradigm based from the start on a
theoretical study of the real institutions that emerge in society and of the market processes which the force of entrepreneurship drives. In the Austrian paradigm, information is never assumed “given,” since it is constantly generated within a certain institutional context which permits the coordination of the maladjusted behaviors of human beings.<sup>40</sup>'
- Jesús Huerta de Soto,
Socialism, Economic Calculation and Entrepreneurship, page(s), 225, 226
<font size="-1">40 Thus, neoclassical theorists do not understand that economic calculation depends on the existence of certain historically contingent institutions (such as money, markets, and free exchanges), historical categories which are “special features of a certain state of society’s economic organization which did not exist in primitive civilizations and could possibly disappear in the further course of historical change.”
Human Action, 201, main text and footnote 1, in which Mises adds that “the German historical school expressed this by asserting that private ownership of the means of production, market exchange, and money are ‘historical categories.’” Hence, it is now perfectly clear that the ideas of Mises do not contain the spectacular contradiction Lange attributes to him simply because Lange sees him as an “institutionalist” who, at the same time, defends the universal validity of economic theory. Lange cannot understand why the Austrian school, from the time Carl Menger founded it, has centered its scientific research program on the
theoretical (general, abstract, and historically independent)
analysis of the institutions (patterns of behavior or human action, such as money, the market, law, etc.) and processes which evolve in society. In fact, Menger dedicated his
Grundsätze to Roscher, since he believed his subjectivist contribution and his work on the evolutionary emergence of institutions provided the initial, necessary theoretical foundation for the historicist school (Savigny, Burke) as opposed to the Cartesian rationalism which was beginning to flood all scientific thought. The theoretical spectacles of the neoclassical paradigm are so poorly adjusted that they prevent Lange from distinguishing even the most obvious circumstances of the scientific environment in which he lives, which he perceives only in a distorted monochrome. See the footnote on page 6 of
On the Economic Theory of Socialism. Also, it is interesting to note that Richard N. Langlois’s book,
Economics as a Process (New York: Cambridge University Press, 1986), which shows a clear “Austrian” influence, is subtitled “Essays in the New
Institutional Economics,” and plainly constitutes, like the works of Mises, a book of economic (and thus not “institutionalist” or historicist) theory on institutions. Despite Lange, the economic theory of social processes and institutions is one thing, and “institutionalism” is quite another. Also of great interest is Peter J. Boettke’s piece, “Evolution and Economics: Austrians as Institutionalists,” in
Research in the History of Economic Thought and Methodology, no. 6 (1988). Finally, let us recall footnote 2 of chapter 5, especially Mark Blaug’s critical comments about the neoclassical-Walrasian paradigm, and his shift toward the tenets of the Austrian school.</font></blockquote>
Context<blockquote>
'..the mainstream neoclassical straightjacket..'(Haptopraxeology) - '..the near entirety of the social science community betrayed humanity .. failed .. to fulfill their vital scientific duty..'(Thymology - Haptopraxeology) - '..entrepreneurship .. actions he will carry out and estimates the future effect of those actions..'(Hapto)praxeology - '..an entrepreneurial, creative manner .. the subjective information or knowledge people create in the processes of social interaction.'(Mind-Body Medicine) - '..the health of our minds and the health of our bodies are inextricably connected to the transformation of the spirit.'(Haptopraxeology) - '..humanism in economics..'Economics as a Science of Human Action - '..the subjective character of the discipline..'Ambiance V (Fictional Story) - Power of Mind V (’..experience in the social realm..’)Affective Introspection</blockquote>