Monday, 21 May 2012

ECONOMICS FOR REAL PEOPLE: “The international financial system in the age of complexity”

Exciting news this week from our friends at the Auckland Uni Economics Group, with two events to put in yoru diary—including a public celebration for the very first Austrian economist to be appointed to a chair at Auckland Uni!

Hi everyone,
    This week we have two events. Tonight is our weekly meeting, as per usual. On Thursday night, however, we are attending Antony Endres's Speech: The international financial system in the age of complexity. The details for both events are below. 
    Please note: If you want to come to Professor Endres’s Inaugural Lecture, you must RSVP. This is very easy to do, just click on the link provided in the description below.

Event #1. Econ Group Weekly Meeting: “What’s in a Firm?”

    What really and truly is the nature of a business? An enterprise. A firm?
    And how does the Socialist Economic Calculation Debate help us answer the question?
    Last week we discussed the economic calculation debate—which shows how the price mechanism plays a central role in the success of any economic system, and the chaos that results without it.  It turns out that understanding the signal importance of the price mechanism also gives insight into further questions, including (who knew?) many questions within The Theory of the Firm such as:

  • Why do firms exist?
  • Why do firms not just grow and grow until one day there is just one large firm in the whole world?

    The ideas used to answers these questions shaped many of the economic reforms that we saw during the 1980s and 1990s, especially in New Zealand.
    In tonight's seminar we shall see that the Economic Calculation Problem is fundamental to a proper theory of the firm.
    This seminar will broaden your understanding of an important real-world economics problem.

            Where: Room 321, Level 3, Business School Building
            Date: Tonight, Monday, May 21
            Time: 6pm

Event #2: Professor Anthony Endres’s Inaugural Speech: “The international financial system in the age of complexity”
    The viability of the current financial system is being questioned. We only need to look at Europe today to see this. Is a new blueprint needed?
    This coming Thursday evening the University of Auckland presents a lecture to celebrate the appointment of Anthony Endres to a full professorship. Professor Endres specialises in the history of economic thought and is highly regarded worldwide. This will be a fascinating lecture—not just for students of economics but for anyone seeking to understand events in the world today.
    Don’t miss this opportunity to hear one of the very best academic economists from this part of the world.

Abstract of the lecture:

    International financial manias, panics and crises have raised doubts about the viability of the present international financial system. Is it in fact a "non-system" in urgent need of a new blueprint or at least more extensive regulation?
    Professor Anthony Endres will answer this question in his inaugural lecture by discussing the nature of crises, the problem of financial contagion, international creditworthiness, currency competition, big player effects and the "too big to fail" problem. In this discussion New Zealand will feature as a small player.

            When: Thursday, 24 May at 6pm
            Where: Business School: OGGB 5, Level 0.

To RSVP and for further details, go to:

Look forward to seeing you on tonight and on Thursday,
Riko Stevens
On Behalf of the UoA Economics Group

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  1. "Why do firms exist?
    Why do firms not just grow and grow until one day there is just one large firm in the whole world?"

    As Coase told us 80 years ago, firms exist because of positive transaction costs. In a zero transaction cost world all production can be undertaken via market contracts. Firms arise when it is cheaper to to carryout a transaction within an organisation rather than across the market.

    For Coase the firm is limited in size by the fact that organisational cost grow as the firm gets bigger and thus the firm stops growing when the costs of internal organisation equal the transaction costs of carrying out the same transaction across the market. For Rothbard having a firm came to dominate the market would mean doing away with input prices which would make economic calculation impossible. This puts an upper limit on the size of the firm. The firm can only grow until it starts to destroy its own input markets and thus do away with input prices.

  2. Well that certainly ruined it for our chances of getting anyone along to hear the answers.

  3. Don't worry Pete there are Austrian economists like Per L. Bylund who don't like the Coaseian answers!

  4. Alas, I can't to make it to Professor Endres' lecture. Will a recording be available after the event?

  5. PC, why don't you invite good looking female professors to give talk in some of the Econ Group Weekly Meetings? Make the occasion sexy, rather than dull. I'll turn up if some hot female professors will give talk.

  6. Peter. Checkout EconTalk for this week. Russ Roberts talks to Ronald Coase.

  7. One thing that I have noted is that proponents of Austrian economics (which I'm one of those supporters to a large extent) have consistently used the term complexity to describe the dynamics of an economy, however if one asks its diehard proponents to define complexity and you'll get a fuzzy & ambiguous definition.

    My point here is that the diehard proponents of Austrian economics follow Mises notion that an economic system can't be described by mathematics or statistics, despite them using the term complexity to describe its (economics) dynamics, which is now largely a mathematical theory of components' interaction in complex systems. The research in this area has been largely driven by physicists (domain of large components that made up a system - as in statistical physics).

    Researches in complex systems have confirmed certain dynamical properties (such as spontaneous order) of complexity in economics that the Austrian economic framework had proposed. If that is not mathematical description of the economy, then I don't know what is.

  8. And there's always Porters 5 Forces to mull.


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