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MAS 6V06 - 002 SPECIAL TOPICS IN MARKET - BASED ECONOMICS

Spring 2010, Jan. 11 – May 3, 2010

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PETER LEWIN

Professor Contact Information

Professor Peter Lewin

Office Phone 972-883-2729
Email Address plewin@utdallas.edu
Office Location SOM 3.223, UT Dallas
Mailing Address P.O. Box 830688, SM 31, Richardson, TX 75083-0688
Online Office Hours You can contact me anytime by phone or email.

Course Description
MARKET - BASED ECONOMICS : An understanding of the dynamics of markets is more necessary than ever, especially for business students. In each generation of
students there is a need to revisit established authorities and refresh our understanding of the importance of market-based institutions.
This course aims to foster an appreciation of the way in which markets can be harnessed to enrich individuals, corporations and societies. It builds on an
understanding of neoclassical economics and applies it to a dynamic world using a process approach that originated with Carl Menger (deriving from Adam Smith)
through to Friederich Hayek and beyond. Such an approach is particularly appropriate for our rapidly changing dynamic economic environment.

A reading selection with discussion questions will be provided for each session. Students should come prepared to discuss these. Grades will be based on
participation and on a short term paper.

Course Outline
Week Topic
How are history, philosophy, politics, sociology and economics related?
• Schools of thought – why bother about the history of ideas?
• The subject matter of economics – choice or exchange – the importance of coordination (Buchanan)
January 15, 2010 • Equilibrium in economics (Lewin)
• Expectations (Lachmann 1)and Knowledge (Hayek)
• The importance of Institutions (Lachmann 2)
• Theory and History – methodological dualism (Politics and Sociology) (Mises)
The wealth of nations and the transition from poverty
• The Division of Labor and the Invisible Hand (Smith)
• Prosperity and Economic Freedom (Friedman)
January 22, 2010
• The meaning of Freedom
• Freedom and Property (Rothbard, Alchian)
• The role of technological change
What is Capitalism? What is it not? Does it matter?
• Capitalism as a social system in history – the role of evolution(Hayek)
January 29, 2010
• Capitalism and the state (Leeson)
• The ‘mixed’ economy (Littlechild, Ikeda)
Classical Capitalism and the Defense of Laissez Faire
• The emergence of laissez faire in England and France
February 5, 2010
• Industrial revolution and empire
• Theoretical revolution and neoclassicism
The critics of Capitalism – the Socialist Calculation Debate

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 • Socialism ascendant (Mises)
February 12,
• Hayek and the critics – calculation and knowledge (Kirzner, Boettke) – knowledge problems and incentive problems
2010
• War and the Road to Serfdom
• Socialism and interventionism
Ricardian, Austrian and Neoclassical methods and how they differ – the nature of the market
• Ricardo, Marx and the Labor theory of value
February 19,
• The marginalist revolution
2010
• Menger and the subjectivism of value – opportunity cost (Buchanan and the LSE)
• The unconscious birth of the Austrian school – the Methodenstreit
The development of Market-Process economics (from Menger to Kirzner)
• Menger
• Böhm-Bawerk, Wieser, the Others in Vienna
• Mises – money, method, and human action
February 26,
• Hayek – between instinct and reason
2010
• Kirzner – the entrepreneur
• Lachmann and the subjectivism of expectations
• Rothbard – passionate radical
• Machlup – eclectic Austrian
The capital structure of the economy
• The nature of capital (Lachmann)
March 5, 2010
• Physical and Human Capital (Lewin)
• Modern relevance (Lewin)
The entrepreneur
March 12, 2010 • Schumpeter and Kirzner
• Modern developments
March 19, 2010 Spring Break
The nature of the firm – a capital-based theory of the firm
• The discovery of the firm (Coase)
March 26, 2010 • Transaction Cost economics (Williamson)
• The Austrian connection (Langlois)
• Modern developments (Lewin)
Managing in a market economy
• Principals and Agents (Jensen and Meckling)
April 2, 2010 • The growth of the firm (Penrose)
• Helpful imperfections (Richardson)
• Modern developments (Foss and Klein)
Business cycles: Monetary and Fiscal Policy
• The nature of business cycles (Mises)
April 9, 2010
• Monetary and Fiscal Policy
• The crash of 2008 (O’Driscoll, J. Friedman)
War, Peace and Globalization
• The role of war
April 16, 2010
• Globalization and its critics
• Economic development and investment
Capitalism and Democracy – written and unwritten constitutions
April 23, 2010 • Freedom and democracy
• Hayek and the liberal order
Education, Health-Care, Retirement and related concerns – markets and hierarchies
• Is education a public good?
April 30, 2010 • How about vouchers?
• Is health-care a public-good?
• Retirement?

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