I have a pile of books, and when I get bored, I often just choose a book at random and start reading it. The lucky book of the day was a book on US Securities Law, and I’ve started reviewing those books in the last few days.
The thing that interests me is not so much American Securities Law as it currently exists, but howAmerican Securities Law developed over time. The interesting thing about US Securities Law is that most of it has developed without much input from the legislative bodies. Except for the passage of key bills such as the Securities Act of 1933 and the Securities Exchange Act of 1934, most of US securities law has developed through an interaction between the courts and the SEC. In particular, most of the issues of what is in the PRC Securities Law are issues that were developed through a detailed development of rule 10b-5.
The implication of this to the PRC, is that it would appear to me that the lack of “Western democratic institutions” aren’t a major barrier to the development of PRC Securities Law and PRC Corporate Law, because democratic institutions weren’t that important in the development of those laws in the United States. One thing that I’ll be thinking about over the next few months is to look at the development of Securities Law in the United States and try to look at the analogous institutions in China. In particular, I’m interested in the exact dynamics between the SEC and the Federal Courts.
The other thing that I’ll be thinking about is the relationship between these ideas and Austrian economics. The two things that I’ll be thinking about are:
- the relationship between Austrian economics and the use of empirical data. Austrian economics prides itself on being derivable from the principles of interactions between individuals, but at the same time I get the sense that a lot of Austrian economics (such as Rothbard) is maybe a little too ideological, and not sufficiently empirical,
- the other thing that I think is a weakness of Austrian economics is the theory of the firm. Austrian economics at its core is about the interactions between individuals, but I think there is insufficient thought given to how individuals form institutions. This fits in with my interest in securities law and corporate law. It would appear to me that corporations are creatures of the state rather than entities spontaneously produced by individuals.
One other thing. It occurs to me that the reason I don’t like neo-classical economics is that I’m too familiar with how corporations work to believe that they maximize profit, and I’m too familar with myself to believe that individuals maximize utility. Where I think the pricing system comes to play is not the corporations maximize profit, but rather than corporations with large losses cease to exist.
So among the many things I have to do over the next year are:
- read more von Mises and Hayek
- figure out what neo-Austrianism is
- read more about institutionalism
- read more economics papers. I have to learn to talk the talk.
One final thing. The reason that I’m interested in Austrian economics is that it has a very good explanation for the deficiencies of the Chinese economy under central planning with the economic calculation problem and Hayek’s “road to serfdom” analysis. Also the building blocks of Austrian economics provides the potential for understanding and making public policies decisions about the Chinese economy.
This is in contrast to neo-classical economics. I can’t think of a single useful insight that neo-classicial economics can bring to analyzing the Chinese economy.