–“As a propertarian I’m assuming you follow the Lachmann rather than Shackle tradition in your appreciation of kaleidics.”— Chris Shaeffer
(Note For Readers: Kaleidic, as used by Shackle, refers to the way groups and individuals in an economy rearrange, much like a kaleidoscope image, into new patterns – constantly, in response to changes, demand, innovations and shocks. However, the term also implies that this process is unpredictable: uncertain. But this is just the first of three metaphors. The second is flocking-and-schooling: an analogy to how fish and birds move in response to external stimuli. Humans flock and school toward opportunities and then groups break off if better opportunities present themselves, and the whole group splits in multiple directions when circumstances radically change. The third metaphor, and the most concrete, by Arnold Kling, is “Patterns of Sustainable Specialization and Trade”, or “PSST”, which reminds us of the stickiness of relationships in the economy, the high cost of organizing them, and the high cost of changing them. I try to use all three of these metaphors depending upon whether I am talking about uncertainty (kaleidic), costs (PSST), or psychology (flocking and schooling). However, the term Kaleidic was used by Lachmann to refer to the fact that the economy does not ever fully equilibrate and eliminate all possibility of profit. But it does tend to move toward efficiency that minimizes profit.)
Great question.
I use the term ‘Kaleidic’ primarily in the broader sense as “indeterministic”, and less frequently in the narrower sense “never reaching equilibrium” or “never reaching neutrality” in which profits are no longer possible. And in practice I follow Nassim Nicholas Taleb and Arnold Kling more closely than either Shackle or Lachmann in the cause for indeterminism: that shocks are more influential than regularities (Taleb), and that rather than Lachman’s argument, flocking and schooling (in my terms) or more precisely, “Patterns of Sustainable Specialization and Trade” due to changing opportunities rather than ‘mechanical rearranging’, and that informational asymmetry, opportunity costs, transaction costs, are less meaningful. In other words, I see opportunities as more frequent and influential than frictions. This is because the costs of increasing efficiency are often higher than the cost of seizing new opportunities in a dynamic economy. As such, companies ‘sort’ by which tactic they are able to pursue.
Cost cutting hurts your allies (employees). Which hurts you. And amateur Austrian economists treat human relationships (alliances) as a funglible resource, when, as dynamism increases, people are the most expensive, least predictive, and most influential resource you can possess.