In this insightful interview, renowned Austrian economist Rahim Taghizadegan shares his perspectives on the principles of Austrian economics, the revolutionary potential of Bitcoin, and the transformative impact of AI on the global economy. Recorded at BTC Prague 2024, Taghizadegan discusses the importance of realism and subjectivism in economics, contrasts Austrian economics with Keynesianism, and explores how technological advancements can shape our economic future.
Interviewer: So, you’re an Austrian economist. What does an Austrian economist do?
Rahim Taghizadegan: Well, I’m an Austrian economist in both senses: I’m Austrian, and I’m a follower of the traditional Austrian economics that was started by Carl Menger. It’s quite different from the tradition that has dominated economics and the social sciences. It’s a specific tradition of understanding complex social phenomena.
Core Ideas of Austrian Economics
Interviewer: Could you tell us what the core ideas of Austrian economics are?
Rahim Taghizadegan: At first, it’s realism. We really care about reality, not so much about how things should be, but how they actually are. So, it’s a bit of a humble approach to the world. It’s not based on big ideas and big words, but actually on real humans acting. Another aspect is subjectivism, recognizing that human beings are free to have their own preferences and act upon those preferences. Understanding people with empathy is crucial because differences bring people together. It’s through valuing things differently that we can exchange and foster society and cooperation. I’d say it’s a very interdisciplinary, down-to-earth, and realistic approach to human beings and society.
Free Market Principles
Interviewer: Is that the bridge to a free market, where you don’t supervise but let things happen?
Rahim Taghizadegan: Yes, it’s no ideological concept; it’s just common sense as you would approach other adult beings. You don’t try to change them or believe you know everything better than others. You should assume that the person you’re talking to also has his experiences and knowledge. The best approach is seeking win-win cooperation, finding common value so we can achieve our ends better. We don’t have to agree on everything. It’s a very commonsensical approach with nothing to do with constructing a utopia, just a down-to-earth approach.
Interviewer: How do you create such an environment in a world where rules are so important?
Rahim Taghizadegan: You don’t create systems; that’s not the belief of the Austrian School. The most important application is creating a framework to keep the system out of the environment. Technology, privacy, and mobility are crucial, but most importantly, it’s about value creation. The market is a process, not a structure. You can learn from history and the insights of the Austrian School to think about better rules, usually discovered by people rather than imposed from the top down. Carl Menger figured that out. Good rules are discovered to be more useful and make more sense for us.
Austrian Economics vs. Keynesianism
Interviewer: What are the main differences between Austrian economics and Keynesianism?
Rahim Taghizadegan: Humility. Keynesians tend to overestimate the importance of reason, intelligence, and expertise. They are social engineers who think they can create better systems. The better approach is to assume you don’t know more than anyone else. You shouldn’t have the power to construct entire systems as it often turns totalitarian. It’s better to learn, teach, and find real ways for cooperation rather than worrying too much about what may go wrong.
Discovering Bitcoin
Interviewer: How did you get to know Bitcoin and what’s your take on it?
Rahim Taghizadegan: I was unfortunately too early in Bitcoin. It’s easier now to get into Bitcoin. It’s a very complex phenomenon and an endless learning process. It’s a gradual process of encountering it many times in different contexts and learning something new each time.
Interviewer: Austrian economics aligns well with understanding Bitcoin. Do you agree?
Rahim Taghizadegan: Yes, I think all Austrian economics, if done well and in the right way, is the best approach to understand Bitcoin. Obviously, I think Satoshi Nakamoto was inspired by that tradition. But you can be an Austrian economist and not get Bitcoin, so there’s no guarantee. You really have to do it well and learn the lesson of humility to be open enough to understand something so new and complex like Bitcoin.
Interviewer: You’ve heard of AI, of course. Do you think AI could change the concept of a free market economy?
Rahim Taghizadegan: I’m reminded of an old discussion where Hayek countered technologists who thought innovations in digitalization and computers could eliminate the need for a market. The wrong conception is that the economy is about things that are already known. AI and large language models extrapolate existing data, but the economy is about the unknown and uncertain. AI might help us innovate better, but human problems and preferences will change. Technology can profoundly change society, but it’s never stopped. It’s better to adapt and use it positively rather than over-regulate.
Interviewer: Should there be any regulations on AI?
Rahim Taghizadegan: I’m not ideological. If someone with expertise recommends best practices for safe technology use, I’d be thankful. But usually, people proposing regulations don’t understand the technology. It’s often about remaining relevant rather than truly addressing safety. We should focus on understanding and using technology in a safer way without stifling innovation.
Interviewer: Great, thanks so much for this insightful conversation.
Rahim Taghizadegan: Thank you.
