Formalizing the Austrian thought: A suggested approach
In his book Socialismo, cálculo económico y función empresarial,1 Dr. Huerta de Soto suggests that society is a spontaneous, dy-namic process of exchange exhibiting an infinite diversity in values. Entrepreneurship is the force that drives this exchange process and consists in the creation, discovery and transmission of information. From Hayek, we recognize that such information is coded by what we know as «the price system». And we also know that when the exchange takes place, it does so with the use of an indirect medium of exchange, also known as money.
Oddly, this process remains much ignored. In my personal experience, as soon as one brings it up in polite conversation, a lack of rigorous formalism is pointed out as the main reason behind the ignorance. Austrian economics is considered «soft», and although many have properly answered this observation (i.e. Huerta de Soto), formalization is still absent. Hence, my humble suggestion on how to approach a definitive formalization of the theory.
Presence of formalization in a theory is always preferable to absence. In the paragraphs below, I give two examples that I think illustrate this point. But I also show that formalization of the mar-ket process cannot be mathematized. This is due to the fact that behind the market process lies human action, which is creation, and creation is not decidable in the Church-Turing sense. But the result of this creation, economic goods, are. This has strong im-plications.
If economic goods are the product of information exchanges, they are algorithms,2 and algorithmic analysis may be applicable.