Before you debate an Austrian or an Austrian apologist, there are a number of questions you can profitably ask to properly understand that person’s brand of Austrian economics.
These are as follows:
(1) Are you (a) a small state Classical liberal Misesian or (b) an anarcho-capitalist in the tradition of Rothbard and Hoppe?Though there is a major split in the Austrian school between radical subjectivists and moderate subjectivists, it seems to me that either group can adhere to anarcho-capitalism. I am actually interested to know how many of the neo-Austrian moderate subjectivists support a minimal state.
(2) If (a) what functions do you think the state should have?
(3) What is your view of ethics? Do you support natural rights/natural law theory or some form of utilitarianism/consequentialism? If neither, then what theory?
(4) Are you (a) a moderate subjectivist in the tradition of Kirzner/ O’Driscoll and Rizzo or (b) a radical subjectivist in the tradition of Lachmann?
(5) Do you think expectations are subjective, as Lachmann contends?
(6) Do you think (a) Mises’s praxeology is the proper methodology for Austrian economics or (b) follow Hayek or O’Driscoll and Rizzo in rejecting pure praxeology and apriorism and wanting a greater role for empirical evidence?
Here is a list of older and modern neo-Austrians. If anyone knows their positions on the questions above, I would like to hear them.
Hans F. Sennholz (1922–2007)
Israel M. Kirzner (1930– )
Laurence S. Moss
Walter E. Block (1941– )
Roger Garrison (1944– )
Karen I. Vaughn (1944– )
Mark Skousen (1947– )
Gerald P. O’Driscoll (1947– )
Don C. Lavoie (1951–2001)
Joseph T. Salerno
Richard M. Ebeling (1950– )
William L. Anderson
Peter J. Boettke (1960– )
David L. Prychitko (1962– )
Steven Horwitz (1964– ; Hayekian anarchist, consequentialist, subjective expectations)
Robert P. Murphy (1976– )
Jonathan M. Finegold Catalan
What about the different people who try and use Keynes' name? There seem to be loads of them too.ReplyDelete
I would have thought the empirical data from the recent unusual period would be whittling down the theories that have any predictive ability.
"What about the different people who try and use Keynes' name?"ReplyDelete
I have dealt with them here:
The old American Institutionalists also followed many of Keynes's ideas, and in some respects were closer to the Post Keynesians.
Axel Leijonhufvud and the disequilibrium Keynesians/coordination Keynesians also have a heterodox interpretation of Keynes.
I consider myself quite an Austrian, and a think every Austrian would respond with a "yes" the "Do you think expectations are subjective, as Lachmann contends?" question. In fact, I think every economist on earth would respond "yes".ReplyDelete
"In fact, I think every economist on earth would respond "yes". "ReplyDelete
And you would be wrong, as mainstream neoclassical economics has rejected this idea.
1. An individual's political views should have no bearing on that same individual's economic views. Politics necessarily implies some type of value judgement, as long as it deals with promoting some type of policy. Economics is a value-free science. That one's beliefs in certain economic theories influence one's political views has no bearing on the differentiation of the two entirely different subjects.
As such, it follows that "natural law" and whatnot have absolutely nothing to do in defining an Austrian economist! Austrian economics is not a study in ethics.
2. I think any attempts to divvy up Austrians based on certain characteristics is disingenuous, and more misleading than it is helpful. All Austrians agree to 90%+ of the same body of theory. Disagreements are minor relative to the Austrian theoretical body as a whole.
3. I am pretty sympathetic to Lachmann, even if I may have more faith in the market's ability to coordinate (although Garrison argues that even Lachmann ultimately had more faith in the coordination forces than in the forces of discoordination).
(7) Are you a Neo-Confederate?ReplyDelete
Perhaps this seems a random question, but it seems to have a significant correlation to internet austrianism.
I think this post is full of false dichotomies and missing alternatives.ReplyDelete
I'm a Hayekian anarchist, most days. Another false dichotomy: http://austrianeconomists.typepad.com/weblog/2009/12/the-false-dichotomy-of-rothbardian-anarchism-and-hayekian-classical-liberalism.html
I'm a consequentialist who thinks that what it means for rights to be "natural" is that they produce societies that forward human flourishing. That's why I think the free society is the good society.
I think radical subjectivism accurately describes the problem situation of economic actors (Lachmann) and that markets still produce discernible order (Kirzner).
Of course expectations are subjective. What Austrian thinks otherwise?
And your last question is a total false dichotomy. See here: http://www.gmu.edu/rae/archives/VOL17_4_2004/1-Horowitz.pdf
"An individual's political views should have no bearing on that same individual's economic views. Politics necessarily implies some type of value judgement, as long as it deals with promoting some type of policy. Economics is a value-free science"ReplyDelete
I have no idea why you refer to "political views."
Whether you support a miminal state or anarcho-capitalism is not really a question about "political views" but about the fundamental nature of your Austrian system.
And, also, the claims that Austrian eocnomics is a "value-free" science ring hollow.
Furthermore, as a person who advocates public policy an Austrian's views on government are very important.
The notion of there being such a thing as a "value-free" science is highly questionable. It's one of those default assumptions that must be shaken lose.ReplyDelete
What's the opposite of wertfrei science? Value-burdened science? Primacy of particular point of view no matter how stupid it is shown to be?Delete
By the way, question 3 is false dichotomy. There is a concept of natural rights as of something that 'ought to be' and there are natural rights as rules of voluntary exchange that might or might not operate unhindered. In this second sense an utilitarian can analyse natural rights too.
You asked that one method of differentiating Austrians was by categorizing their views on government. Austrian Economics doesn't have anything to say about government, or whether it should exist or not exist. Austrian Economics has nothing to do with political theory.ReplyDelete
I don't know what you mean by, "Whether you support a miminal state or anarcho-capitalism is not really a question about "political views" but about the fundamental nature of your Austrian system."
At face value, the statement is wrong. Austrian economics deals with objective economic phenomena. Even if you believed the market to coordinate perfectly there's still nothing to be directly implied regarding the role of government. So, how you see government is not about the "fundamental nature of your Austrian system."
Regarding value-free economics, what about Austrian economic theory do you see as value-loaded?
Economics is not value free, and it can NEVER BE value free. You're a fool for thinking otherwise.ReplyDelete
Here's something that I responded to with regards to the power of neoclassical economics in influencing politics(applies to austrian economics too...SAYING WHY ITS NOT VALUE FREE) elsewhere:ReplyDelete
it would be appropriate to say that the LANGUAGE of neoclassical/neoliberal economics has become firmly institutionalized into the discourse. It’s not simply a morality play by the part of those doing the interviews…they have been lulled into the language of market failures or distortions because they are seen as tools of rationalization that occur INSULATED FROM POLITICS that apply a form of impartial reason. This is typically what the rule of law, interpreted by legal institutions, serve as. The language of neoclassical economics has today become a non-judicial and extra-political constraint imposed on society…it tells us what is or isn’t good for society. It institutionalizes skepticism about assumptions the welfare state does not question. This institution(called meta-regulation among law types) has today become a social institution that shapes the agenda of politics that has reached across every facet of society.
"Austrian Economics doesn't have anything to say about government, or whether it should exist or not exist."ReplyDelete
If you mean pure economic theorizing where you never make any public policy pronouncements or advice to anyone on how to run an economy or make ethical judgements about government, maybe you're right.
Yet Austrians are constantly making public policy pronouncements and condemning government in a moral way.
Perhaps it is better say that Austrian ideology has the role of government as a fundamental issue, and one branch of it - anarcho-capitalism - seeks as its main aim the abolition of government.
And Rothbard is quite explicit that his case for anarcho-capitalism is an ethical one based on natural rights, when he rejects Mises’s utilitarianism:
"The point here is that Mises, not only as a praxeologist but even as a utilitarian liberal, can have no word of criticism against these statist measures once the majority of the public have taken their praxeological consequences into account and chosen them anyway on behalf of goals other than wealth and prosperity. Furthermore, there are other types of statist intervention which clearly have little or no cumulative effect, and which may even have very little effect in diminishing production or prosperity (Rothbard 2002: 213) ….
“Thus, while praxeological economic theory is extremely useful for providing data and knowledge for framing economic policy, it cannot be sufficient by itself to enable the economist to make any value pronouncements or to advocate any public policy whatsoever. More specifically, Ludwig von Mises to the contrary notwithstanding, neither praxeological economics nor Mises’s utilitarian liberalism is sufficient to make the case for laissez faire and the free-market economy. To make such a case, one must go beyond economics and utilitarianism to establish an objective ethics which affirms the overriding value of liberty, and morally condemns all forms of statism” (Rothbard 2002: 214).
Rothnard claims he going beyond "economics" in doing this: but this just confirms that what Austrians are doing is making public policy pronoucements and making moral judgements about government.
Rothbard, M. N. 2002. The Ethics of Liberty, New York University Press, New York, N.Y. and London.
"Regarding value-free economics, what about Austrian economic theory do you see as value-loaded?"ReplyDelete
Mises does indeed claim that economics is value free. But, in that case, just parroting Mises' praxeological arguments gives you NO basis whatsoever making "any value pronouncements or to advocate any public policy whatsoever."
Yet that is precisley what you and other Austrians are constantly doing.
You mean to tell us that you have never told people that they should follow some Austrian economic policy?
If you ever done so, you have already admitted defeat and introduced values into what you doing.
And what sort of "economist" never actually advises anyone to do anything or follow some economic policy?
And, furthermore, if you really think economicsReplyDelete
is totally value free, then what's the point of
Rothbard's The Ethics of Liberty?
Why did he waste his time trying to convince people to implement his system in some long ethical argument?
Tnanks for your comments.
"I'm a consequentialist who thinks that what it means for rights to be "natural" is that they produce societies that forward human flourishing."
Then, in such a moral theory, you could easily make a "consequentialist" argument for Scandinavian social democracy as the best system available for advancing "human flourishing" too.
Once you adopt consequentialist ethics, as Rothbard understood, many pure Austrian economic inferences in praxeology will be rejected because a community using consequentialist ethics has other goals/ends.
In response, the pure Austrian economist can have nothing to say, unless he drags in values and ethics.
And P. J. Boettke (1995) seems to understand this:ReplyDelete
"Rothbard, as a strong adherent of natural rights, believes that an objective theory of ethics is available. Mises’s ethical relativism, and his adherence to utilitarianism represents a serious problem to the Rothbardian libertarian. For one, if the majority of people within an economy – knowing the full consequences of the policy as pointed out by Mises – choose interventionist policies (for a host of reasons that persuade them to trade-off economic prosperity for some other ‘good’), Mises must remain silent" (Boettke 1995: 43. n. 7).
Boettke, P. J. 1995. “Why are there no Austrian socialists? Ideology, science and the Austrian school,” Journal of the History of Economic Thought 17: 35–56.
I was browsing, more or less randomly, when I found this post.ReplyDelete
I for one, found it useful, although I can't say I am an expert in Austrian school (and some previous commenters have criticized it).
May I suggest Lord Keynes and his Austrian critics to make a list of their best posts on the subject and post it here, so that readers could study them and make up their own minds?
"I'm a Hayekian anarchist"ReplyDelete
How can that work? Hayek defended private property while anarchists think "property is theft"...
The only overlap I can think of is that Hayek thought the state defends private property as do anarchists -- that is why anarchists want to abolish the state while Hayek wanted to keep it.
Ultimately, anarchism is a specific socio-economic theory and movement. It has always been anti-capitalist and anti-state. It cannot be combined with pro-capitalist ideologies -- it would be like discussing "Marxist-capitalism"...
The same can be said of libertarian as well, of course....
An Anarchist FAQ
I agree with every word in that Pete Boettke quote. If people choose poverty over plenty, so be it. Economics qua economics can say nothing.
And yes, one can make a consequentialist case for social democracy. Then we talk and we try to figure out whose case is better and why. That's what scholarly and public discourse is all about.
I fear that you utterly misunderstand Mises's concepts of value freedom and the "a priori." For Mises, being value free simply means that the economist says "given your ends, will your chosen means achieve those ends?" The economist, qua economist, doesn't question the ends. "If you think a minimum wage law will help the poor, you will find that you this means will not achieve that end." That's value free economics. Of course the economic analysis of the MW might be wrong, but that's a separate question.
And as far as Hayekian anarchism goes, read the link and read some history. There is indeed a pro-market line of anarchist thinking that dates back at least to the mid-19th century. You might want to check it out Iain.
"If people choose poverty over plenty, so be it. Economics qua economics can say nothing."ReplyDelete
Quite. This is what Mises says:
“Economics neither approves nor disapproves of government measures restricting production and output. It merely considers it its duty to clarify the consequences of such measures. The choice of policies to be adopted devolves upon the people. But in choosing they must not disregard the teachings of economics if they want to attain the ends sought. There are certainly cases in which people may consider definite restrictive measures as justified. Regulations concerning fire prevention are restrictive and raise the cost of production. But the curtailment of total output they bring about is the price to be paid for avoidance of greater disaster. The decision about each restrictive measure is to be made on the ground of a meticulous weighing of the costs to be incurred and the prize to be obtained. No reasonable man could possibly question this rule” (Mises, 1998 . Human Action: A Treatise on Economics, Ludwig von Mises Institute, Auburn, Ala. p. 741).
But your statement that people will "choose poverty over plenty" just assumes the state interventions in question will in fact cause "poverty over plenty." It's circular reasoning, begging the question.
Do you really think fire codes and regulation will reduce the community to penury or poverty? That the cost in reduced output will
be anything but trivial and insignificant?
In fact, the prevention of fires and reduced costs of rebuilding from less fires will outweigh whatever small lost output there is.
I wasn't making a blanket "a priori" claim in my earlier comment. I was simply identifying the style of reasoning in play.ReplyDelete
One has to make an actual argument that regulation X or intervention Y will indeed make people worse off *as judged by their own ends/preferences.* I don't believe you can establish global "a priori" truths for every intervention just by invoking the action axiom and deducing from there. (And neither does Mises of course - I think people radically misunderstand his use of "a priori.")
So stop trying to score ideological debating points with me. I'm actually interested in dialogue about the nature of economics not politics. It's funny that critics of AE accuse us of being ideologues, but one skim of your site here indicates YOU are much more consumed with ideology than most of the academic Austrians I hang out with.
To be clear: if I come off as rude, then I am happy to apologise.ReplyDelete
"One has to make an actual argument that regulation X or intervention Y will indeed make people worse off *as judged by their own ends/preferences.* I don't believe you can establish global "a priori" truths for every intervention just by invoking the action axiom and deducing from there"
Fair enough. And this is a very reasonable position to hold.
"but one skim of your site here indicates YOU are much more consumed with ideology than most of the academic Austrians I hang out with"
Unless one can show that the ideology is wrong, I am not really moved by this.
Yes, I advocate Post Keynesian economics and social democracy, just as the committed anarcho-capitalist Austrian advocates free markets and no government. Both hold ideologies - but whether they are justifiable ideologies seems like a more important question.
At any rate, your book Microfoundations and Macroeconomics: An Austrian Perspective (Routledge, London and New York, 2000) is one I am gradually reading and learning from.
"Economics is not value free, and it can NEVER BE value free. You're a fool for thinking otherwise. "
What value-free economics refers to is the fact that economic phenomena are true whether irregardless of your moral judgement. IOW, that a price ceiling will cause a shortage is true whether you think that's a good or bad thing.
It refers to the science itself, not to the policy judgements that may be influenced by the science.
You and "Lord Keynes" are conflating different subjects.
"What value-free economics refers to is the fact that economic phenomena are true whether irregardless of your moral judgement."ReplyDelete
You're repeating the Misesian view that praxeology is value-free. Even if we assume it is true, public policy demands that morality/ethics have a major role in deciding what is economic policy and what is not.
For exmaple, fire codes restrict output. So what? As Mises concedes, the lost output is not significant compared to the greater good that comes from preventing more fires.
But setting economic policy isn't a part of economic science! Economic policy is only based on economic science. The science itself, which is what the economist studies, is value-free. For what it's worth, I'm not referring to "praxeology", but all correct economic theory.ReplyDelete
When an Austrian economist is commenting on policy then he is no longer playing the role of an economist. He is playing the role of a legislator, influenced by his views on economics.
That's the distinction you're erroneously failing to make.
"That's the distinction you're erroneously failing to make."ReplyDelete
I am not failing to make it: it has been my point all along.
In being an Austrian, you
(1) engage in economic theorising (which may or may be be value free) and
(2) advocate public policy or urge particular policies, or make value judgements about current, past or hypothetical policies.
Show me an Austrian economist who only does (1).
And the claim that economic science is value-free is a controversial idea: just because you believe does't make it so.
I think Mises was quite inconsistent or naive. He admits certain regulations, such as those concerning fire disasters, but rejects anothers, such as social security or public provision of certain services. His praxeological system, as a value-free approach, doesn't say much about that, but he always kept defending the minimal state (but with public medical services included!) through all his writings.ReplyDelete
That's the problem with ideologues as economists, even they may have a lot of reason in certain issues, they will still try to persuade everyone to their political views.
People bring value-laden assumptions to economics well before they start theorizing and before they come to accept any economic system.ReplyDelete
These value-laden assumptions help guide them when they are trying to come up with their economic models. Then they flesh out the details of these models and the consequences of choosing a policy based on the models.
Ultimately, legitimate empirical evidence should decide any model, but sample sizes are so small and contradictory evidence can be brought up for almost any position.
Nothing is so clear to me anymore, but the evidence people have brought up for the effectiveness of select government interventions has led me away from Austrian economics and towards Post-Keynesian economics.
I doubt I would have ever seriously considered Post Keynesianism if it weren't for the financial crisis. Oddly enough, someone I know, who didn't give too much thought to the Austrians, came to reject New Classicism and accept Austrian economics. In fact, his detestation of mixed systems is driving him towards Rothbardian anarcho-capitalism! Go figure.
Well, I consider that the most relevant schools in economics are the Austrian and the Post-Keynesian. In my opinion, these are the ones which are more correct epistemologically and methodologically; for instance, they begin their analysis with the least assumptions, making for more realist models. Anyway, I don't consider myself an expert in economy, but that's what I've found so far.ReplyDelete
And about the latest financial crisis, I think it may not correspond to most old formulations of the ABCT, but I think it's quite considered in Jesus Huerta de Soto's writings. Many people see this last crisis correspond to Hyman Minsky's financial crisis hypothesis. I just don't see it as an opposite view to the ABCT, but I'd rather see it as a complementary theory.
This comment has been removed by the author.ReplyDelete
In my opinion Rothbard set the Austrians off on the wrong path with anarchism. I greatly prefer Mises.ReplyDelete
LK, you didn't have Frank Shostak on your list. He would destroy the utter trash that flows from your pen. I hope I get notified of responses by you because I could destroy you in a debate too, having been schooled on the Banking School. You are clearly a lay person.ReplyDelete
Ah, the delusions of the Austrian cultist. I've read Shostak's work. He's not much better than the other Austrian crackpots.Delete