Saturday, December 10, 2011

An Austrian Blog Worth Reading

A quick post. I have found a highly interesting Austrian blog here well worth reading:
Austrian Economics,
Unfortunately, the blog does not appear to be active, but there is some nice discussion of Post Keynesians and Post Keynesian economics.


  1. I believe that blog was run by a James F. Mueller, who had correspondence with Michael Emmett Brady before...

    Scroll down to read the debate.

  2. I found the original link to the debate here.

  3. Some points from that debate:

    The crucial point (I gather) is that Keynes' work on probability, especially in the TP,
    Keynes regards uncertainty as having different degrees or grades, in that w "measures the knowledge base upon which the probability estimates are estimated. w ranges between 0 (ignorance) and 1 (complete certainty of Knowledge)."

    That being so, then where w = 0, we have radical/Keynesian uncertainty. But where w is above 0 but below 1, or a some range above 0 but below 1, surely you have risk, don't you? Risk in the sense that in fact give an objective probability score.

    "Unless Post Keynesians can show technically how uncertainty,as opposed to risk, leads to involuntary unemployment they will always come up a loser against a technically trained neoclassical or Bayesian in any exchange about unemployment problems."

    So the problem here is identifying what areas in economic decision making are subject to genuine uncertainty.


    “By ‘uncertain’ knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty; nor is the prospect of a Victory bond being drawn. Or, again, the expectation of life is only slightly uncertain. Even the weather is only moderately uncertain. The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealthowners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever” (Keynes 1937: 213–214).

    So according to Keynes the "sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence".

    Unless I am mistaken, Keynes does not seem to restrict the "applicability of complete ignorance to the investment decision in long lived capital goods alone."

  4. Regarding the "knowledge base upon which the probability estimates are estimated", there is then the question of how the data from your knowledge base are interpretated:

    "Michael Emmett Brady says:
    You will find your answers about Keynes's views on how knowledge is obtained in Part III of the TP. This is the heart of the TP. Keynes argues, convincingly, that knowledge comes about by means of induction and analogy."

    Then we already have a problem: inductive inference is subject to the problem of induction, and there are is an influential view that induction lacks rational foundation, and so on.

  5. You're following Popper's criticism on induduction, aren't you? Regardless of whether or not induction is rational, it seems to be used by a lot of decision-makers. Do you own a copy of A Treatise on Probability?

  6. Some quick points:

    "You're following Popper's criticism on induction, aren't you?"

    Actually the problem of induction goes back to David Hume. That is what I am thinking of above. Bertrand Russell wrote on it.
    There is a large literature in modern analytic philosophy and from Quine. Popper claimed that he solved the problem by abandoning induction and adopting falsification by hypothetico-deduction. I have written something on this here:

    "Do you own a copy of A Treatise on Probability? "

    As it happens, I borrowed the TP from my university library back in 2009 and tried to read it, at a time when I was interested in Keynes's views on induction, but quickly realised my knowledge of mathematics and probability theory just isn't up to reading it yet.

  7. I see. Speaking of philosophy though, will you do a post on "das Adam Smith problem"? Brady follows some heavyweight scholars who argue that Smith never abandoned his moral philosophy when he wrote The Wealth of Nations...