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Carl Menger is probably the only relevant economist out of the whole Austrian School. He helped develop the theory of marginal utility. Off the top of my head, several of their claims are basically false, such as the Austrian Business Cycle and their utter rejection of econometrics and mathematics. I also think the entire premise of praxeology is just plain wrong.
Can you provide evidence that the business cycle theory is "basically false"? It's a pretty well known understanding of market intervention today. Even the federal reserve understands the principles of the business cycle.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
There's that and the fool assumption that just because Ryan has his employees read Rand, that it's how he governs...Which, judging from his track record, he clearly doesn't.Paul Ryan (R) promotes von Mises. He is also a Randian & a high ranking, Repub, washinton-insider. Are the two mutually exclusive?
Of course they're not, but, in reality, how many are there? I've never heard Paul Ryan mention Mises, though it's possible. Bachmann of course said she reads Mises on the beach, but do either of them advocate a return to the gold standard or ending the Federal Reserve? Do they promote the Austrian theory of the business cycle which was perhaps Mises' greatest contribution?
The simple fact is that the Austrian school is not popular within the circles of power, right or left, because the Austrian school doesn't support government power.
But that expecting the blind partisan demagogues to notice such things is just too much to expect.
) 
Carl Menger is probably the only relevant economist out of the whole Austrian School. He helped develop the theory of marginal utility. Off the top of my head, several of their claims are basically false, such as the Austrian Business Cycle and their utter rejection of econometrics and mathematics. I also think the entire premise of praxeology is just plain wrong.
Can you provide evidence that the business cycle theory is "basically false"? It's a pretty well known understanding of market intervention today. Even the federal reserve understands the principles of the business cycle.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
Can you provide evidence that the business cycle theory is "basically false"? It's a pretty well known understanding of market intervention today. Even the federal reserve understands the principles of the business cycle.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
One of the major problems of the ABCT is this concept of a natural rate of interest based on the work of Knut Wicksell. It's inherently a loanable funds theory at the end of the day. The whole concept of a natural rate of interest and equilibrium are fictitious.
Can you provide evidence that the business cycle theory is "basically false"? It's a pretty well known understanding of market intervention today. Even the federal reserve understands the principles of the business cycle.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
One of the major problems of the ABCT is this concept of a natural rate of interest based on the work of Knut Wicksell. It's inherently a loanable funds theory at the end of the day. The whole concept of a natural rate of interest and equilibrium are fictitious.
THE NATURAL RATE OF INTEREST
So named by Swedish economist Knut Wicksell, the natural rate of interest is the rate that reflects the underlying real factors. In macroeconomic terms as applied to a wholly private economy, it is the rate that governs the allocation of resources between current consumption and investment for the future. By keeping saving and investment in balance, the natural rate guides the economy along a sustainable growth path. That is, governed by the natural rate, unconsumed current output (real saving) is used for augmenting the economy's productive capacity in ways that are consistent with people's willingness to postpone consumption.
"In Keynesian theory, the role played by a market-determined interest rate is a disruptive one."
In the hands of the Austrian economists, the natural rate became the rate that reflects the time preferences of market participants and allocates resources among the temporally defined stages of production. The output of one stage serves as input to the next in this logical and broadly descriptive representation of the economy's production process. The temporal dimension of the economy's capital structure is a key macroeconomic variable in Austrian theory.
I have been reading some stuff mainly about Rothbard, which has got me to thinking. Is there any interest in a somewhat technical and nerdy discussion of the "Austrian School" and should it be here or in the CDZ? My first choice would be to put it here. What say you?
Carl Menger is probably the only relevant economist out of the whole Austrian School. He helped develop the theory of marginal utility. Off the top of my head, several of their claims are basically false, such as the Austrian Business Cycle and their utter rejection of econometrics and mathematics. I also think the entire premise of praxeology is just plain wrong.[/B
]I do appreciate the intellectual contributions of Hayek, von Mises, etal.... I do thoroughly detest Murray Rothbard, though. I don't think he understood macroeconomics.
Better contact the Nobel Committee and get them to revoke Vernon Smith's Nobel Prize for Economics.Can you provide evidence that the business cycle theory is "basically false"? It's a pretty well known understanding of market intervention today. Even the federal reserve understands the principles of the business cycle.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
One of the major problems of the ABCT is this concept of a natural rate of interest based on the work of Knut Wicksell. It's inherently a loanable funds theory at the end of the day. The whole concept of a natural rate of interest and equilibrium are fictitious.
As I understand it, the Austrian business cycle theory (ABCT) is basically a theory of unsustainable increases in bank credit, often encouraged by central bank policy. The main attack on it (from Keynes, Sraffa, Frank Knight, and later Milton Friedman {which is one reason including him among the Austrian School is problematic!} is based on the statistical evidence. There are some good insights about the business cycle in ABCT, but IMHO it doesn't do well as a predictive model. I really don't look at ABCT much, so I'd like to hear from people who are more familiar with it.
One of the major problems of the ABCT is this concept of a natural rate of interest based on the work of Knut Wicksell. It's inherently a loanable funds theory at the end of the day. The whole concept of a natural rate of interest and equilibrium are fictitious.
THE NATURAL RATE OF INTEREST
So named by Swedish economist Knut Wicksell, the natural rate of interest is the rate that reflects the underlying real factors. In macroeconomic terms as applied to a wholly private economy, it is the rate that governs the allocation of resources between current consumption and investment for the future. By keeping saving and investment in balance, the natural rate guides the economy along a sustainable growth path. That is, governed by the natural rate, unconsumed current output (real saving) is used for augmenting the economy's productive capacity in ways that are consistent with people's willingness to postpone consumption.
"In Keynesian theory, the role played by a market-determined interest rate is a disruptive one."
In the hands of the Austrian economists, the natural rate became the rate that reflects the time preferences of market participants and allocates resources among the temporally defined stages of production. The output of one stage serves as input to the next in this logical and broadly descriptive representation of the economy's production process. The temporal dimension of the economy's capital structure is a key macroeconomic variable in Austrian theory.
Here
Wicksell lends to, not retracts from the austrian principle of market interest rates, rather than central rate controls.
I have been reading some stuff mainly about Rothbard, which has got me to thinking. Is there any interest in a somewhat technical and nerdy discussion of the "Austrian School" and should it be here or in the CDZ? My first choice would be to put it here. What say you?
Carl Menger is probably the only relevant economist out of the whole Austrian School. He helped develop the theory of marginal utility. Off the top of my head, several of their claims are basically false, such as the Austrian Business Cycle and their utter rejection of econometrics and mathematics. I also think the entire premise of praxeology is just plain wrong.[/B
]I do appreciate the intellectual contributions of Hayek, von Mises, etal.... I do thoroughly detest Murray Rothbard, though. I don't think he understood macroeconomics.
So, economics is not a social science? Praxeology is the understanding that human action is the epicenter in economics. That markets were not created by some inventor, but are an evolutionary process in human behavior.
Is your contention that economics is a hard science, and that mathematics can explain human action? Because so far, observation isn't on your side.
So, economics is not a social science? Praxeology is the understanding that human action is the epicenter in economics. That markets were not created by some inventor, but are an evolutionary process in human behavior.
Is your contention that economics is a hard science, and that mathematics can explain human action? Because so far, observation isn't on your side.
So, economics is not a social science? Praxeology is the understanding that human action is the epicenter in economics. That markets were not created by some inventor, but are an evolutionary process in human behavior.
Is your contention that economics is a hard science, and that mathematics can explain human action? Because so far, observation isn't on your side.
I know this was not directed specifically to me, but that has never stopped me from answering before!
My undergraduate degree was in history and economics with a minor in mathematics. My graduate education was in mathematical economics applied to the Soviet economy. This gives me a peculiar slant with a foot in statistical theory and practice, mathematical economics, and historical/institutional approaches. In fact I think these are the three legs that all good work in economics must rely on. Each of them is necessary but not sufficient for a proper analysis. Of course the mix will change depending on the subject matter.
At the core, economics is a model of certain types of human behavior, the creation and distribution of wealth. Humans are individually quirky, but in large numbers become more predictable in a statistical sense. On a continuum this makes economics the hardest of the social sciences and somewhat less precise than the softest of the hard sciences (to what extent is weather and climate a hard science?). This argues for a need for more tools that mathematical models, not for the avoidance of such models.
Back to the regularly scheduled food fight!
And right on queue, shallow insults and no evidence to present for prior assertions.
From here i wont bother. You're arguing from a no evidence, no validation fallacy and then resort to insults that, at best only come off as weak projections based on your love for authority and control over others. "We need models so we can be more confident in our failures in utopian economic control! All else is just crank right wing flat earthery!"
OK, you're not here to discuss this topic, so neither am I.
The trolls get the thread.
by categorizing the fundamental principles of economics as a priori truths and not contingent facts open to empirical discovery or refutation, Mises was not claiming that economic law is revealed to us by divine action, like the ten commandments were to Moses. Nor was he proposing that economic principles are hard-wired into our brains by evolution, nor even that we could articulate or comprehend them prior to gaining familiarity with economic behavior through participating in and observing it in our own lives. In fact, it is quite possible for someone to have had a good deal of real experience with economic activity and yet never to have wondered about what basic principles, if any, it exhibits.
Nevertheless, Mises was justified in describing those principles as a priori, because they are logically prior to any empirical study of economic phenomena. Without them it is impossible even to recognize that there is a distinct class of events amenable to economic explanation. It is only by pre-supposing that concepts like intention, purpose, means, ends, satisfaction, and dissatisfaction are characteristic of a certain kind of happening in the world that we can conceive of a subject matter for economics to investigate. Those concepts are the logical prerequisites for distinguishing a domain of economic events from all of the non-economic aspects of our experience, such as the weather, the course of a planet across the night sky, the growth of plants, the breaking of waves on the shore, animal digestion, volcanoes, earthquakes, and so on.
Unless we first postulate that people deliberately undertake previously planned activities with the goal of making their situations, as they subjectively see them, better than they otherwise would be, there would be no grounds for differentiating the exchange that takes place in human society from the exchange of molecules that occurs between two liquids separated by a permeable membrane. And the features which characterize the members of the class of phenomena singled out as the subject matter of a special science must have an axiomatic status for practitioners of that science, for if they reject them then they also reject the rationale for that science's existence.
Economics is not unique in requiring the adoption of certain assumptions as a pre-condition for using the mode of understanding it offers. Every science is founded on propositions that form the basis rather than the outcome of its investigations. For example, physics takes for granted the reality of the physical world it examines. Any piece of physical evidence it might offer has weight only if it is already assumed that the physical world is real. Nor can physicists demonstrate their assumption that the members of a sequence of similar physical measurements will bear some meaningful and consistent relationship to each other. Any test of a particular type of measurement must pre-suppose the validity of some other way of measuring against which the form under examination is to be judged.....What is notable about economics in this regard is just how much knowledge can be gained by hunting down the implications of its postulates. Carl Menger arrived at the great insight that the value of a good to an actor depends on its marginal utility to him based entirely on pursuing the consequences of the assumption that people act with the purpose of improving their circumstances. Mises's magnum opus, Human Action, is a magnificent display of the results that can be achieved along these lines.
And you completely and utterly misunderstand Mises theorizing on economics as a priori. As most do, because you believe that economics is in fact, a hard science where there are truths that can be established. In the world of economic control, thats probably true, because again, someone is making the fuciking rules. Pretty simple.
Try this out and see if it helps you understand the difference. As you've already mentioned, you refuse praxeology, human action. So apparently economics is the business of its inventors; those who control and manipulate based on perceived authorities 9even though it is not).
by categorizing the fundamental principles of economics as a priori truths and not contingent facts open to empirical discovery or refutation, Mises was not claiming that economic law is revealed to us by divine action, like the ten commandments were to Moses. Nor was he proposing that economic principles are hard-wired into our brains by evolution, nor even that we could articulate or comprehend them prior to gaining familiarity with economic behavior through participating in and observing it in our own lives. In fact, it is quite possible for someone to have had a good deal of real experience with economic activity and yet never to have wondered about what basic principles, if any, it exhibits.
Nevertheless, Mises was justified in describing those principles as a priori, because they are logically prior to any empirical study of economic phenomena. Without them it is impossible even to recognize that there is a distinct class of events amenable to economic explanation. It is only by pre-supposing that concepts like intention, purpose, means, ends, satisfaction, and dissatisfaction are characteristic of a certain kind of happening in the world that we can conceive of a subject matter for economics to investigate. Those concepts are the logical prerequisites for distinguishing a domain of economic events from all of the non-economic aspects of our experience, such as the weather, the course of a planet across the night sky, the growth of plants, the breaking of waves on the shore, animal digestion, volcanoes, earthquakes, and so on.
Unless we first postulate that people deliberately undertake previously planned activities with the goal of making their situations, as they subjectively see them, better than they otherwise would be, there would be no grounds for differentiating the exchange that takes place in human society from the exchange of molecules that occurs between two liquids separated by a permeable membrane. And the features which characterize the members of the class of phenomena singled out as the subject matter of a special science must have an axiomatic status for practitioners of that science, for if they reject them then they also reject the rationale for that science's existence.
Economics is not unique in requiring the adoption of certain assumptions as a pre-condition for using the mode of understanding it offers. Every science is founded on propositions that form the basis rather than the outcome of its investigations. For example, physics takes for granted the reality of the physical world it examines. Any piece of physical evidence it might offer has weight only if it is already assumed that the physical world is real. Nor can physicists demonstrate their assumption that the members of a sequence of similar physical measurements will bear some meaningful and consistent relationship to each other. Any test of a particular type of measurement must pre-suppose the validity of some other way of measuring against which the form under examination is to be judged.....What is notable about economics in this regard is just how much knowledge can be gained by hunting down the implications of its postulates. Carl Menger arrived at the great insight that the value of a good to an actor depends on its marginal utility to him based entirely on pursuing the consequences of the assumption that people act with the purpose of improving their circumstances. Mises's magnum opus, Human Action, is a magnificent display of the results that can be achieved along these lines.
here
You'll have that, with your central planner types.And right on queue, shallow insults and no evidence to present for prior assertions.
From here i wont bother. You're arguing from a no evidence, no validation fallacy and then resort to insults that, at best only come off as weak projections based on your love for authority and control over others. "We need models so we can be more confident in our failures in utopian economic control! All else is just crank right wing flat earthery!"
The core conceit of economic central planers....The belief that because a lot -or even a majority- of people have done something in the past they'll do it again, despite the context of the times and the fact that humans are quirky, capricious and sometimes tempestuous.....The notion that you really can in fact push a rope.So, economics is not a social science? Praxeology is the understanding that human action is the epicenter in economics. That markets were not created by some inventor, but are an evolutionary process in human behavior.
Is your contention that economics is a hard science, and that mathematics can explain human action? Because so far, observation isn't on your side.
I know this was not directed specifically to me, but that has never stopped me from answering before!
My undergraduate degree was in history and economics with a minor in mathematics. My graduate education was in mathematical economics applied to the Soviet economy. This gives me a peculiar slant with a foot in statistical theory and practice, mathematical economics, and historical/institutional approaches. In fact I think these are the three legs that all good work in economics must rely on. Each of them is necessary but not sufficient for a proper analysis. Of course the mix will change depending on the subject matter.
At the core, economics is a model of certain types of human behavior, the creation and distribution of wealth. Humans are individually quirky, but in large numbers become more predictable in a statistical sense. On a continuum this makes economics the hardest of the social sciences and somewhat less precise than the softest of the hard sciences (to what extent is weather and climate a hard science?). This argues for a need for more tools that mathematical models, not for the avoidance of such models.
Back to the regularly scheduled food fight!
And you completely and utterly misunderstand Mises theorizing on economics as a priori. As most do, because you believe that economics is in fact, a hard science where there are truths that can be established. In the world of economic control, thats probably true, because again, someone is making the fuciking rules. Pretty simple.
Try this out and see if it helps you understand the difference. As you've already mentioned, you refuse praxeology, human action. So apparently economics is the business of its inventors; those who control and manipulate based on perceived authorities 9even though it is not).
by categorizing the fundamental principles of economics as a priori truths and not contingent facts open to empirical discovery or refutation, Mises was not claiming that economic law is revealed to us by divine action, like the ten commandments were to Moses. Nor was he proposing that economic principles are hard-wired into our brains by evolution, nor even that we could articulate or comprehend them prior to gaining familiarity with economic behavior through participating in and observing it in our own lives. In fact, it is quite possible for someone to have had a good deal of real experience with economic activity and yet never to have wondered about what basic principles, if any, it exhibits.
Nevertheless, Mises was justified in describing those principles as a priori, because they are logically prior to any empirical study of economic phenomena. Without them it is impossible even to recognize that there is a distinct class of events amenable to economic explanation. It is only by pre-supposing that concepts like intention, purpose, means, ends, satisfaction, and dissatisfaction are characteristic of a certain kind of happening in the world that we can conceive of a subject matter for economics to investigate. Those concepts are the logical prerequisites for distinguishing a domain of economic events from all of the non-economic aspects of our experience, such as the weather, the course of a planet across the night sky, the growth of plants, the breaking of waves on the shore, animal digestion, volcanoes, earthquakes, and so on.
Unless we first postulate that people deliberately undertake previously planned activities with the goal of making their situations, as they subjectively see them, better than they otherwise would be, there would be no grounds for differentiating the exchange that takes place in human society from the exchange of molecules that occurs between two liquids separated by a permeable membrane. And the features which characterize the members of the class of phenomena singled out as the subject matter of a special science must have an axiomatic status for practitioners of that science, for if they reject them then they also reject the rationale for that science's existence.
Economics is not unique in requiring the adoption of certain assumptions as a pre-condition for using the mode of understanding it offers. Every science is founded on propositions that form the basis rather than the outcome of its investigations. For example, physics takes for granted the reality of the physical world it examines. Any piece of physical evidence it might offer has weight only if it is already assumed that the physical world is real. Nor can physicists demonstrate their assumption that the members of a sequence of similar physical measurements will bear some meaningful and consistent relationship to each other. Any test of a particular type of measurement must pre-suppose the validity of some other way of measuring against which the form under examination is to be judged.....What is notable about economics in this regard is just how much knowledge can be gained by hunting down the implications of its postulates. Carl Menger arrived at the great insight that the value of a good to an actor depends on its marginal utility to him based entirely on pursuing the consequences of the assumption that people act with the purpose of improving their circumstances. Mises's magnum opus, Human Action, is a magnificent display of the results that can be achieved along these lines.
here
Trust me, I understand von Mises more than most. One of the more absurd assumptions I see online is that “Praxeology” is the only methodology employed by Austrians. It hasn’t occurred to you that purely a priori propositions were rejected by von Hayek and by a good portion of Austrians influenced by Hayek. I hope you realize that.
It makes me think how von Hayek would have viewed the legions of Austrians on the internet prattling away about praxeology. The very notional that praxeology doesn’t require any empirical data or evidence is beyond reproach. If von Hayek were alive today, I’m sure he would classify Praxeology on par with Marxism. Literally.
As far as your post goes, it’s the more of the same. As with any a priori argument, based on Misesian theory and deductive reasoning, it must be true. No empirical evidence is required to prove von Mises’ theories correct. In the event the real world has a good amount of empirical data contractdicting von Mises, it’s viewed as irrelevant and will ultimately be explained away in a haphazard manner.
It should be clear to most economists why praxeology has tons of flaws. This apodictic certainty in praxeology dissipates under closer inspection. When we examine von Mises’ arguments, it can be ascertained that his reasoning is dependent upon synthetic propositions which are ultimately false in nature. Many of the inferences drawn from praxeology simply have no basis in reality. Ultimately, when Austrians make these assumptions, then throw in a priori reasoning to make inferences, their conclusions may possess some truth, but it’s based on a fantasy world where said assumptions are correct. Praxeology describes a world other than we live in on a daily basis. It’s about as imaginary as the yellow brick road.
I'm going to have to reread Human Action. It's been close to ten years.
And you completely and utterly misunderstand Mises theorizing on economics as a priori. As most do, because you believe that economics is in fact, a hard science where there are truths that can be established. In the world of economic control, thats probably true, because again, someone is making the fuciking rules. Pretty simple.
Try this out and see if it helps you understand the difference. As you've already mentioned, you refuse praxeology, human action. So apparently economics is the business of its inventors; those who control and manipulate based on perceived authorities 9even though it is not).
here
Trust me, I understand von Mises more than most. One of the more absurd assumptions I see online is that “Praxeology” is the only methodology employed by Austrians. It hasn’t occurred to you that purely a priori propositions were rejected by von Hayek and by a good portion of Austrians influenced by Hayek. I hope you realize that.
It makes me think how von Hayek would have viewed the legions of Austrians on the internet prattling away about praxeology. The very notional that praxeology doesn’t require any empirical data or evidence is beyond reproach. If von Hayek were alive today, I’m sure he would classify Praxeology on par with Marxism. Literally.
As far as your post goes, it’s the more of the same. As with any a priori argument, based on Misesian theory and deductive reasoning, it must be true. No empirical evidence is required to prove von Mises’ theories correct. In the event the real world has a good amount of empirical data contractdicting von Mises, it’s viewed as irrelevant and will ultimately be explained away in a haphazard manner.
It should be clear to most economists why praxeology has tons of flaws. This apodictic certainty in praxeology dissipates under closer inspection. When we examine von Mises’ arguments, it can be ascertained that his reasoning is dependent upon synthetic propositions which are ultimately false in nature. Many of the inferences drawn from praxeology simply have no basis in reality. Ultimately, when Austrians make these assumptions, then throw in a priori reasoning to make inferences, their conclusions may possess some truth, but it’s based on a fantasy world where said assumptions are correct. Praxeology describes a world other than we live in on a daily basis. It’s about as imaginary as the yellow brick road.
I'm going to have to reread Human Action. It's been close to ten years.
Ah, more of the "it doesn't match central planner authority reality and is therefore, fantasyland".
A priori denotes knowledge that exists without reference to reality. Much like mathematics.
Can you break down for me these so called obvious (tons, I'll settle for two) flaws in Mises praxeology theory and also show the contradictory of real world observation and so called "empirical evidence"?
I'll wait.
