A short question for you guys:
If Austrians agree that the free market tends to result in a favorable out come, why has Austrian economics not been chosen by and large by the free market? Why does the average person tend to lean towards a collectivist mindset if the individualism that Austrians advocate is the best? If the free market is all knowing – why has the free market not chosen anarcho-capitalism or minarchism or something closer to what Austrians believe than todays current state?
This has been addressed by a number of papers. Yeager’s is good, but not available online without a JSTOR subscription. Here is a review of it though. There’s also this and this.
My short and simple answer is: because “the free market” doesn’t currently exist.
Don’t fall into the “vulgar” trap of assuming that present conditions are a result of a free market per se.
To say that people do not prefer the free market because it doesn’t exist doesn’t really answer the question.
My answer is that everyone prefers if not the anarcho capitalist society, they at least prefer a minarchist state, “one that just barely escapes being no state atall”
you would point to our current government as proof otherwise. but I will point to each individual. every person longs for freedom. and for the freedom of coercion. wether it is the fellow who would like to be able to buy beer past 2am or just a beer over 3.2 for that matter, the restaurant owner who wants to be free from the regulations, the hairstylist who wants to be free from licensing fees, the prostitute who wants to be left alone to do her business, or the labouror who would like to keep more of his own money.
After acknowledging this fact there are 3 resons why we do not live in a anarcho capitalist society or even in a minarchist state. 1 no faith in it. 2. the utiltarian mindset, or 3 shortsightedness.
The first is that the Utilitarian mindset has become an epidemic. people look for the greatest good for the greatest number. and so many people justify a trade off. a big government, but more people are better off, even though they themselves are inconvienced and deprived of liberty. they take the place of God and can not see that the happiness and what is best for each person is for that person to decide.
the second is that other people are short sighted and can not seperate what is wrong from what is illegal. Whenever something is illegal it is always wrong, and so they think that what is wrong should also be illegal. but of course this is not the case, and as with the utilitarian they are taking the place of God in determining the more greyish areas of right and wrong.
lastly and the reason I can not commit to anarchism, is that people have a lack of faith, they don’t realize that the design of human nature is one to which justice as well as economic stability will find its own course.
That’s not exactly what I’m saying. I’m saying that the question itself, at least as it was phrased, involves a circular or flawed premise because it requires the pre-existance of a free market. And if there is a pre-existance of the free market, then the question answers itself and makes no sense. The question appears to translate to “why hasn’t the free market chosen the free market?”. Well, if we assume that there already is a free market, then the free market has already been chosen. If we assume that the free market has not yet been chosen, it makes no sense to ask why something that does not currently exist isn’t a cause for itself. Quite simply, the free market has not chosen the free market because there is no free market. The whole premise devolves into circular reasoning. On a side note, I’d like to avoid the implication that “the free market” is a sentient entity in and of itself rather then a spontaneous order that is the cumulative result of the diverse and decentralized free decisions of individuals.
I don’t mean to derail the thread into a semantic circle jerk but the way the question was phrased put me off. I’d just like to emphasize that “the free market” is not a model or representative concept of the present system or an explaination for current conditions (although of course free market theory can explain why current conditions are the way they are due to a lack of a free market and why there are natural tendencies of human action that explain the failures of interventions in the market). This is the “vulgar” trap that I refer to above, the mistake of using free market economics as a justification for currently existing conditions in the unfree market; the use of “the free market” as an explainatory device or model for the present when the present economic system clearly is not a free market. In short, there is no current “free market” to defend at least in terms of a causal explaination of present conditions. One cannot point to “the free market” as a cause for anything right now. I hope you generally follow my reasoning here.
But at the beginning of time, was there not some free market? Before the first “state” was created wasn’t there a free market before that?
Do you have any reason to think that, if Austrian economics had been introduced into a free market for academia, it would not have become the dominant school? What’s happened here is that people have lost track of the original question. The original question was why the market chose Keynesian economics, not Austrian economics, as the dominant school of thought. The answer, which Brainpolice is arguing for, is that there was no free market in economic thought at the time that Austrian economics was introduced.
Yes, there was a free market in academics at some point in history. Unfortunately, that was before Menger.
So then, if markets produce favorable outcomes, why didn’t someone like Menger come earlier?
My main point is that it is somewhat ironic that a school of thought which puts a great deal of faith in the free market has not been chosen by the free market.
Austrian Economics claims that market participants are better off in a free market because such a system economizes scarce resources in the most efficient way relative to individual value scales. It does not make any claims whatsoever about things which fall outside of the realm of economizing scarce goods. Ideas, theories, etc are not goods.
It is an interesting question though. My thought is, as wrong and as far off the mark as prisoner dilemma situations are with respect to puzzling over why exchange occurs, it does help illustrate quite well 1 reason why things such as fractional reserve banking, and economic theories which support corrupt regimes come into place. All of the individuals in society benefit from a 100% reserve requirement for example. But, at least 1 individual in particular (the bank’s owner) can benefit himself much moreso by illegally loaning out deposits. The harm falls mainly on other people, and the banker will likely profit immensely. I am not puzzled over why it is in the bankers interest to do such a thing, and praxeologically all need be said, is that the banker subjectively weighed the gains to be received against the potential costs. He made his decision, and acted.
Granted, that is not the only reason. Incorrect theories and the like don’t always come into existence because of the malice of individuals who stand to gain. Sometimes people make mistakes in judgement and reasoning and it can take many years before those errors are found and corrected.
Right.
Most likely not. While there may have been pockets of voluntary trading here and there, many of the concepts we take for granted, like universal rights, political equality, and laissez-faire free markets, are all relatively recent ideas in human history. And without societal support, without even the idea to think of, people would naturally fall into whatever politico-social structures they already knew and were familiar with, with only slight differences.
Because, as the Austrians always point out, time matters. Importantly, Menger didn’t come out of nowhere. He had philosophical precursors, and it was necessary for those ideas to develop before Menger could apply them to economics. I’d trace the philosophy back in a few directions, and indeed, it took many centuries for the ideas to develop. I don’t think a body of theory like Austrian economics could have just popped into existence at some earlier point. We needed to develop the metaphysics, the ontology, the epistemology, and those are complex issues. Philosophy had to develop to a certain level before Menger could come along.
Or, at least it would be if there were a free market in economics at a time when Austrian economics was an option. Besides, I’m not quite sure it’s the same thing, although you might be right. Economics, as in a particular theory and methodology, is somewhat different from a good or service on the market.
It has been chosen by the free market. Mises.org is the most popular economics website. It is socialist institutions like government bureaucracies and universities that have chosen to back other schools of economics.