*Austrian economics "refuted" threads*

Economics Economics Questions
1

Inspired by the Abortion Threads thread, I figured this would be a nice one to make as well.

This of course includes the famous Bryan Caplan “Why I Am Not an Austrian Economist” piece. So no, you’re not showing us anything new by posting it.

(And as with the Abortion thread, I’m sure there are more than this. This is just a small sample, but you get the idea.)

“Why I am Not an Austrian Economist” Nov 8 2007

Some critiques of Austrian economics (for those in the mood to dissect them) Nov 8 2007

Why I Object to Austrian Economics Jan 9 2008

Debunking, “Why I Am Not an Austrain” Aug 14 2008

Guy calls Austrian Theory: The Hangover Theory Sep 4 2008

Any Rebuttals to Critiques of Austrian Economics? Sep 20 2008

Most cogent criticism of Austrian Economics? Dec 8 2008

Austrianism = unscientific Feb 9 2009

Caplan’s Criticisms Feb 14 2009

is there a response to Caplan’s “Why I am not an Austrian Economist” by any of the professors? Apr 16 2009

Critiques of Austrian Economics. Aug 4 2009

Criticising Austrians Sep 19 2009

My take on Bryan Caplan’s criticism Oct 3 2009

Why I am not an Austrian Economist Oct 14 2009

Austrian Arrogance Jan 9 2010

Critiques on Austrian Economics Mar 11 2010

Critiques on Austrian Economics Mar 11 2010 (Yes. Two different people created different threads with the exact same title on the exact same day. This is what we’re dealing with here.)

Refutations of The Austrian Business Cycle/Austrian Economics Apr 5 2010

Most annoying criticism? Apr 23 2010

Criticism of the Austrian School from wikipedia May 6 2010

Robert Nosick’s criticism of Austrianism and Indifference Jun 25 2010

Does Rothbard Contradict himself with regards to the Law of Diminishing Marginal Utility? Aug 3 2010

Rebuttals to Bryan Caplan’s Critique of Misesian Economics? Sep 16 2010

Arnold Kling Takes on Rothbard and the ABCT. Sep 30 2010

Why I Am Not An Austrian Economist by Brian Caplan Feb 25 2011

Why I Am Not an Austrian Economist by Bryan Caplan Jan 11 2012 (Yes. The exact same thread title (albeit spelled correctly this time) for a thread on the exact same topic)

Critisms of austrian economics, any weight to them? Feb 4 2012

Criticism on the ABCT Feb 16 2012

Rational Expectations Objection to the Austrian Business Cycle Theory Mar 2 2012

Critique by Caplan on ABCT: Why dont consumption goods enjoy a boom during depressions? Mar 3 2012

Caplan & empirical testing of economic theorem. Mar 14 2012

Can the crash in the Baltics be explained by Austrian Business Cycle Theory? (austrian predictions) Mar 31 2012

Rothbard refuted! Apr 11 2012

The problem with ABCT Jun 8 2012

2

I really feel like we need to have a FAQ of common statist canards and how to blow each one out of the water.

Such as: “Look at the auto industry, steel mills, manufacturing industry. It used to be big and huge, and the mills were full! Now the big corporations have moved overseas because of capitalism and now the workers are poor and have nothing because capitalism how dare you like capitalism etc”

3

Something like this?

4

Possibly more like this

5

That’s a pretty awesome setup. Too bad it’s filled with crap and I therefore can’t send it to anyone. (Did you read any of that stuff?)

If anyone has to the time to organize something like that from a strictly economics perspective (from an Austrian persuasion of course) it would be great. But that’s kind of what is underway at the Mises Wiki, in particular in that “Argumentation” category. Tackling “common statist canards and how to blow each one out of the water” is precisely what that category is about.

If anyone can add to it, feel free. As I’ve pointed out before, virtually everything you see on the Wiki now is the product of about less than half a dozen people, with the majority of the content being from maybe half that. It would be great if more people would join in to help improve and expand it.

Also on another note, now that I think about it, Economics in One Lesson kind of fits the bill here as well.

6

For whatever it’s worth, if someone wanted to make a counter to the anarchist FAQ I’d be happy to help make it if we get enough people on board. I’ve never been too enthused about the wiki just because there’s so much material to specifically cover, rather than being able to make a concise presentation or grouping of an argument, as it were.

I do enjoy the anarchist FAQ, it’s wonderfully well written and acts as a terrific primer. It’s just too bad that it doesn’t present a very strong argument to someone who actually understands what they’re critiquing. For instance the assertion there that production, and not exchange, is not important is fallacious because of the very economic method which they refuse to utilize, the individualistic one, during the critique of which they utterly fail to explain how a market phenomenon could not act as the outcome of individualistic behavior.

7

…a terrific primer for socialist nonsense…

  • “To quote libertarian socialist Cornelius Castoriadis:…” [what the hell is a libertarian socialist?]
  • “the need for the capitalist to make a profit from the workers they employ is the underlying cause of the business cycle.”
  • “[“anarcho”-capitalists] use a dictionary definition of anarchism. However, this fails to appreciate that anarchism is a political theory. As dictionaries are rarely politically sophisticated things, this means that they fail to recognise that anarchism is more than just opposition to government, it is also marked a opposition to capitalism (i.e. exploitation and private property). Thus, opposition to government is a necessary but not sufficient condition for being an anarchist – you also need to be opposed to exploitation and capitalist private property. As “anarcho”-capitalists do not consider interest, rent and profits (i.e. capitalism) to be exploitative nor oppose capitalist property rights, they are not anarchists.”

They literally define “anarchism” as being against the concept of property. It’s supposed to be an FAQ for people who are trying to learn about anarchism, and the very foundation upon which these authors have built is an inherently socialist one.

How in the hell you can find this useful, I have no idea.

8

“…a terrific primer for socialist nonsense…”

Exactly. I’m not saying that it’s a good primer for what I believe, or any sort of “right anarchistic” philosophy, I’m saying that it does exactly what it is supposed to do, it explains quite a complex social philosophy in a simple and relatively concise way, after reading the Anarchist FAQ you should have no questions as to the philosophy of leftist anarchism.

“They literally define “anarchism” as being against the concept of property.”

Which is part of the problem with leftist and traditional anarchism, is that they try to paint property as inherently exploitative, when, if it is, then human actions are necessarily exploitative, as civilization necessitates property.

“How in the hell you can find this useful, I have no idea.”

It depends on what you’re looking for. It’s incredibly useful if you’re trying to understand leftist/traditional anarchism. I never said it was a good primer on all forms of anarchism. Leftist anarchists love to believe that they have a monopoly claim on the term “anarchism”

9

That leads me to another canard that’s really convincing (like, in the “there is practically a church based off of this in San Francisco whose members swear eternal jihad on the heretics” style convincing) lfor many people:

'private property is exploitation and coercion!"

If you respond, ‘well, you have the right to live in a leftliberwhatevertopia where you all have no property’, they’d respond “well, YOU’RE FORCING US TO LIVE ON A RESERVATION!!!11”

They seriously do not understand the idea that their idea of freedom is self-contradicting; that it is forcing you to live under their standards.

However, even my simple response doesn’t feel convincing enough to even myself; wouldn’t the whole concept of homesteading, private property etc be yet another kind of “artificial socially constructed coercive” etc standard?

What I’m saying is that I’d really love a resource where the argument that civilization entails private property is nailed down pat, which I can use to counter the most emotional of arguments. My current arguments in favor of it don’t feel convincing enough to myself, and I sure know that they wouldn’t to anybody I’d come across.

How do you get across the logic that private property entails no coercion? Every “left-anarchist” is apparently under the impression that they are enslaved at gunpoint to have to live in their own little asylum rather than be “free” to force everyone else to live in their asylum with them.

The devotion to the “anti-property as true freedom” ideal is a huge indicator of a person’s understanding of logic.

10

On the whole mutualist objection to private property:

https://forum.freecapitalists.org/t/chomsky-on-ron-pauls-libertarianism-how-do-i-respond/21217/10

Birthday Pony’s last responses to that thread raise pretty thorny but common objections that do not get refuted quite easily. Shame that thread ended with those objections as they are clearly not the last word. Anybody care to continue?

Btw, I always feel that I am begging for answers sometimes. I hope that isn’t the case. I try to be Devil’s Advocate and call out things I think are unanswered. I think I’m actually obligated to do so. I’d love to get a response like “figure it out yourself”, only if that response has a link to it where I can figure it out for myself.

The Mises wiki is a good start for me, not in the sense that I could add anything substantive to it on my own though.

I also try to get my reading on when I get free time.

11

In order of relevance to your request:

What Libertarianism Is

What It Means To Be an Anarcho-Capitalist

How I Became A Libertarian (from I Chose Liberty: Autobiographies of Contemporary Libertarians)

…all mentioned in this excellent interview (which I highly recommend)

For a a greater extrapolation, see here. (In particular, the Law and Economics lecture from 2009, and the resources on ownership, which are linked in that post as well.) However, you might still start with “What libertarianism is”, as it’s probably the best overall primer I’ve ever read.

12

Of course there’s always arguments like this, refuted by such cogent arguments as “how can you know that economic growth matters?” or “empirical evidence cannot be used by economists (unless they’re investing in stocks or working for a bank in which case it’s praxeology!)”.

Right wing economics worse for economic growth

Inadvertent Austrian Refutation Thread

13

Um, some guy cites a bunch of esoteric papers, and a bunch of amatuers on a forum fail to counter him (to your liking apparently), and that counts as a refutation?

Well, lucky enough for us, our amatuers are pretty smart, and did well to refute the fallacious methodology Mustang’s arguments relied upon below and onward in the thread.

(begin about halfway through the first page)

https://forum.freecapitalists.org/t/since-i-heard-you-guys-dont-like-empirical-evidence/22923

14

That’s page two, on page three some guy is left citing a source which shoots down his own point.

15

I meant to say page 2. Other than that, I have no idea what the fuck your point is.

16

Property is very simple to defend.

It’s unavoidable as a concept. I’ve been doing this over and over and over in these forums over the last couple of months, and if we can get it written up in a FAQ I’d participate.

Property is an emergent category. It’s actually an owner->property relationship.

The root event in reality is the intersection of human mind (intended action) + matter + time (boundary = start + stop) + space (volume within which that matter exists for the duration of the use).

So, using something is an instance of the construct above. If I use a stick I pick up off the ground, I’m creating such an intersection. I use it for a length of time, I move it through space, and in fact I may alter it. My mind (indirectly through the use of my body) directs it’s behavior in reality.

I don’t know how it is possible to think of or imagine a world in which what I stated above isn’t true. A concept (a category used in language and thought) of property arises as a solution to a different occurence which is also a fact of reality which one can’t deny exists. Conflict. Now this is not a conflict in reality, this is a conflict at the level of the human mind. When two different human minds want to use the same matter or same location at the same time for different metaphysically incompatible uses. Meaning same matter in different locations, or different matter at the same location.

A claim of ownership is the solution to that problem. The owned thing is called property. This establishes a “right of way” for one mind over the other. That’s a political solution.

So the question isn’t whether or not the concept of property is right or wrong. It exists a priori, now all we have to argue about is what are the social norms, laws, rules that a social group uses to legitimize a claim.

That’s it. Chomsky can say he doesn’t believe in property, but he absolutely must act, and therefore he must use matter. At a minimum his action in reality on matter is a de facto claim of a right of use. Now the only question is how to resolve conflicts over conflicting claims.

Anarcho-communists gloss over this part. But even their rules must consist of describing legitimate use (legal) and illegitimate use. Some social mechanism must arise to resolve disputes over use. One cannot describe or talk about a world where this is not true.

So, please, lets push this point hard, and get rid of this argument about whether or not property exists. It exists, now we’re just arguing about how to define legitimate claims. A legitimate claim is a socially constructed solution, to the phenomena of dispute over the use of matter.

There is no “no private property solution” There is always the use of matter by individuals. Always, there is no reality we can describe without it. Under “community ownership” disputes will arise over scarce resources. Regardless of how you resolve the dispute, by doing so you are establishing rules or criteria that make a claim to that use legitimate or more legitimate than another conflicting claim.

This micro-problem can’t be glossed over. We have to pound this point, it changes everything about such arguments.

17

As a simple example of my post.

Why do you get to eat that ham sandwich, if I want to eat it too?

Why does your desire to eat it take precedence over mine?

This question requires a mechanism for solution. If we don’t come up with social non-violent means of resolving the question, we end up with a simple “Might makes Right” political solution.

Natural Property Rights are a solution. But don’t think that throwing out the idea of property solves the problem. Whatever you bring back to solve it in a non-violent way will have the features of claims of ownership. You can call it anything you want to, but it won’t matter what you call it if the features are the same, the results will be the same.

The only thing left to do then is to argue about how to establish legitimate claims, and how to arbitrate disagreements about such claims! That’s it, please deconstruct that analysis and show me I’m wrong. Otherwise, let’s argue about what basis to use for calling a claim legitimate.

18

Marx addresses this point in the Grundrisse:

The aim is, rather, to present production – see e.g. Mill – as distinct from distribution etc., as encased in eternal natural laws independent of history, at which opportunity bourgeois relations are then quietly smuggled in as the inviolable natural laws on which society in the abstract is founded. This is the more or less conscious purpose of the whole proceeding. In distribution, by contrast, humanity has allegedly permitted itself to be considerably more arbitrary. Quite apart from this crude tearing-apart of production and distribution and of their real relationship, it must be apparent from the outset that, no matter how differently distribution may have been arranged in different stages of social development, it must be possible here also, just as with production, to single out common characteristics, and just as possible to confound or to extinguish all historic differences under general human laws. For example, the slave, the serf and the wage labourer all receive a quantity of food which makes it possible for them to exist as slaves, as serfs, as wage labourers. The conqueror who lives from tribute, or the official who lives from taxes, or the landed proprietor and his rent, or the monk and his alms, or the Levite and his tithe, all receive a quota of social production, which is determined by other laws than that of the slave’s, etc. The two main points which all economists cite under this rubric are: (1) property; (2) its protection by courts, police, etc. To this a very short answer may be given:

to 1. All production is appropriation of nature on the part of an individual within and through a specific form of society. In this sense it is a tautology to say that property (appropriation) is a precondition of production. But it is altogether ridiculous to leap from that to a specific form of property, e.g. private property. (Which further and equally presupposes an antithetical form, non-property.) History rather shows common property (e.g. in lndia, among the Slavs, the early Celts, etc.) to be the more original form, a form which long continues to play a significant role in the shape of communal property. The question whether wealth develops better in this or another form of property is still quite beside the point here. But that there can be no production and hence no society where some form of property does not exist is a tautology. An appropriation which does not make something into property is a contradictio in subjecto.

to 2. Protection of acquisitions etc. When these trivialities are reduced to their real content, they tell more than their preachers know. Namely that every form of production creates its own legal relations, form of government, etc. In bringing things which are organically related into an accidental relation, into a merely reflective connection, they display their crudity and lack of conceptual understanding. All the bourgeois economists are aware of is that production can be carried on better under the modern police than e.g. on the principle of might makes right. They forget only that this principle is also a legal relation, and that the right of the stronger prevails in their ‘constitutional republics’ as well, only in another form.

When the social conditions corresponding to a specific stage of production are only just arising, or when they are already dying out, there are, naturally, disturbances in production, although to different degrees and with different effects.

To summarize: There are characteristics which all stages of production have in common, and which are established as general ones by the mind; but the so-called general preconditions of all production are nothing more than these abstract moments with which no real historical stage of production can be grasped.

19

Good, Marx understood that the property relationship exists regardless of how you define it, but it seems from the comment on shared ownership, that he misunderstands that conflict is inevitable and social groups develop mechanisms to arbitrate the disputes, and that those arbitrated decisions result in rules, laws, norms that establish what constitutes a legitimate claim of ownership, even if it’s as ephemeral as a short-term use norm, but a free-for-all appropriation norm when not in use. Those shared ownership claims do not function as some form of shared ownership in fact… Groups may establish norms for legitimate uses, but individuals act on the matter in question. Within the group there will be norms about use by individuals, because there is no use by a group - and before you argue with me on that, yes I can understand that you might characterize 3 soccer teams attempting to play on 1 field.

But then at the end, he “summarizes”, by saying so what. “There are characteristics that all stages of production have in common, …” (Please define stages of production, and then provide qualitative and significant differences between them.) “.. and which are established as general ones by the mind;” (Good, even more so there’s the start of an acknowledgement of the praxeological nature of human action.) “but the so-called general preconditions…” (So-called? why so-called, my conditions clear up any misunderstandings he might have had.) “… of all production are nothing more than these abstract moments with which no real historical stage of production can be grasped.” WTF? He acknowledges them, and then says, sorry can’t use them, cause they don’t explain anything?

Simple rulesets that operate on a population in a simulation can provide for very diverse and complex emergent behavior. But if they’re well-defined and you have sufficient data, one can trace the emergent behavior back to the rules; you can explain the behavior in terms of the rules, and you can analyze and predict the effects of changes to the system. Praxeology provides just such a path to trace the macro-level economic phenomena back to the simple micro-level phenomena. When you understand for example, how ants leave trails of pheromones on the ground, the social behavior of walking a specific trail to a known source of food becomes obvious, and predictable. Before that you are left guessing about how they found the food source, and inferring that they have a “hivemind”. The same is true of group economic action, of class “mind” etc. When you don’t understand the underlying phenomena that produce the behavior, one might talk in terms of a hivemind, or a class logic, but when you’ve got the underlying mechanisms understood and explained, the behavior no-longer requires such false explanations. You throw them out and use the more informative and accurate one. Praxeology is that explanation.

I’m going to have to go back and read the timeline and the history of Austrian Economics on one side, and Socialism on the other side.

I like that Marx keyed in on conflict and property as the core phenomena that give rise to political power. But he never performed a Praxeological analysis of it. I feel I’ve provided that.

Obvioiusly he died in 1883 and didn’t see the rise of Austrian Economics. I’d like to think that if he’s as smart as he seemed, he’d have seen that methodological individualism also applies to conflict, i.e. that one can reduce conflict to it’s essential form as a metaphysical incompatibility between the intentions or goals of two human beings.

For whatever reason, as far as I can tell in my readings, no Austrian - Mises, Rothbard, etc. - ever looked at or talked about the micro-political event. The conflict. Marx did, but before Praxeology arises (Mises, I believe), and so his conflict archetype was at the group level, since that is a significant class of phenomena. He keyed in on the conflicts and struggles that arise within what’s considered to be a cohesive social unit (a country). He ignored the macro-level events at the nation-state or city-state level. He didn’t talk about the struggles and conflict within the family unit, or within older tribal groups. But he did talk about it inside the social structures that have arisen in modern industrial societies. But if one is to build a science that talks about those phenomena, it must arise out of a science of human action. Which means starting at the bottom. If we do that, we can bind all of Politics and Economics as Theoretical Social Sciences under their parent science Praxeology. We can use such a theoretical science to analyze history, and to analyze current events. We can use such a theoretical science to analyze our social technological solutions (the institutions that we use to engage in economic action and in conflict resolution). Why is social science still stuck in the dark ages?!

20

David, good posts. I’ve utilised some of these arguments myself before (on the inevitability of property.) Hoppe also bases a good deal of his argumentation on ethics on conflict and the inevitability of property in some shape or form.