It occurs to me that Austrian Economics, while thought-provoking and insightful, isn’t really a “school” of economic thought. I can’t really find any new theory nor any concept to build upon any existing Austrian Theory. The only new scholarship I see is the application of Hayekian & Misesian theories to history. I don’t see much innovation in the Austrian Movement, just quoting Mises, Hayek, Rothbard, & Hazlitt. I don’t see any strong Neoclassical sythesis as of yet–unelss I am missing something? So, what I am thinking is the "Austrian ‘School’ " needs to synthesize with Neoclassical Economics and Monetarism
I should add: I am an economics student
Why does “innovation” mean “a strong Neoclassical sythesis”?
Austrians are against the neoclassical school so why would we want a neoclassical sythesis?
Because Neoclassical Economics is mainstream economics and contrary to the bold generalizations that people often make, has some very solid components. In Austrian Economics, there really doesn’t appear to be any new Austrian Theorists coming in and building upon existing theories, or coming up with new theories to explain new problems and phenomenon in the current age of globalization.
There is plenty of new work being done within the Austrian school. Just read the Quarterly Journal of Austrian Economics.
You may want to elaborate on what you think Neoclassical economics’ “solid components” are. I have heard this idea elsewhere, that modern economics is a better school of thought than Austrian economics because the former continues to develop and publish new ideas while the latter is supposedly stuck in an intellectual quagmire. What matters though here is quality, not quantity. Neoclassical economics may have forumulated a wide range of economic literature and econometric models in different compartmentalized subjects, but how much of it is correct? The postulates developed by Mises and Rothbard many years ago can still cogently explain the economic phenomeonon the current age faces while the models/theories of Neoclassical/Keynesian yesteryear (ex Phillips Curve) gather dust.
you’ve already been brainwashed by your college professor… what a shame
First, you’re right. Austrian economics is merely a branch, albeit the most developed branch, of neoclassical economics (an extremely vague term in itself). It has always been part of the neoclassical school, though much of it is no longer considered part of the mainstream. Austrian’s, like Roger Garrison, have spent a considerable amount of time trying to remedy mainstream confusions in certain areas (such as method, capital theory, monetary theory, and business cycle theory). But over the past 40-50 years the Austrian school has made serious theoretical contributions in the fields of informational economics and economic coordination, entrepreneurship and the firm, capital theory, monetary theory, and business cycle theory.
Next, there hasn’t really been that many major theoretical contributions from the mainstream, with the possible exception of international trade (Samuelson and Ohlin). Solow, for example, won his prize for his growth model which simply states (oversimplifying it, of course) that savings and technological innovation cause economic growth (somewhat controversial at that time, but hardly a new concept). Krugman won his prize for essentially plagiarizing JP Say (ironic), and Friedman won his prize, in part, for reintroducing the quantity theory of money (and all of the untenable assumptions which were remedied during the early part of the 20th century). And this ignores all of the absurdities that mainstream economics has produced during this period (such as Leontief’s input output model, for example).
Also, you should consider asking questions before you make such broad and sweeping generalizations (which are simply incorrect).
I wouldn’t say the Austrian School is the “most developed branch” at all, it only covers the areas you mentioned and no more. Furthermore, Austrian economists could make strides in convincing the mainstream of the value of free banking, currency, and markets by taking a multi-disciplinary approach. Some quantitative methods would be needed to accomplish this, even if such methods are to convince others against quantitative economics.
You touched upon the fact that the Austrian School has no theory of international trade, which has the potential of revolutionizing our understanding of Trade if they were to formulate one.
You mentioned I should ask more questions (thought I did not appreciate the tone, or the allegation that I don’t know what I’m talking about), so please consider this question: What would an Austrian Economist do in the business world?
(I ask because it seems like much of their academic works are in refuting others, so I wonder how a professional austrian economist would perform as a financial economist with the demands of the business world – four areas of research out of a potential thousand doesn’t seem to cover it).
The same thing that a non Austrian economist world do, pontificate.
The issues that I highlighted are areas where the Austrian school has made some sort of theoretical contribution which differs from the views held by the mainstream in at least some respect. In other words, these are the areas that are controversial and where the Austrian view is easily differentiated from other views, from other schools of thought. There are other areas, such as international economics, which are entirely noncontroversial (there’s a consensus within the economics profession, for the most part). Value and price theory are also relatively noncontroversial (though there is some debate regarding what utility is) and the Austrians were essentially pioneers in these fundamental fields (Menger, Wiseser, Bohm-Bawerk). And finally, there are some fields that Austrian economics, for whatever reason, either ignores or dismisses (such as financial economics and mathematical economics). It is not the case that every economic paradigm attempts to explain all economic phenomena. The Monetarist’s, for example, basically focused exclusively on monetary theory and cyclical fluctuations.