Hi, i’m just starting out to read on Austrian Economics and have not yet advanced to read completely the books by the various Austrian Scholars.
I had a discussion and these are some points of the flaws of Austrian Economics. If anyone can kindly look at them and comment, i will appreciate it.
1) Austrians are unable to derive the income and substitution effects of price changes due to their strict definition of utility, but give concession to those 2 effects anyway.
2) Rejecting the concept of indifference, and so the use of indifference curves, which form the basis of many micro analyses.
3) Rejecting continuity in preferences. Yes, in real life it may not be always possible for supply and demand schedules to be continuous all the way, but it is an assumption that isn’t that far fetched from reality, and technically allows for very useful analyses.
To reject continuity means to reject the use of calculus in supply demand analysis (you can’t differentiate a non-continuous function). And there you have a whole lot of useful stuff thrown out the window. This rejection also means that equilibrium would only exist as a rare occurrence in the Austrian school, but again, inconsistently, they refer to such supply demand intersections as per mainstream economics.