Debate on Austrian Economics

Neoclassical,

yes, that’s the one. I’m sorry; my name on that website is ‘Lode Cossaer’; incidentally my real name. :slight_smile:

I never said that. I believe that some neoclassical economists tend to overlook their own logical inconsistencies for purely self-serving reasons. I also believe that some people attack Austrian method because they cannot invalidate Austrian theory and are displeased with its implications.

Esuric, neither Quine nor I deny that "some knowledge may be derived logically from general principles.

The question might then be how you label such derived knowledge? empirical? that’s cool, its just a different flavour to words

You wrote too much, AdrianHealey!

Here’s a quick rundown based on my skimming:

  • You state that “Austrian would generally note that data tells you something about a certain period, but we can’t deduce economic laws that help us predict the future in any quantitive way. You can use statistics and try to model human behavior; and even if there isn’t anything wrong with the math, there is something wrong with this method.” This is how science works; the fact that what we create coherent theories based upon our data does mean it’s not apodictically certain, but that doesn’t mean it’s not true in a reasonable sense. All physical science is true in this sense, and most still trust airplanes to fly.
  • To quote,"Regarding ‘a priori’; I would say that it isn’t ‘dead’ for thousands of years. The history of ‘a priori’ reasoning has a long history in philosophy – starting with Aristotle, passing through the middle ages by various writers such as Aguino and going on to Kant and others. I would also note that just because the words ‘a priori’ aren’t used, doesn’t follow that people aren’t thinking a priori. " Many philosophers actually still defend apriorism; it has not been entirely abandoned. However, I see few thinkers here actually defending it against 20th-century criticisms (particularly Quine, who actually considered analyticity a dogma of logical positivism, a staunchly empiricist philosophy). To defend apriorism fairly would require defenses against its best enemies; most here are not doing that.
  • You state that “Uncertainty is an area that has been greatly examined by Austrians. I don’t think just saying ‘hey, we live in an uncertain world, therefore deduction is wrong’ is enough to argue against Austrians in general.” Uncertainty, as also examined heavily by Frank Knight and Keynesians, seems crucial to Austrians. What is it? I’m increasingly convinced that Austrians are ignorant of probability theory; I assert that people balance expected marginal benefits to expected marginal costs–is there a problem with this? That is, what the heck is wrong with search theory?
  • You state that “I would, for instance, argue that ‘market failure’ is a flawed concept. It doesn’t make sense to speak of a ‘failure’, because ‘failure’ implies an end in and of itself that one has failed to achieve.” Generalized as “satisfaction,” even Mises argues that our acts seek a particular end; could not “market failure” simply be the failure to maximize satisfaction?
  • You state that “externalities seem to be a legal failure, not an economic one.” How so? In your conception, what prevents parties from making trades that internalize an externality? If a company is creating a negative externality (e.g., pollution) for a town, then isn’t there actually a collective action problem?
  • You state that “Another problem with the deduction of empirical data is that a whole lot of theories can be supported by the same or similar data sets.” Likewise, data sets are used to illustrate Austrian theories. If Austrians didn’t even do this, then I should think Austrian economics quite useless indeed.

I know you never said that: my point is that if, as Austrians commonly claim, neoclassicals reject apriorism, then how does that mesh with your claim that apriorism is nother more than deducing logical consequences from general principles? I bet we all agree that neoclassicals do perform such logical steps, yet–strangely–Austrians claim that’s all there is to apriorism.

Neoclassical,

thanks for your comments, but I should it more specific. Since we were talking about the relationship between theory and history, I was hoping you were to comment on those parts. But the other ones are noted. (and if you would like, I’ll answer them.)

I’ll ask one question myself: do you agree that economic theories have to take into account that humans are purposeful beings trying to achieve goals and that we have to investigate them in such a way that ‘sunrises don’t cause clocks to go of’?

As I’ve noted before; yes, a lot of neoclassicals implicely accept this. When a neoclassical says ‘we need to distinguish between correlation and causation; he does this by referring to human action’. Sunrises don’t cause alarmclocks to go of.

The problem is, however, that some neoclassicals forget about that and come up with silly stuff.

“If the core of Austrian economics is its reliance on some amount of a priori theory then it is all nonsense. There simply is no such thing as a priori knowledge.”

why waste time with people like this?

"Like I’ve stated elsewhere, I actually have no oppositional stance to praxeology; I simply want its practitioners to realize that praxeology (as most clearly revealed by Rothbard) has an empiricist foundation and is revisable (hence there is no guarantee of immutable truths or certainty). Additionally, since there is an empiricist rooting, Austrians should not be so averse to alternative methodologies that more openly empirical.

To be more clear, I believe that Austrian axioms are empirical in nature and should be claimed as such. In lieu of that, praxeological deductions are not apodictically certain. And, finally, since Austrians are empiricists, if even unknowingly so, they should have less opposition to neoclassical methods."

um…what?

Am I the only one who thinks this whole debate is a joke? I don’t agree with either pro or con. It seems like bofh are statist and neither is pro.

“Am I the only one who thinks this whole debate is a joke? I don’t agree with either pro or con. It seems like bofh are statist and neither is pro.”

<= To which debate are you referring too? The debate in this thread between neoclassical and esuric, or the debate on the link?

What has the ‘statist’ thing to do with it? It’s a methodological debate, not a normative debate.

What do you mean ‘neither is pro’? Pro whàt?

I’m referring to OP link and articles that are posted on his site. There is debate between guy that is against austro-libertarian and guy that is in favor of it. Neither is representing voluntary or even ancap position and neither is misesian. Pro austrian guy is hayekian and he seems awfully on defense. Debate in OP link is not about methodology - he clearly argues against not only AE but austro-libertarian movement as a whole.

In other words, AEs should be more like Hayek. Interestingly enough, I think most of what economists do (both Austrian and neoclassical) is apriori reasoning. Some call this “introspection”.

I would like to hear more about “a priori synthetic knowledge.” - What does that mean?

An a priori synthetic statement is one that is both logically undeniable but isn’t based off of empirical observation. Such statements are true by their very nature yet refer to the real world. For example: The angles of an Euclidian triangle equal 180 degrees.

Angurse,

Your example is incorrect. While the angles of a Euclidian triangle equal 180 degrees, whether the axioms (and postulate) of Euclidean geometry accurately describe the physical universe is not a purely logical matter. It could be that Euclidian triangles only exist as abstractions with no physical instantiation. That is, a non-Euclidian geometry, with non-Euclidean triangles, may more accurately describe our universe.

Moreover, synthetic statements are, by definition, deniable without contradiction – this is precisely what differentiates them from analytic statements. If a synthetic statement can be known a priori, then it is because it conflicts with some other synthetic statement. Logically, there is no alternative.

Boniek,

the person that you are attacking, would be me than.

First of all; I can assure you that I’m completely ‘ancap’. What you see are certain statements that are qualifiers - e.g. ‘there might be a reason for government intervention’ - because my approach generally isn’t to start debunking the whole set of arguments for government in one take, but point by point. That’s an approach you can criticize; but it doesn’t follow that I’m not an anarchist, nor do I wish to portrayed as a statist. When talking about - in this example - market failure; I prefer to give the view that ‘even though there might be arguments for government intervention, market failure isn’t one of them’. I can assure you that I approach every argument in favour of government intervention like that. The advantage this gives me is that you don’t switch from argument to argument in the same position like that. There are a numerous amount of reasons people have given for government intervention and this sort of conceptual ‘putting stuff between brackets’ helps to clear the argument as such. ‘Let’s talk about specific argument x; and don’t talk about the others right now.’ If you read between the lines; you might notice that I’ve tried to squeeze in that voluntary association can deal with a whole lot of stuff. I find that an intellectual better way then just saying ‘oh, a free society can deal with every single problem!’ which is not an argument but a statement. Don’t let my way of debating - which you can criticize, of course - fool you. Here is an example from the debate:

The third issue isn’t really an ‘Austrian’ one, but more of a ‘Libertarian’ one, to be honest. But in any case; I hope you do realize that you are just begging the question? ‘there are very compelling arguments for…’ Oke; that is probably true – else nobody would believe that these things should be provided by the government. But it doesn’t follow that there couldn’t be very compelling arguments the other way around, now does it? I would say that from a theoretical and empirical point of view; most – if not all – things that government provide can (and have been) provided private. An economist can’t say wether or not this is a good thing, but as an economist, we should keep in mind that a whole lot of things have been provided privately. I would also say that empirically; the robustness of ‘markets’, i.e. entrepreneurial discovery of alternatives when the state is absent, is pretty amazing .Someone like Elionor Ostrom did some great work on that.

See what I did there? I didn’t came full out ‘omfg! private markets can do everything!’ but just gave remarks that are more in the realm of economics then in the realm of political theory as such. Again; that’s just my way of approaching things. I’m not claiming superiority here, but I do mind being called a statist, just because I chose a different approach in a discussion.

Secondly; the methodology I’m defending is fully and directly Misesian; directly from Mises his Theory and History, first 100 chapters of HA and The Ultimate Foundation of Economic Science. I’m sorry to hear that you think this is in any way ‘not’ Misesian. I don’t see why; though. All statements I make regarding the use of empirics that’s in there are straight from Mises. Mises spends a great deal of time in those works explaining what’s the role of empirics in it’s work and I think I’ve given an good representation of it. Of course; I don’t want to be the standard bearer of my own writings, but if you have anything substantially to criticize; feel free to do so. I would however like to say that: please, do not make the mistake of thinking that Mises was just an a priori writer; who didn’t think the empirical world had no influence on his writings. Because it’s not and it’s to bad friends and foes have presented him like that. It is true that I allow for some Hayekian remarks - e.g. ‘Some argue that we can broaden this towards empirical generalizations, as long as the theory ‘makes sense’.’ - but the view I’m defending is always and has always been a Misesian one regarding praxeology. The only think I don’t agree with is that economic science is limited to praxeology - and that statements who aren’t a priori aren’t of economics. That’s a definition Mises gives which is a plausible one, but I don’t see any reason to exclude certain knowledge, just because of some definition. That’s the same criticism Mises had regarding falsification. That’s about the only digression I have, as far as I know. It doesn’t follow that I think praxeology is useless or anything; just that the body of knowledge that is created by praxeology is identical to the body of economics. But it really is foundational.

But all the points I’m making - qualitative economic laws, auxiliary assumptions, synthetic a priori, empirical observation as ‘giving’ you notions to work with, causal-realism, the relation between theory and history as the relation between applying and comprehending, empirical data must be ‘comprehended’, the use of ceteris paribus, … - are all Misesian points, imo. But again; if there is something unclear or un-Misesian to you; feel free to criticize. I’m only human. :slight_smile:

Thirdly; the debate in the OP wasn’t, indeed, solely about methodology, but I focused personally on that part.

In other words, AEs should be more like Hayek. Interestingly enough, I think most of what economists do (both Austrian and neoclassical) is apriori reasoning. Some call this “introspection”.

I agree, for all the hot air wasted on a priorism and praxeology, the methodology really isn’t too different, most economists do the same thing. Basically reasoning from a number of accepted principles to conclusions, the only difference is that most people do it using math and then subject their findings to rigorous empirical scrutiny, Austrians don’t.

first 100 chapters of HA

Long book, huh?

You wouldn’t say! :smiley:

Well; if that’s your final conclusion than, I’m afraid, you didn’t get the whole distinction between testing theories based on empirical data and comprehending empirical data by applying theories.

‘I think x causes y. I’ll figur out a method to test it. Do the test. And then see wether or not this holds.’

is not the same as

‘these theory is (apodictally) certain when certain conditions hold. Let’s see if those conditions where present some time in the past and thus try to proof wether or not the theory is applicable to understand that historical event.’

It’s definitely true that the third part is also done by economists of the mainstream. But that’s the only kind of empirical research that makes sense. The first one does not.