First make sure you understand what truths known a priori are. It has nothing to do with how they’re discovered. You’re taking the debate out of context, as most critics of the Austrian method do, without understanding the relevant terminology.
Mises did no such thing, since Menger was not “anti-empirical” (although he’d certainly be anti-positivist.) He termed his method empirical in fact, in the sense that economic concepts are derived from abstraction of essential features and connections of observable phenomena, i.e. in the Aristotelian sense based on induction. What Mises did is to convert this into the Kantian transcendental system, as well as to give Kantianism a realist feel. To understand Mises one must understand neo-Kantian realism, and understand that it has nothing to do with banishing facts (and thus economic history or econometric studies), but everything to do with banishing mere correlations as capable of sustaining theories in the realm of human action. Menger was also an empiricist; he was just not influenced by the nonsense that early Modern philosophers such as Hume came to be possessed by.
Clearly they care though, and so do those receiving the notes they pay out. The notes merely represent an amount of a given commodity in a bank. They’re not money themselves, but titles to the good in question. Gold is the medium of exchange, the notes are the titles to it. It is certainly not a case of “money backing money”, but of money backing the issuance of notes.
Feel free to describe a priori truths. I am not taking this debate out of context, but it is going on a tangent. I disagree on the gold standard and certain Austrian methodologies. This seems to cause a raucus among certain Austrains. Other than that I am aligned, especially with Rothbard’s political ideologies.
My rhetoric was out-of-line. I should not have used the words “anti-empiricist”. Menger’s methodology was Aristotelean realism and difficult to classify whether he was an empiricist or not (I would have to delve into Robbins more). His methodology did part from Millian empiricism even though they were both arguing a form of deductive a priori approach to economics.
Mises’s version of a proirism saw no room for empirical testing since all economic truths are formed from deductions. This is where I have some tensions. There is a lack of empirical papers based off of Austrian theory, and this stems back to an Austrian distaste of empirical testing. You won’t find this lack of empirical testing in the Chicago School. I don’t see anything wrong with empirical testing backing up theory.
I never brought BANKS into this argument. Money is money whether it is a 100 gold coins, a 100 dollar bills, or a 100 pokemon cards. The only thing you want to spend your money on is goods and services (i.e. gdp). It does matter if money is gold, dollars, or pokemon cards, as long as it is redeemable for goods and services (i.e. being backed up by gdp).
I don’t think testing in the positivist sense is at all conducive to the social sciences. The one regard in which I think empirical studies may play a role though is in retroactive controls over the axioms contained in the theories. It might be the case that an important axiom was left out, or was misspecified &c., and this should show up in the case of repeated absurdities, which is why I recommend reading Geoffrey A. Plauche and Barry Smith on methodology, as they offer a clearer account of the Austrian method, one which coincides with how Mises acted in practice, once one does away with the obscure Kantian method, and goes in the direction Rothbard wanted to take it.
I think you are talking about underdetermination, but I don’t know what you mean by “retroactive controls”.
The law of demand breaks down under empirical evidence, never mind the “axioms” of consumer theory.
It might be better if you sum it up and their reluctance to empirical testing. I also don’t know the authors of Plauche and Smith and their relevance to economic methodology.
Well then you had best ask for some papers of theirs. If you’re going to post on these boards, make sure you familiarize yourself with arguments on Austrian methodology. Their “relevance” to economic methodology consists in papers of theirs on the matter. Look them up in the reading list on praxeology, and begin reading. Mises and Hoppe lay down the arguments against positivist style testing in The Ultimate Foundation of the Economic Science and The Economic Science and the Austrian Method, respectively, and Martin Hollis advances the full case against positivism in Rational Economic Man. Of the three the former two are freely available online. Briefly, it is impossible to treat the economy as a laboratory, and it is impossible to treat human agents in the social sciences in the same manner as one treats various phenomena in the natural sciences. In the one case one is dealing with volitional agents, in the other with nothing but deterministic phenomena. Empirical generalizations in economics work for a while, but tend to break down. These are not genuine laws in any sense. To even know which aspects of action one is confronted with one needs a prior theory, so as to avoid the “refutation” of theories from phenomena which are not economic in any sense. And no, I’m not talking about underdetermination of the data - I am referring to taking something as axiomatic that is not an axiom, or alternatively missing an essential axiom altogether. If a theory’s explanatory power increasingly falters, it might be due to that.
I’m not really interested in neoclassical axioms, but I’d love to know how the law of demand “breaks down”, and how it can be known whether ceteris were imparibus, or not. Perhaps this will be a classic illustration of why so-called empirical testing has little to do with economic theory.
The rationalist/empiricist dichotomy is false and it would be a mistake to classify Aristotle as either a rationalist or an empiricist as these terms are understood according to the dichotomy. Similarly, with regard to Menger to the extent he was an Aristotelian.
I grow tired of this. Who the heck are you to tell me when I am qualified to post on these boards? I already proved that money is backed by gdp.
I would also recommend another thread for methodology since I am your only playmate.
Post links if they are that important. I find methodology important, but grow tire after awhile.
I have already dealt with this issue. If not, then no. I am aware of experimental economics.
When does the theory break down from the emprics?
The law of demand is genuine, even though it breaks down under empiricism. One of the earliest attempts to empirically the law of demand was in 1938 by Schutlz. He was trying to test the SLUTSKY symmetry conditions.
Your misunderstanding is becoming evident.
And…? The only person who brought up neoclassical economics like they did with banks was you.
And where did you do this, exactly? I honestly do not care if you “grow tired” of it, because others, as well as myself, grow tired of your continuous misunderstandings of and unwillingness to learn Austrian economics.
I hinted where you may find them - right on a reading list in this very subforum. It’s hardly too much effort to find their works in it. Nonetheless, here’s one of Smith’s shorter articles, and here is Plauche’s main article on methodology.
No, you haven’t.
The Phillips Curve is an example of the utter breakdown of a supposed correlation that was previously considered to be, one on which economic policy was heavily based on. Theories break down, on the other hand, when there are errors in deduction or in the formation of the concepts involved (i.e. the inductive part.) Repeated failure to explain a phenomenon might hint at such a problem.
Alright, now provide the details of this “refutation” by “empiricism” (you mean empirical testing.)
Yours exponentially more so.
I only mentioned banks because they typically function as issuers of notes, which has little to nothing to do with neoclassical economics in specific.
That argument arises from a very poor understand of…pretty much every concept at hand.
“Money” is not backed by gold, the “money” is the gold. The paper bill is just warehouse receipt, and has value only because it represents gold. If people were to use gold coins in lieu of paper notes, what would the coins be backed by? Nothing. Gold is as valueable as the amount of goods and services it can be exchanged for.
Because of this you can say that the price of gold is “backed” by the production of anyone who accepts gold as payment. But why do people accept gold as payment?
Paradoxically, gold is demanded as money because of its use as money. A person accepts it as payment because they anticipate others will as well.
In the past paper notes were sought after only because they were guaranteed to be convertible into gold, but today thats no longer true. But why paper notes are accepted is much easier to explain: People accept paper notes because they have to. The dollar is a fiat currency. Fiat does not mean unbacked, though fiat currencies often are; fiat means, by decree. The dollar bill is money because government violence makes it so.
The Dollar is fiat only to those under the control of the American Government(though that happens to be most of the world). People outside the US freely accept it because of its guaranteed convertibility within the US.
Which brings us to GDP. Expressing production in terms of its value in dollars makes as much sense as expressing production value in terms of gold. Obviously, how much a single ounce of gold will buy is dependent on how many other ounces of gold are circulating.
In conclusion, Fiat currencies are criminal and are backed by stolen loot. Free market money is the only moral option.
It’s too easy to fall into that mistaken concept since the governments of the world have spent pretty much all of human history attempting to disassociate money from the backing commodity so they could debase it at will for their own personal gain.
Then came the age of the Great Democracies and the move to devalue the currency for the ‘public good’.
Either way they have been successful in selling the idea to the public and the court economists that manage the economy. Only the crazy folks talk about specie or free market money anymore while the sophisticated people can spout off some equation that the common man doesn’t really understand as if it’s a known fact to show how specie is hazardous to small children and puppies…
Morality has long been left out of the neo-euclidean drive to formalize human action into an axiomatic system.
In related I mean by the ‘demand’ being people’s desire to not starve to death instead of refraining from purchasing a good as the price rises? Or hoarding in expectation of further price increases becoming a self fulfilling prophesy perhaps?
100 gold coins = 100 papers = 100 pokemon cards. Who cares what money is as long as it is redeemable, not easily replicable, and cannot be easily manipulated. I just want my money to buy goods and services?
This is the second time I recently caught you talking in a collective fashion. You also spoke “they”. Who is “they”? I don’t know. I would recommend losing your collective rhetoric, because it is not fashionable.
I also did not know that either yourself your Mises had a monopolistic understanding on Austrian economics. Therefore, I grow tired of your pretentious understanding understanding of Austrian economics. (I would not even classify you as an economists. You are more of a philosopher and a methodologist, albeit and intelligent one).
Don’t hint next time. Praxeology is a form of revealed preference theory, put forth by Samuelson. I understand that men must act in order to survive, but they do not always place their best thoughts forwards. People do not always know what is best for them in a given situation. I don’t buy into praxeology for the same reasons I don’t buy into the neo-classical axioms of revealed preference theory.
I’ll be happy to discuss these paper more with you.
Yes, I have.
To my recollection the SR PC model was based on empirical findings (I would have to dig deeper into history). Was it a theory first that fit empirical findings or was it empirical findings the supported a theory? I understand it breaks down. Your issue is with underdetermination, which we have repeatedly talked about.
As a side note, I also think Taylor models parrellels to PC models. Was it theory finding empiricisms or empiricism finding a theory.
I do mean empirical testing. I think there is some misunderstanding going on. What do you mean by “refutation by empiricism” versus “empirical testing”?
Markets create asymmetrical information. This asymmetry creates problems of an upwarding sloping demand curve, such as the market for used automobiles and wine. If your used automobile is not selling, then raise the price. The second most least expensive wine on the menu sells more than the first cheapest wine, despite its quality.
I have conducted experiments where people pay more for the second cookie than the first. The law of marginal utility breaks down. For example, if you are really hungry you will devour your first slice of pizza, but you are more likely to savor your second slice and “gain more satisfaction” based on the price your charge.
Yeah, that isn’t backing. That is its exchange value.
AC, Fred Furash and others here. I would recommend losing your attitude, because it’s not doing you any favours,
Pretentious? Asking you to actually familiarize yourself with the material is not “pretentious”, and it is irrelevant how you’d classify me given that you barely know enough about me to even begin.
What? Where does Mises say one knows what is best for them? It has next to nothing with this neoclassical concept. You must be confusing Rothbard’s writings on demonstrated preference for something that it isn’t.
Where?
It was a generalization that arose from an empirical correlation to my recollection. The point is that it was a flimsy basis for economic theory, given that the sort of correlations that can be observed in the natural sciences do not exist in the human sciences. My “issue” is not just with underdetermination, it has to do with whether the hypothetico-deductive method works at all within the human sciences.
Empiricism is a methodology, albeit a rather vague one, and one that has fallen out of fashion. So speaking of it refuting anything is odd in the extreme. Empirical testing is also possible within the context of rationalism, or indeed Aristotelianism.
You don’t see the relevance of banks functioning as issuers of banknotes which function as titles to the commodities they hold? What can I say…
Information is a scarce good unto itself according to Austrian theory. Hence the role of the entrepreneur to wade through the imperfect markets seeking arbitrage opportunities. Just because an arbitrage is lost because the seller gets new information (in this case that nobody will waste their time even looking at a suspiciously low priced car) doesn’t mean that anything is broken. All that really means is demand for crappy cars is low enough that there really isn’t a viable market for them so you need to move into a different market, the good used car market. Now if you really have a crappy car and manage to sell it on the good used car market then that wouldn’t really mean the market is broken but that you are a fraudulent seller in my opinion.
As to the wine, who knows how those people think…I stick with beer myself and am pretty irrational in my purchase decisions if one were to observe from the outside.
The real question would be if people would buy the second most expensive wine a second time if it turned out the price didn’t reflect its true quality in the subjective view of the buyers. Now you have some irrational market actors.
Prices are signals after all and people assume there were previous rational actors in the past that are the basis of the price today.
I would postulate that the first cookie and the second cookie are different goods or if it were a choice between only being able to buy one cookie at price X and two cookies at price Y then they are most certainly different goods.
In the first case you are reevaluating your value scale with the added information that you already consumed one cookie and are now bidding on a completely different good, a second cookie.
If it were the second case Rothbard explained this quite well in MES, groups of fungible goods can’t be treated the same as the mere sum of the individuals.
Yes, pareto inefficiencies may crop up here and there but that doesn’t mean the law of demand is bunk. It just provides the margins that entrepreneurs need to successfully operate in the big bad market.
You do know that I never asked for favors. If you or “others” have an issue with my “attitude”, then start a thread or address me PM. I am an antagonist. I do not know any other way to bring out the truth. I am civil.
Familiarize myself with your “theoryladeness”?
Let’s not make this personal.
I don’t know where Mises says that man places his best thought before other relevant thought, but that is my understand of Praxeology: Man placing is best thought before all others, so he can act in is “best thought”.
(Speaking about Mises vs. Rothbard. I am a natural rights theorists before utilitarian ideologies…and?)
What is your question again?
Beautiful!
Empiricism follws the scientific method. How is it following out of fashion.
It’s no wonder that the discussion before led nowhere. No, money backs nothing indeed. It’s a good with exchange value. What was being discussed was whether GDP backs money, i.e. whether the banks have been given the nation’s GDP in exchange for notes, which they must hand over in the event of someone demanding redemption for one of their banknotes. You’re confusing exchange value with backing.
I’m not sure how that is conducive to bringing out the truth as opposed to merely irritating fellow discussants.
I am familiar with it already. It’s interesting as an argument against pure positivism.
No, and I think this is why you’re confusing the neoclassical conception of the law of demand with the Austrian one, which is based on Menger’s exposition of marginal utility. Samuelson’s ideas on revealed preference have little to nothing to do with Mises’s action axiom. Mises maintained that man will always act to substitute a less satisfactory state of existence for a more satisfactory state (or at any rate to avert a worsening of his conditions.) He will choose the means which in his view can attain this. Rothbard reformulated it somewhat. As for revealed preference, look it up here.
Yes, although there are various interpretations of Mises’s ethical positions. Mises was a neo-Kantian, Rothbard an Aristotelian. That is the source of many of their differences.
Go back through the discussion and see.
You mentioned theory-ladenness. Are you aware that this is one of the primary reasons that empiricism in its purest forms is no longer fashionable? Or falsificationism or positivism. One of many reasons of course. It’s long fallen into disrepute. Modern science is based more on instrumentalism and pragmatism than anything else. As a conceptual point, empiricism cannot follow any method - it is the method in question, or at least the underlying basis of it.
Then why pick out that statement? It was peripheral to my entire point.