Claudius,
Rejecting Phillips’ Curve is not the same as “shooting down” Keynesianism. This is evident by what I said earlier, about the fact that even Neoclassical models are based on principles largely established by Keynes and his interpreters.
The policy prescriptions of Real Business Cycle Theory (neoclassical school of macroeconomics which grew out of Robert Lucas’ rational expectations) is the diametric opposite of what Keynes prescribed. Have you ever heard of saltwater vs. freshwater?
“Taxes = Demand for Money”\
Shouldn’t this read, “taxes=demand for legal tender”?
The policy prescriptions of Real Business Cycle Theory sound good, basically govt stays out of the way. Too bad it reached the right conclusion from the wrong assumptions.
It’s sorta like this:
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2 plus 2=5
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Add your age.
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Therefore, laissez faire is the right response.
I think Austrian economics appeals to the economically illiterate because it’s not a rigorous science. Its outright rejection of empirical evidence, refusal to make use of econometric and statistical methods, and lack of mathematical formalization allows anyone with a moving pie hole to join in the debate.
This is more than just being a dick, this is obvious trolling.
That debate is actually rather trivial from the Austrian perspective. It consisted of essentially various branches of the same general school of thought quibbling over minor issues (such as interest-rate targeting vs money-supply targeting, and the effectiveness of monetary policy vs the effectiveness of fiscal policy, etc). Some Austrians don’t even see a big difference between Friedman and Keynes (except when it came to monetary theory, of course, but their general frameworks were essentially identical).
Both sides employed the income-expenditure model, adhered to what Hayek called the “mythological” notion of capital (a self-replenishing “fund” consisting of perfectly homogenous, complementary and substitutable capital goods, which merely “expands”), focus exclusively on the roll of fixed capital (durable goods), assume that the demand for capital goods varies in the same direction as the demand for consumer’s goods, etc.
Also, Austrians use the term “Keynesian” in the most general sense possible, namely referring to those that hold certain assumptions (some of which I’ve mentioned already above). This includes Keynes, Neo Keynesians, New Keynesians, supply-siders, and possibly monetarists.
And EconomistInTraining goes missing…
That’s his modus operandi; debate and ridicule opponents, disappear like smoke in the wind whenever any of his statements are seriously questioned. He’s done this before in other threads when debating people like Esuric and liberty student.
Also, Austrians use the term “Keynesian” in the most general sense possible, namely referring to those that hold certain assumptions (some of which I’ve mentioned already above).
Not just Austrians, but some Keynesians themselves. Garrison’s interpretation of Friedman as a “Keynesian” is actually heavily based on Axel Leijunhufvud’s “Keynes and the Keynesians: A Suggested Interpretation”, where he writes,
One must be careful in applying the epithet “Keynesian” nowadays. I propose to use it in the broadest possible sense and let “Keynesian economics” be synonymous with the “majority school” macroeconomics which has evolved out of the debates triggered by Keynes’s General Theory (GT).
I’d like all of the elusive commentators that pop up here frequently with hit and run posts about math to start giving their background. Mine: I won an award for the highest math score in my county and generally pretty much aced math all through school (random calculation errors and all that) while skipping grades. “Wild” guess: they are all Joe Average. (Minus sarcasm: I guarantee they are internet posers.)
I was first in my class at Princeton, I have an I.Q. of a hundred and eighty-seven, and it’s been suggested that Stephen Hawking stole his Brief History of Time…from my fourth grade paper.
You know I was kind of going to respond in this thread in your favour, because as I’ve said before, I do think it would do much good if Austrians who are interested in serious intellectual debate read neoclassical economists and their textbooks more seriously. But this kind of bull you’ve just cited annoys me to no end.
Theories in the natural sciences are built from hypotheses, or more precisely hypothetical propositions used from whom consequences are traced, and when these predictions do not accord with observation they are falsified, but not proven true, since false premises can yield true conclusions. The entire point of this methodology is to refute hypothetical premises concluded to be false. This has NOTHING to do with modelling, which simply refers to the practical application of physical laws in certain scenarios, reasoning as to what factors we can ignore and to what approximation. “Modelling” NOTHING to do with the discovery of physical laws, if you want to emulate the natural sciences then you should perhaps learn the entire point of their methodology, and certainly not mistake empirical corroboration of conclusions of false premises as somehow corrobrating your “theory” built from a tissue of fallacies.
I support that arguement askebabs.
And so modest! (I kid, I kid).
But it seriously baffles me that these people expect to intimidate us with their ability to solve “complex” DSGE equations. They way they throw out these terms makes it sound like they’re a concept they spent three minutes reading on Wikipedia, declared themselves masters of the subject, and then decided to throw it in our faces as some sort of blot against out intelligence. I’m by no means savvy in economics, seeing as its a subject that I’ve only had time to study off and on for the past year, but even I can see through this facade.
I have not read the alternatives. I received basic mainstream economic education up to the end of high school. They taught me about the business cycle etc. I have no interest in reading up on mainstream intricate mathematical models of macroeconomics because i get my economic education from youtube videos (joke). But there are definitely more mainstream economists that have never heard of Austrian economics, than there are Austrian economists who have never had the privilege of being educated in mainstream economics. I would be willing to read some good books on what would be considered mainstream economics if you could suggest some, but as time is short and there are so many good books that i have still yet to study from the Austrian school. It is unlikely that I will spend too much time on them, if i did it would probably only give me a better way to convince mainstream economists to become Austrian economists.
I plan on finishing MES +HA and some other core works before moving on and read some more mainstream stuff. I don’t see any difference between this and starting with the mainstream stuff and reading austrians later, and it is certaintly less dogmatic than ignoring the austrian school entirely.
Its good to read the alternatives, after a point you will become a better economist not by reading more Austrian works but by reading more Neoclassical works (since you will better understand Austrian critiques about them, become more knowledgeable about mainstream economics, and sharpen your critical thinking skills). You don’t necessarily have to read JMK’s GT to critique Keynesianism, a much better book to read would be a modern macroeconomics textbook (such as one by Mankiw etc).
abskebabs, I knew if I was going to try to get that shit past you it wouldn’t fly haha! I’m not going to argue about the natural sciencies with you, but I do think that when you say this:
his has NOTHING to do with modelling, which simply refers to the practical application of physical laws in certain scenarios, reasoning as to what factors we can ignore and to what approximation.
That sounds a lot like what goes on in economics, economists will try to find a simplified model of economic phenomena and put it against the data to find out what forces are the most important etc. But maybe I’m not getting what goes on in the natural sciences. Of course, I’m not sure there are too many (if any) laws in economics (diminishing marginal utility/ marginal returns?) at least not as I understand them in the natural sciences.
As to the rest of you, I dissapeared cause my professors wouldn’t let me get a grade for posting here! That and I had birthday celebrating to do, I’ll get back to all of you soon enough.
Happy belated birthday btw!(if it was yours)
It’s strange in a sense, sometimes I feel like we’re all arguing past each other. If what you’ve described as the goal of economic modelling were to be understood and confined to that description, then it would not constitute economic theory but an empirical branch/attempt to do economic history. For instance in accord with Menger’s goods theory you’d use it to carry out statistical analysis to check the effects of changes in prices of fairly specific complementary factors on each other’s prices in particular historical situations(Menger cites the stop of cotton imports following the American civl war as a good example, considering its effects on the prices of complementary factors in cotton goods industries and the wages of associated specific labour). In short you’d use it to do what praxeology alone cannot do, to give you a clue as to “how much” as well as the “what.” But if you think you’re going to use real R squared values to “test” the fact that the goods value of 2nd order goods specific to producing bread don’tl exist when you lack one of the complementary factors, e.g. flour, then you are nothing more than severely mistaken to the point of absurdity.
But just as the models of engineering don’t “test” the laws of physics they apply, neither would economic models “test” economic laws(especially if they are built from assumptions already known to be categorically false, in which they would be little more than vain mental masturbation). You are probably right that what can be said by pure economic theory is limited without an understanding of history. I don’t think anybody would dispute that. This doesn’t make it not a worthwhile endeavour however, and neither would history supercede economic theory as so many seem to have misunderstood since Menger started the Methodenstreit.
I came upon mises.org only as an accident of looking for something in a subject that was until then entirely mysterious to me. After that I began paying attention to commentary by economists in the media. After hearing a painful amount what the typical, representative economist has to say on various matters I lost all interest in the “alternatives”. It’s a good thing that I did not listen to economists before I studied AE. Otherwise, I would most likely have shut myself off to the subject before learning anything about it.