Interesting response in a thread on Austrian Economics

Economics Economics Questions
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1

It seems I’ve riled up the folks at SFN enough for them to make a thread discussing Austrian Economics, and I presume, why it is wrong.

http://www.scienceforums.net/forum/showthread.php?p=522723#post522723

I made my one and only a post on the thread, though I got the following response I find highly interesting:

"…and it’s disadvantage is it’s over-reliance on metaphysics. “Actors” are metaphysical beings, separate from their bodies. They are unified, rational minds. From here are its axioms derived, and conclusions are reasoned to rather than tested. It throws up its hands in despair at the thought of supposedly impossible empiricism, instead relying on statements like “you can’t imagine it otherwise,” the ultimate refrain of the unimaginative and wrong dogmatists since the beginning of philosophy, from geocentrists to medieval theologians to deniers of quantum mechanics.

What a human actually is, as far as empirical science can tell us, is a complicated mass of organic molecules, a product of biological evolution mindlessly and persistently sifting towards ever-more complex reproductive strategies. Consciousness is an emergent phenomenon, but no consistent rules govern its behavior, and in fact the very notion of a “being” as a unified whole appears to be largely illusory. It is no more bound to obey the axioms of Cartesian dualistic metaphysics than a soda machine.

That’s not to say that nothing can be known at all about how humans tend to behave, just that it can’t be reasoned to, at least not with sufficient accuracy. Empirical psychology and neuroscience, though still far from perfected disciplines, offer the most promising windows into human - and thus economic - behavior, yet these things are apparently rejected by the Austrian school, or simply not considered, their basis contradictory to what has already been decided cannot be otherwise."

Aside from the author’s inabillty to separate what follows from the structure of human action(Praxeology), from what explanations we can categorise for them to act in a certain way(Psychology), is he wilfully denying the purposefulness of his own behaviour? Is there no way we can establish whether his response is anything more than the complex consequences of a bubbling soda machine?

Are there any other contradictions, or am I just hopping around nothing? Do you think he makes any good points/criticisms?

I think when push comes to shove, I’ve found many of the participants at Science Forums are essentially historicists with their outlook to theoretical economics and “establishment knows better” interventionists with regard to policy.

I really need to get back to my work and stop this forum thread addiction!

2

He misconstrues what kind of science economics is. It is not interested in humans as physiological or psychological beings, but as acting beings. In that sense, economics applies to any kind of acting being, human or not. The same is true for mathematics or computer science. Computer science does not ask whether a computer is a circuit board or a human writing on paper. The rules unfold as they unfold regardless of the nature of the computer. If the rules are violated, the laws break down regardless of the nature of the computer.

What he calls a disadvantage, a reliance on metaphysics, is the entire point.

3

Yes. Science will one day solve the subjective value debate.

Except we’ve predicted virtually every depression. It should also be pointed out that Austrians are avid historians; Rothbard’s Great Depression… the modern works of Roderick T Long and TJ Lorenzo. These guys are excellent, excellent historians. Austrians dont sit around developing praxeology, they go do research debunking the myths of keynesian hacks.

The only reason other schools do not draw criticism of armchair theorizing is that they try stepping into the realm of engineering and utterly fail.

And yet the Austrian approximation is so far the most accurate.

Big point: Science is believed to be true because it allows us to predict things in the real world. If Austrianism can do the same, shouldn’t it be considered true until something better comes along? Shift the debate from methodology to outcome. He’s basically right that if we knew every molecule’s quantum state we could predict the future of the universe. But until we have a computer made of more atoms than there are atoms in the universe, we’ll have to rely on approximations. This said, Austrian theory will no doubt evolve in its usefulness and certainty. Perhaps instead of badmouthing the most successful school of economics, he ought to try to see its positive aspects and add to it wherever he can.

4

I think this may help in discussing human behavior and economics.

Thymology

5

It’s a pity, nothing he said here contradicts Austrian econ and in fact nowhere does Mises claim it is based on assumptions of dualism (rather, he says it sidesteps the whole debate.) Regarding the soda machine, I didn’t know those had consciousness. Oh wait. They don’t. We may know very little about consciousness from a psychological/biological perspective, but erm, so what? Economics seeks to explain purposive behaviour given that the concepts it treats of stem from it. If it is ‘illusory’ (demand hard evidence, not metaphysical speculation on part of ‘philosophers’ and ‘scientists’) it makes no difference because the illusion cannot be broken so in the end we just go on acting in the real world anyway. Talk about insubstantial, ethereal blather. Can he actually come up with an original, not-wrong point? This:

is a very common rhetorical trick substituted for an argument. None of the bolded bits are assumed by any Misesian (though some may or may not hold these positions.) It starts from the fact of purposive behaviour. Not from any Cartesian assumptions. Nor does it ‘despair’ at the thought of empiricism, rather it argues against the use of the hypothetico-deductive methodology in regards to the social sciences, often labelled as ‘empiricism’. Send this person Long’s book on Wittgenstein (the pdf that is) if they want to get a grasp of praxeology as opposed to regurgitating trite nonsense.

6

I just sent him the pdf link. I want to thank you guys for the responses. I think sometimes you have objections to something and know that it’s wrong but fumble around for answers, your responses really helped clarify something I got a bit muddled with, plus I loved the analogy with computer code and Turing machines.

7

Just think about it this way: a robot washing up on a deserted island is bound by the same laws of economics as Robinson Crusoe.

8

I just saw another hilarious reply, I think referring to Lilburne’s 4th comic, this time defending Keynesian Economics:

"Not to nitpick, but the Keynesian Money Supply stimulation analogy is pretty heavily flawed. When you increase money supply and give it to people who will spend it quickly you aren’t “faking them out” but are taking little pieces of each person’s dollar in the economy, putting together to make whole dollars, and giving them to those who will stimulate the economy.

Consider this scenario:

There are 10,000 shares in a company, all of which are owned and no one wants to sell any of them. The company is in trouble, but they can bring in help who will make the company more profitable so they survive the rough patch - only problem is that person wants 1,000 shares, and no one will give them up.
However, they could agree to print 1,000 more shares, which make every share worth somewhat less, but would slice an equal amount of value off every share out there without any physical redistribution. The person may reject the offer of 1,000 shares, since they were asking for 10 percent of shares - not an arbitrary magic number, at which point they’d have to print 1,111 total shares so the old share holders don’t give a single one up yet the newcomer gets 10% of total shares.

That way the whole mess of trying to have someone who owns one share ending up with a fractional share is avoided. Everyone suffers a 10% loss, but the reason is to get something more for that 10% or at least stop the value from plummeting more than 10%.

Personally I think the idea of increasing money supply is a poor tactic at best and really just a form of triage - and all together unfit to solve chronic conditions. However, taxes that result in a redistribution of wealth for trickle-up economics can do the same thing without increasing the money supply."

I have my own ideas as to why this is totally worthless, what do you guys think?

9

That would be called fraud. Unless the contract specifically stated the company could do it or the shareholders all agreed to it.