It’s easy to see that Austrians don’t belong to the demand-siders. But how about the supply-side? ABCt, for example, focuses totally on the supply (malinvestments, production structure, etc). Is it fair to say that the Austrian School belongs to the supply-side?
no, its not fair. and neither is economics split into two sides.
I think that although there is a much deeper affinity between supply-siders and the Austrian school, writing it off as just another variation on supply-side economics would be unwarranted.
Supply-siders and demand-siders alike treat the capital structure as being homogenous, while Austrians see it as being heterogenous. Big difference.
Thanks for your answers. And where exactly do you see the biggest differences between Supply-Siders and Austrians?
methodology
and from Rothbard;
There has also been a fervent revival of the old left-Keynesian idea that “deficits don’t matter, anyway.” Deficits are stimulating, we can “grow ourselves out of deficits,” etc. The most interesting, though predictable, twist was that of the supply-siders, who, led by Professor Arthur Laffer and his famous “curve,” had promised that if income tax rates were cut, investment and production would be so stimulated that a fall in tax rates would increase tax revenue and balance the budget. When the budget was most emphatically not balanced, and deficits instead got worse, the supply-siders threw Laffer overboard as the scapegoat, claiming that Laffer was an extremist, and the only propounder of his famous curve. The supply-siders then retreated to their current, fall-back position, which is quite frankly Keynesian; namely deficits don’t matter anyway, so let’s have cheap money and deficits; relax and enjoy them. About the only Keynesian phrase we have notheard yet from Reaganomists is that the national debt “doesn’t matter because we owe it to ourselves,” and I am waiting for some supply-sider to adopt this famous 1930s phrase of Abba Lerner without, of course, bothering about attribution.
No, the Austrians aren’t supply-siders at all. Supply-side economics focuses on creating good incentives via tax cuts and the like. The Austrian school, in contrast, is a general study of economics.
Austrian Econ stands on its own side. It focuses on the whole of trade-action, not just one part. It is an holistic view.
Supply-side economics is not an approach to the study of economics, it is a set of policy recommendations, based firmly on Keynesian analysis, that is intended to “favor the supply side of the equation.” Austrian economics is an approach to economic analysis, and on our approach, there is no such thing as favoring one side of a transaction.
For Austrians, the supply side is the demand side dressed up. Supply curves are just older demand curves.