“Your first quoted sentence says that Friedman acknowledges that “money in the short term is not neutral,” but in the second sentence you say “they disregard this.” How can both be true?”
Is it so hard to believe that a human being can be inconsistent? Or that he can err and make a set of correct assumptions for one particular problem, which he believes (falsely) can be eliminated or disregarded in another?
Look at what you wrote in the original statement. You had Monetarists in the parentheses as part of those that don’t agree with you.
Quoting Brian Snowdon and Howard R. Vane, The well-establiushed positive association between money and aggregate output may simply indicate that the money supply is responding to economic activity rather than the reverse. In such a situation money is endogenous and the money-to-output correlations that we observe are evidence of reverse causation; that is, expectations of future output expansion lead to current increases in the money supply. According to real business cycle theories, the demand for money expands during business expansions and elicits an accommodating response from the money supply, especially if the monetary authorities are targeting interest rates. The impetus to downgrade the causal role of money was also given support from the evidence emerging from vector autoregression analysis which indicated that, once interest rates were included among the variables in the estimated system, money ceased to have strong predictive power.
I stated, “Some, like me, have a suspicion that it is neutral in the short-term, but others disagree (monetarists, New-Keynesians, etc.).”
That means, unlike my (very weak, but working assumption) that money is neutral in the short-term, monetarists disagree and believe money is non-neutral in the short-term, just like Austrians.
Like many here perhaps, I was a libertarian first, probably for moralistic reasons, and then started dabbling in the economics. You immediately get pulled into the wealth of libertarian literature produced by Austrian thinkers (e.g., Hoppe, Rothbard, Rockwell, etc.)–and, let’s face it, the LvMI produces so much free material that it’s hard not to get a strong Austrian impression of economics.
But I, philosophically, always had strong empirico-verificationist leanings. That had, for many years, been the epistemological outcome of serious philosophical inquiry. I could never stomach the Austrian methodology; I mean, I can mathematically formalize natural selection from a concept of “replicator,” but that doesn’t mean I consider evolutionary science a priori.
Eventually, I started reading price theory from a neoclassical perspective, and I knew I had discovered a more reasonable methodology with much better, much more vast, results. Plus, these thinkers tend to conform to my other beliefs, as well, like consequentialism (e.g., I can’t believe anyone seriously believes in “natural rights” like Rothbard).
First of all: Hoppe nor Rockwell are really (new) Austrian thinkers in any sense of the word. Hoppe is a philosopher first, who also writes on economics. Rockwell does awesome work with the Mises Institute, but it’s not like Rockwell (nor Hoppe for that matter) really get published in academic journals, or making any ‘new’ contributions in Austrian economics. If you want to know the ‘new’ stuff: Garrison, Salerno, Boettke, White, Hulsmann, Herbener, …
Second of all: ‘verificiation’ is useless without a theory; a theory that has to make sense. Roderick Long’s paper on Mises versus Friedman on method is really good on that part.
‘Natural rights’ and ‘consequentialism’ are mutually reinforcing; but you can’t have one without the other. Without natural rights, you really can’t give a critique on government without the concept of morality incorporated. Again: Roderik Long is the man you need.
D’uh. I was giving an autobiographic sketch, offering a list of the thinkers most people are first exposed to. For the record, I like Boudreaux and de Soto best.
So? Data, to become information, must have a theory imposed upon it. I fail to see what point you were making.
I critique government without the concept of morality all the time. Give it a try; it’s called cost-benefit analysis.
Neoclassical theorists (Gorman, Sonnenschien, Mantel, Debreu, Shafer…) set selves the problem:
- “Under what conditions will a market demand curve obey all the properties of an individual demand curve?”
- Market demand curves obey the Law of Demand (be downward sloping) if …
- There is only one consumer; and
- There is only one commodity!
- Therefore: market demand curves can have any shape at all
- -
- -
Shafer & Sonnenschein (Handbook of Mathematical Economics Vol II, 1982: pp. 671-2)
“… market demand functions need not satisfy in any way the classical restrictions which characterize consumer demand functions…
“Unfortunately … the aggregate demand function will in general possess no interesting properties … The neoclassical theory of the consumer places no restrictions on aggregate behaviour in general.” (Varian 1992)
The edifice of Austrian economics is founded much more upon Mises’ work than Rothbard’s. And liberty student is correct about Mises not being a proponent of natural rights. In fact, he was one of its most eloquent critics. As Rothbard wrote that, “In several chapters on “value”, Mises offers a virtually running attack on the concept of natural law…” and of Mises’ “consistently harsh hostility to the concept of natural law…”