OK, this will take a while, but I’ll begin at least. My comments in bold. We’ll begin at the beginning, with Chapter one of that site:
Summary
The Austrian School of Economics is a tiny group
Is the size of the group an indication of how wrong they are? Let’s ask our good friends at cracked.com, who provide us with
5 Famous Scientists Dismissed as Morons in Their Time
The size of the group that believed one should wash ones hands between touching dead bodies and delivering babies was one. Great read, with 4 more examples. And it’s just a drop in the bucket. There are many cases of the small group being right.
of libertarians at war
At war? What kind of language is that?
with mainstream economics. They reject even the scientific method that mainstream economists use,
Mainstream economists do not use the scientific method. Let’s listen to Nobel Prize winner [in physics] Richard Feynman:
The principle of science, the definition, almost, is the following: The test of
all knowledge is experiment. Experiment is the sole judge of scientific “truth.”
So mainstream economists sit in some laboratory all day, experimenting? Don’t make me laugh.
Not only that, as the great Austrains have pointed out, it is impossible to conduct and experiment in economics. Here’s our man Mises laying down some truth:
. But the experience to which the natural sciences [=physics]
owe all their success is the experience of the experiment in which
the individual elements of change can be observed in isolation. The
facts amassed in this way can be used for induction, a peculiar proce-
dure of inference which has given pragmatic evidence of its ex-
pediency, although its satisfactory epistemological characterization
is still an unsolved problem.
The experience with which the sciences of human action [=economics] have
to deal is always an experience of complex phenomena. No laboratory
experiments can be performed with regard to human action. We are
never in a position to observe the change in one element only, all
other conditions of the event being equal to a case in which the
element concerned did not change.
Put simply, you can do an experiment in physics by taking two situations, identical except for one thing, and see what happens.
For instance. You can drop the same ball [more or less] from the same leaning tower of Pisa on the same day at the same time with the same wind conditions, same everything, but do it from different heights. That will teach you something about the effect of height as applied to dropped balls. Newton did this sort of thing by sitting under apple trees.
But you cannot conduct an economics experiment at all. If we want to know what the effect of a minimum wage law is, can we produce two identical cities with identical economies, at the same time, impose a minimum wage law on one and not on the other, and see what happens?
Is this guy saying he does that constantly? That he uses the scientific method?
preferring to use instead a pre-scientific approach that shuns real-world data
Shuns real world data? What? Has this guy ever read America’s Great Depression? Full of real world data.
But there is a sense in which he is right. Austrians claim that economic data cannot teach you anything. It is too complex. How do you know what numbers are even relevant? How do you know what the connection is between the various numbers you collect? [Plus, many times the data is impossible to know. Once the govt stopped giving out the numbers for M3, we have no way of knowing.] You need a theory first, and then you can examine the data to see if it fits the theory, meaning doesn’t contradict the theory .
Mises again:
Historical experience as an ex-
perience of complex phenomena does not provide us with facts in the
sense in which the natural sciences employ this term to signify isolated
evcnts tcsted in experiments. The information conveyed by historical
experience cannot be used as building material for the construction of
theories and the prediction of future events. Every historical experi-
ence is open to various interpretations, and is in fact interpreted in
different ways.
The postulates of positivism and kindred schools of tnetaphysics are
therefore illusory. It is impossible to reform thc sciences of human
action according to the pattern of physics and the other natural
scicnccs. There is no means to establish an a posteriori theory of
human conduct and social events. History can neither prove nor
disprove any general statement in the manner in which the natural
sciences accept or reject a hypothesis on the ground of laboratory
experiments. Neither experimental verification nor experimental falsi-
fication of a general proposition are possible in this field.
and is based purely on logical assumptions.
Prof. Feynman again:
You might ask why we cannot teach physics by just giving the basic laws on
page one and then showing how they work in all possible circumstances, as we do
in Euclidean geometry, where we state the axioms and then make all sorts of de-
ductions. (So, not satisfied to learn physics in four years, you want to learn it in
four minutes?) We cannot do it in this way for two reasons. First, we do not yet
know all the basic laws: there is an expanding frontier of ignorance. Second, the
correct statement of the laws of physics involves some very unfamiliar ideas
which require advanced mathematics for their description.
Notice what he is saying here. That in an ideal world, physics would be taught like Euclid’s Geometry. The axioms would be stated, the deuctions drawn from them. This Nobel Prize winner thinks this would be the best way to teach physics, if possible. The very way our critic here dismisses as “pre scientific” and “based on logical assumptions” [horrors]. Of course to be fair, maybe his beef is that AE is based “purely” on logical assumptions. But as we have indicated, in economics, that’s all we’ve got.
But this is the very method that thousands of religions use when they argue their opposing beliefs, and the fact that the world has thousands of religions proves the fallibility of this approach.
This is wrong in so many ways. Factually, for instance.
And of course it is also mathematically impossible. If there were a mere two thousand religions, each of whom wrote just one book arguing why each of the others is wrong, we would have 2000! [=2000x1999x1998x1997…x3x2x1] books, an impossible number to even write down.
But I’d like to see even ONE book like that. Purely logical arguments to validate ones religion? I claim no such book exists, for any religion.
But the key arguments are, first of all, tell that to Euclid. Sorry Euclid. You blew it. Your Geometry is all wrong, because thousands of religions do what you do. Man are you fallible.
Second of all, even granting that there are all those religious works, so what? Logic is all we have. It is the great gift the human race has recieved, and it’s all we’ve got. If those assumed religious works claim to reach a thousand different conclusions, all by pure logic, then 999 of them are wrong, and it is our job, if we are interested, to go through the books and find their logical fallacies. Sorry, Charlie, it’s all mankind has. Logic. That’s how we think.
It is absurd to say logic is fallible. It is illogic that is fallible.
Academia has generally ignored the Austrian School,
Because Academia is funded by somebody who HATES everything AE stands for. Things like free enterprise, small govt, no meddling in the economy, no unions backed by violence, no tarrifs, no money printing, no central bank, no govt subsidies. Can you guess who that someone is? HInt? He has tons of money and hates hearing that govt should be as powerless as possible. Yes, it’s Mr Government.
and the only reason it continues to exist is because it is financed by wealthy business donors on the far right.
The only reason aminstream economics continues to exist is because it is financed by govt.
But really, since when is the correctness of an idea judged by who is funding it? It should be judged by its merits. Or is that too logical?
The movement does not exist on its own scholarly merits.
What does this even mean? Of course it exists on its scholarly merits. What else convinces people, brainwashed from cradle to grave that mainstream economics is right, to embrace AE?
OK, that takes care of the summary. Hopefully there will be more on the other chapters.