Hi everyone. I just found this forum and am soaking up all the great info.
I’m writing an article comparing Austrian economics with other schools of thought and want to make the most of my research. There are so many details out there. I am wondering if any of you could give your opinion on what basic points I need to focus to get the most out of my research.
My audience will be the average person, so I don’t want to get too detailed. I’ve heard a lot of praise for Austrian economics; I only have a few days to research and I want to make sure my article is not only accurate, but will also encourage other people to learn more about Austrian economics.
Summarily, the Austrian school is a heterodox school of economics focused on methodological individualism and marginalism. It focuses on realistic theoretical assumptions and stresses the importance of sound theory, eschewing excess mathematical modelling, regarding it as divorced from reality. Unlike most other schools, it has a well-developed theory of capital and entrepreneurship, and prefers treating the market process as a dynamic one rather than focusing on static models of equilibrium. Although its adherents believe in value-freedom, for the most part they are proponents of free markets.
Basically, the Austrian school doesn’t differ too much from neoclassicism in that it regards markets as the most efficient way to organize production and in that it is based off marginalism. Where it differs fundamentally is that it applies marginalism more consistently, even in its monetary theory, that it has substantial theories dealing with capital and entrepreneurship and of course its business cycle theory (best explained by Hulsmann.) It also tends to argue against the mainstream view of public goods and monopoly theory. These are the elements I would focus on. They help make it clearer why Austrians favour free markets, and are the main points of divergence from neoclassical theory. I’d leave out any discussions of methodological apriorism or mathematics (mainly because Austrians differ in their view of its use in economics), because they’re difficult philosophical notions that need substantial prior understanding to be comprehended.
From my very limited exposure, I still believe Inquisitor has given you an exquisite gist of Austrian economics emphasis. I feel forever fortunate that I was exposed to their George Mason U. Center for the Study of Marget Processes faculty back in the 80’s - after having had a couple of actual socialist-oriented undergrad Econ professors. Talk about opposite sides of the spectrum! The logic of von Mises and its other influential thinkers is such a breath of fresh air to the nonsensical, highly suspect notions espoused by central-planning type adherents (ie. Keynesian and leftward to Marx, etc.). Inquisitor touched on the heavily quantitative bent to economics nowadays - and I’d simply add that Austrian’s stick mostly within the arena of what’s called Microeconomics (ie. theory of the firm), and with much less confidence in any of the number-crunching and extrapolation processes that go into what’s deemed Macroeconomics ( a key term being the empirically observed choice called “revealed preference” in human action, rather than the Keynesian concoction of Aggregate Demand as a legitimate policy measurement and device). Best of luck!
Thank you for the great comments. However, in my research I seem to be coming up with philosophical or historical explanations of these economic theories.
What I’m really wanting to learn is how they relate to our actual economy…the effects each type of system would or do have, and how other countries might use other systems that do or do not work as well as ours. I’ve heard a lot of people talk about how The Economy is their biggest issue right now, but I’m not sure most really understand what that means. Are there certain policies of one school versus another that really warrant concern over our economic future? I’ve been listened to a lot of what Ron Paul has been saying about the economy, but I want to learn the details behind it all.
“I’m writing an article comparing Austrian economics with other schools of thought” right?
Could take the site’s free Quiz of 25 questions, and the experts we’ll give you a score of how closely they fit an Austrian view of Economics - and can go back and ask for their clarification (I only saw this myself today - awesome!)
I’d be sure and look at the public choice school as well. Austrians say that (through the economic calculation problem and the knowledge problem) government lacks the information to organize the economy, while public choicers focus on the incentives of government agents. Since the information needed are prices, and prices are themselves incentives, I believe its worthwhile to compare these two schools.
I would definitely write about the knowledge and calculation problems anyways. I’m not sure a lot of neoclassical and neokeynesians have really taken those arguments to heart.
Strictly speaking, isn’t public choice subsumed under the Chicagoans? It doesn’t matter really. it’s perhaps the closest ‘mainstream’ school of economics to Austrianism.
Sophia, I’d second TomG’s suggestion. The test contains enough information to summarize each school’s propositions and their intended effects.
Wow, didn’t really pay much attention to that average person line did you? I read this site 2 or 3 times a week at least and I have NO clue what that sentence means.
Not even with wikipedia? Methodological individualism just means studying the decisions and actions of individuals, which in turn lead to larger outcomes. It’s a way of studying how those outcomes come to be, as opposed to ignoring the element of the individual. Marginalism refers mainly to the marginal utility theory of value, on which value is the utility an agent would gain or lose if they consume one unit more or less (respectively) of a good or service (marginal goods or services are those satisfying the least urgent need of an individual, from their point of view.) It is coupled with the subjective theory of value.
Didn’t try wikipedia, but my point was that a layman should be able to easily follow the explanation. Anything uncommon in regular ole english should be spelled out, especially the terms more common to austrian economics than other branches. You know, for us moron types.
I actually had a dictionary and thesaurus on hand to look up all the words!
Wikipedia was somewhat helpful; that is where I started, but it wasn’t written in common terms I could easily understand.
My score came out to 85 with 6 Chicago, 1 “historical” answer, and the rest Austrian. However, in many cases, I felt my views lay somewhere in between Austrian and Chicago, eg I think education should be left primarily or entirely to the market, but I have no problem with government provision of basic infrastructure such as roads. I can see how you picked the Socialist answer for globalization, I really didn’t like any of the options very much.
Sophia, it’s possible to ‘dumb’ the terms down further than I did in my explanation to stolz, but in general, when speaking on economics, you have to be willing to do a brief introduction to the jargon. Some of the terms are difficult to introduce otherwise. Value is one of those topics - otherwise leave out marginalism, and just mention it holds that goods are valued subjectively. Methodological individualism is not so difficult to convey.