De Soto his ‘The Austrian School’ (http://www.iea.org.uk/files/upld-book515pdf?.pdf) tackles some of the question. I would, however, argue that it’s a semi-straw man. But it’s still useful to take a look at it.
Incorrect, they explicitly use cardinal utility when it comes to inter-temporal choice.
Esuric, this is a great list. Do you mind if I post it in the Mises blog?
Grayson that would be great if you did like a primer or comparison someday!
It’s wrong…
EconomistInTraining, of course I already know you think that!
OK, just as a side note, what’s your take on the use of game theory in economics?
I haven’t looked into it enough to have a fully developed stance yet. So far it’s a mixed bag. The general thrust of Carilli’s and Dempster’s application of the prisoner’s dilemma to the ABCT makes perfect sense to me. But to the extent that game theory models human actors as probablility calculators, it seems to be way off.
And this statement is based on what?
Check Barnett’s paper on the topic, or Murphy’s guide.
I cite them in the thread:
I’m sure you have ever constructed an indifference curve, i.e. two bundles of goods are valued exactly the same. Ordinal ranking would mean that such a thing is impossible, i.e. there is an ordinal ranking… cardinal ranking, however, allows to put them on the same spot.
I don’t see how you can have ordinal value theory and having 2 things ‘at the same spot’; that defeats the whole concept of ordinal ranking.
Solidarity win
I’m sure that list would be improved further if he had known it could be posted.
I don’t see in that list for the neoclassical/mainstream - lack of a theory of entrepreneurship, as well as the static nature of capital vs the Austrian time and sequential nature of capital (in addition to heterogeneous as already mentioned). Those are two BIG ones that any list that lacked them would simply do injustice. He may have implied those but it’s definitely not explicitly clear.
Neoclassicals also don’t have any systematic economic analysis of government intervention except for the basic minima/maxima price controls
That’s very true and has to be explicitly mentioned DD5, and I think it could also be explictly stated that the neoclassicals like to state externalities -either positive or negative and this admits that utilities can be calculated and compared. Also, whereas austrians focus on choice, neoclassicals focus on things like the constant preference assumption -all to the detriment of the idea of price changes which is predicated on changing preferences.
Does the Marshallian-scissors, “real costs” doctrine still play a large role in neoclassical economics?
No, I don’t mind, but it’s just a list. I didn’t really explain the differences in detail.
I haven’t looked into it enough to have a fully developed stance yet. So far it’s a mixed bag. The general thrust of Carilli’s and Dempster’s application of the prisoner’s dilemma to the ABCT makes perfect sense to me. But to the extent that game theory models human actors as probablility calculators, it seems to be way off.
Grayson, it’s well recognised that as a normative model of how perfectly rational agents should act game theory does quite well, however, as an empirical matter the models often have a poor fit to reality. Empirical work and lab experiments have generally found many examples where cash motivated agents act less than perfectly rational (although, there have been other examples where agents have acted in accordance with game theoretic analysis, see Minimax Play at Wimbledon). But if you ask me, this is exactly what economics is about, finding discrepancies between theory and reality and trying to improve our models of reality.
Well, I’ve not ready any of the work in question, but via Wikipedia
So saying that there’s no room for entrepreneurship in the mainstream models isn’t strictly true, perhaps you might have problems with Baumol’s work in particular but saying that nobody is doing this work is plain false.
And this is just plain false…
You seem to be denying any room for indifference at all, which seems to me to be a seriously untenable position. All the more so as Robert Nozick has shown that indifference is key to the Austrian conception of “a good”.
Your observation is wrong. I’ve defended Nozick use of the word ‘indifference’ in Austrian Economics. This particular kind, however, doesn’t rest on cardinal utility; nor does it imply equalness in value, as Hoppe has showed. Indifference, in the Nozickean sense, is what an Austrian calls substitutability, which is sort of a kind of indifference. The discussion really is just semantics. The moment a person acts, however, he proves that there is no equality.
This, however, cannot be compared to mainstream indifference curves; which say that two bundles of goods have the same amount of utility as such. There is no such thing as 2 items under evaluation being at the same spot in the value scale.
That’s very true and has to be explicitly mentioned DD5, and I think it could also be explictly stated that the neoclassicals like to state externalities -either positive or negative and this admits that utilities can be calculated and compared
Who admits that utilities can be calculated and compared? The fact that people admit this can’t be done is what leads to the use of tools such as “willingness to pay” which can be calculated, or at the very least approximated.
Also, whereas austrians focus on choice, neoclassicals focus on things like the constant preference assumption -all to the detriment of the idea of price changes which is predicated on changing preferences.
Both Austrians and the mainstream focus on choice, optimal choice given certain constraints. There’s no difference between man relieving his uneasiness and people trying to reach the highest indifference curve they can given various budget constraints. Yes, sometimes preferences will be modelled as constant, but this is just a use of the ceteris paribus condition in order to highlight other issues under consideration.
The discussion really is just semantics. The moment a person acts, however, he proves that there is no equality.
Fine, which is what revealed preference is all about. The fact that there is a great deal of consistency in preferences across time, however, proves that there must be some preferences that are distinct from action. Keep in mind, I don’t necessarily believe that utility scales exist, just that they make a useful tool for examining individual preferences. Nonetheless, I find it seriously untenable to claim that nobody can be indifferent between two different bundles of goods (and the whole point of indifference analysis is demonstrating that they are not indifferent by trying to reach the highest curve possible).
Ever heard of monotonic transformations?