I think it makes perfect sense that government intrusion of the free markets causes unsustainable periods of bust-and-boom. It’s not so much that we don’t have periods of bust and boom. It makes perfect sense to mek that the government intrusion of the market is what causes these artifical ones to happen more than they would have happened if the banks couldn’t just extend more credit out to businesses than they would without the central bank’s help. I think that the central bank shouldn’t be manipulating the private market. And, that interest rates should be set on the free market. I’m not ready for the complete abolition of the federal reserve because I think it would cause too much panick. However… I think the austrian theory provides a lot of insight to what causes these artificial boom-bust theory and I think that it stands the test of time. I don’t know why people seem to think that it doesn’t make sense, or, that it’s just nonsense.
I know of noone who understand the Austrian School and doesn’t agree with it.
I know alot of people who don’t know about it.
They don’t/can’t understand capital theory.
Well, Post Keynesian thought is largely consider a heterodox school of economic thought, alongside the Austrian school. Now, regarding the role of government in the economy, Post Keynesians reach very different conclusions to the Austrians. So I’m not sure that the rejection of Austrian thought can be attributed to their pro-market conclusions.
Gordon Tullock who is, by and large, a mainstream economists (and a Nobel prize winner) has noted that his work in rent seeking was published in neither the AER not the SEJ, simply because the editors of these journals prefer to accept highly “technological” works than innovative works. The fact of the matter is that it doesn’t pay for top journals, who are insulated from the price system, to accept pieces that challenge the mainstream, regardless of their ideological orientation.
To use one of Kuhn’s terms, mainstream economists working on “normal scientists” don’t wish to have their paradigm challenged.
Yeah, there still hasn’t been an adequate critique. It’s basically just ignored.
Tullock did not win the Nobel, Buchanan did
I just checked and it appears you’re correct. I knew Buchanan had won the prize but I thought Tullock had also. Thanks for the correction.
Why don’t more people take the austrian school seriously?
Because it destroys the myth of central economic planning. Since intellectuals are largely a captured class, schools that refute or challenge the premise of the captors don’t get a fair hearing.
I’m sure it’s been undermarketed, poorly marketed at times.
But the people pronouncing what is and is not serious, are the same people who say “deficits don’t matter”, “read my lips, no new taxes”, “I swear to uphold the constitution…”
So instead of trying to validate AE to people who have an interest in supressing it, we attack the credibility of these individuals, and bring the gatekeepers down. They are wrong on a lot more things than AE. Collectivism as a whole is pretty ignorant and dangerous stuff.
It debunks their world of make-believe and is not politically expedient.
You can say that again. If you look at the Wikipedia entry on full reserve banking it states that Austrians take full reserve banking seriously. But then goes on to imply that full reserve banking is some sort of voodoo fantasy that doesn’t even exist! It doesn’t even state how full reserve banking works. I invited people from this forum to fix the article (as anyone can do with Wikipedia) but so far nobody has taken this on. I would like to do this myself but am not expert enough to do so. Pleeease would someone here fix this terrible piece of PR.
because power is knowledge, not the other way round
I think there are several key barriers to Austrian Economics being taken seriously by today’s mainstream economic thinkers (although one has to remember that many Austrian insights have in the past been absorbed into the mainstream of neo-classical economic thought):
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Methodology. This is probably first and foremost the biggest stumbling block to wider acceptance of Austrian theories. It is easilly mischaracterised as being an ideology rather than properly scientific. When we say things like historical evidence or emperical data do not (and cannot) refute the laws or “truths” of economics, that praxeological theorems cannot be emperically tested, it can easilly appear that we are simply trying to isolate our theories from criciticism which is a common way in which “psudo” sciencies try to proceed. Austrians need to convince the mainstream of what makes them different.
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History. Austrians lamment central banks and inflationary monetary policy but when one compares the gold standard era with the central bank era, one sees that speculative boom/busts were more frequent in the former period. This needs to be explained in ways that don’t look like mere rationalisation.
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Faith in Markets. Modern economists seem to be very good at studying where, how and why markets perform sub-optimally. Therefore the view that markets should be trusted, just left to get on with it, is considered increasingly naive and dogmatic. If we are so good at spotting markets not working as effectively as they should be, it is hard then to accept the idea that we shouldn’t be trying to correct such innefficiencies when we find them.
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Harshness. Even those who generally believe the markets need to be left to get on with it, many believe that the government should be doing all it can to help alleviate the ill effects and suffering caused in a recession. Ok, unemployment is an innevitable consequence of a recession but shouldn’t we be doing all we can to give people jobs so that they can feed themselves until the economy recovers?
There are probably more reasons but these are all significant barriers to a wider acceptance of Austrian ideas and will not be easy to overcome.
That’s a great list by Fried Egg. I think the Harshness one is particularly true. Austrian economics is all about looking at the long term unintended consequences of government intervention. This is a hypothetical way of looking at things, even if it is based in truth. So if you tell somebody, “hey you shouldn’t have that government job/subsidy because you’re wasting our resources and somebody somewhere is going to lose their job because of it,” they are probably going to respond “screw you if i didn’t have this job/subsidy I wouldn’t be able to feed my kids. Leave me alone.” And I think rightly so. Why shouldn’t people seek help from the government when they are down and out due to something they can’t control? Knowing that it’s for the greater good of efficiency to just suck it up and take it isn’t much comfort for people trying to pay their mortgage.
TBH they should ask 1) why they are where they are to begin with and 2) if they can bear to live as pure parasites, and if given the gun personally, they would secure the resources they “rely” on.
I’ll repeat essentially what I posted in the other thread, since it devolved into a silly debate
It doesn’t help that Austrians claim all their propositions are the result of deductive logic, yet after half a century no one has actually explicitly spelled out the reasoning involved for any non-trivial conclusions (and it’s not a response to say they are all necessarily trivial). If they had, then how would anyone disagree, any more than they could disagree with a mathematical proof, except to either point out the validity of the reasoning or the truth of the assumptions? You say it’s not mathematics? Yes, I know, but is it deductive or not?
The excuse I’ve heard is that it would be hard work, or that it’s not like mathematics. Well how you do know this methodology is even valid, then? And you would think this would be something of a priority. You must be accepting these propositions based on a plausible argument, and the relevance of certain empirical claims. I don’t think there’s anything necessarily wrong with that.
have you met anarcho-mercantilist?
It doesn’t help that I have no clue what your point is. Some people think they don’t exist even after you tell them they do or that they both exist and don’t exist. Who cares? BTW I can list the number of things without formal proof that people yet nonetheless take as true - could you explain why a proof in formal logic is needed to understand the truth of something? Have some people got a mental impairment obstructing them from understanding the very clear propositions of the Austrians set forth by the likes of Hoppe in his epistemological works?
Are you talking to me?
No, I am both talking and not talking to you, and I will offer a formal proof of it!
Duh.
