“First-rate thinker? I doubt it.”
I’m an Austrian by methodology, but I agree with StrangeLoop here. Bryan Caplan is a very good economist. Neoclassical and Austrian economics can very often come to very similar conclusions, and sometimes for similar reasons.
I’m not sure what you mean by this. Don’t know if its a typo.
Again, Murphy has restated Caplan’s assertions that if U(a)=5 while U(b)=10, all it means is that B is preferred to A, not by a certain amount of “utils”. Even though there are arguments to be had againist the use of utility functions (as other Austrians have pointed out), and whether or not Neoclassicals support the use of cardinal utility is besides the point. It doesn’t matter if Neoclassicals support the use of cardinal utility, what matters is if their models depend on the use of cardinal utility in order to be correct. If, in the Neoclassical tradition, a point on an individual’s demand curve is really the “Tangency condition” of the agent’s budget constraint (where the slope of the two prices-the budget constraint- and the slope of the individual’s utility function are equal), then say what you will about the utility functions, or this assertion being ordinal, but that statement itself requires cardinality. You can never have the utility of an additonal apple equal the utility of an additional orange because ordinal rankings per se must be ordinal (rankings cannot be divided) and this supposed indifference can never be expressed in action.
As far as I’m aware, I have yet to see a Neoclassical take the supposed ordinality of their functions and verbally demonstrate the tangency condition and subsequently their price formation.
This is from my own understanding of Neoclassical price formation from my intermediate micro class. Any errors above are entirely my own.
No. All I’m saying is that the idea that “being sure that a thing is wrong when you haven’t read it is wacky” is incorrect.
(Not ever**y claim made against Austrians necessarily falls into the category of things known a priori to be wrong, but some do)
Yeah, Caplan is as Austrian as Hayek; he’s just not a Misesian or Wittgenstenian Austrian.
I do think he’s wrong on a few points, but it doesn’t matter enough to argue with him.
Also, he is practically identical to my friend’s brother; right down to the voice and snorty laugh.
Here is part 1 of 13 of a debate with Boettke, the rest are all on Youtube:
Absolutely not. Caplan cannot be considered an Austrian economist in anyway whatever. He rejects Austrian price, capital, and business cycle theory (Hayek, on the other hand, was instrumental in the development of Austrian capital and Business cycle analysis). Additionally, he basically rejects the more nuanced points of the calculation and coordination arguments, and ignores decision making under uncertainty (focuses on calculable risk/the Bayesian approach, where novelty is wholly excluded, and where learning merely means adjusting the various probability distributions of all known possible outcomes).
It would be nice if you first familiarized yourself with Hayek’s work before you entirely dismiss him. His method may vary from Mises’, though that’s debatable, but he is, without question, an Austrian economist. Some would argue that he is the most important Austrian economist, but that’s another matter altogether.
Prices and Production was good, his book on capital was confused, his political and philosophic stuff is crap.
I would like to see how one can derive that equilibribrium condition without calculus. Murphy says it’s possible. Anyone here know how to do it? ANd of course, lay it out for us? Or, on the other hand, anyone know how to prove that it’s impossible?
And Herbener’s response to Bob Murphy also missed the boat.
IMHO, of course.
I’m not sure if this helps at all with point 1. of this post, but it’s usefull nonetheless.
Yeah, thats where I always draw the line. Caplan can certainly make the argument that utility functions only describe ordinal relationships, but being able to use these ordinal utility functions to derive optimal baskets (tangency conditions) at “given prices” which are then used to develop a demand curve thats supposed to explain this “given price” (another valid critique is that their model runs on circularity) seems impossible.It doesn’t really matter if the functions are “supposed” to explain only ordinal relationships, if they rely on cardinality than they must be rejected. If it can be done, I’d to see it (not saying this in a mocking tone, I truly want to see if its possible and one can trace out the theorem in verbal logic).
I find Caplan’s contentions to be relatively insignificant. I don’t see how the issue of indifference is a big deal, for one; it may involve a widening of one’s concept of action or preference, but this does not take away from the general principles of praxeology.
He also expresses doubts about the impossibility of socialism, saying it would perhaps be less efficient but not totally impossible. Still, over long periods of time, without the necessary price mechanism, even Caplan may find it difficult to believe that socialism is merely inefficient.
His presence in mises.org is most welcome, as there are no fundamental differences in terms of belief in free markets and liberty in general.
The equiibrium condition doesn’t need calculus or utility, cardinal or otherwise. Calculus is an assumption that’s tagged on to make the analysis more tractable, as the neoclassicals put it, but it is not essential.
This is how the neoclassical economist proceeds:
I can certainly ask myself whether I prefer bundle a to bundle b, vice versa, or neither (called indifference). My preference relation summarizes this information for all bundles. Now, take two bundles which the preference relation ranks the same (i.e. two bundles for which I am indifferent), and say these bundles are
(100 beers, 4 shirts) and (80 beers, 5 shirts)
This means that I’d be indifferent to an exchange of 20 beers for 1 shirt. This is precisely my MRS, and it can be calculated for all bundles which my preference relation ranks the same. With continuity, this is just the ratio of the partial derivatives of the utility function (for tiny changes).
–
So their system is internally consistent. I think the best way to best explain this is: the preference relation (as the neoclassicals conceive of it) has two important properties. One is an ordinal property, how it ranks bundles. Another is a cardinal property, its MRS along levels sets of the preference relation. The utility representation preserves both of these important properties. But being a function, it also has several other (ordinal and cardinal) properties itself. But these are irrelevant; the only properties which have any economic meaning are the ones just described.
Of course, at that point Austrians could critique the neoclassical economist on their conception of preferences. But from within their system, there is no logical problem.