I've come across a critique of Austrian economics that goes something like this:
Economics is a practical and material science, and the Austrians err in treating it as a formal and speculative science. People in the material world often have preferences that violate formal relationships. For instance, one may like Coke better than Pepsi, Pepsi better than lemonade, and lemonade better than Coke. Thus, material relationships do not lend themselves to formal logic.
I'm skeptical as to how circular or contradictory preferences can even give rise to action in a given moment, but I'm still learning, so I'd appreciate the thoughts of others. Thanks!
Economics is a subdivsion of praxeology, the study of human action. Even if the above relationship was possible it has no place in economics, since it can't be shown in human action.
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
Jim:For instance, one may like Coke better than Pepsi, Pepsi better than lemonade, and lemonade better than Coke. Thus, material relationships do not lend themselves to formal logic.
Did he really say this? roflmao
When we say that we prefer coke to pepsi, what we really mean is that we prefer the predicted outcome of having drunk coke to the predicted outcome of having drunk pepsi. What is being measured in making a judgment is the amount of satiety or happiness created that can be generated by possible actions, which is clearly transitive.
Diminishing Marginal Utility - IT'S THE LAW!
There is an empirical side to everything, even logic, but when considering relationships you have to abstract from the particular elements involved to find the principles you're trying to grasp. Focusing solely on the traditional reductionist method of finding such principles doesn't always work out well. Consider how Milton Friedman had to readjust parts of his own theories as new data came in because he was overly reliant on empirical data to make seemingly abstract conclusions.
It's much like computer science in that way, you can go through your entire 'life' thinking about problems as unconnected events for which you have to code each case individually which leads to a very ugly program that won't be able to tackle cases yet observed or you can go through 'life' and consider what the cases have in common and devise a more elegant, easily modifiable program by comparison. Economics, at least from what I gather in regards to Austrian School, tends to follow a similar view in as much as they don't see it as something that acts on its own (they always reframe the problems in the context of human beings and how they act).
Then again, that's just my Randroid outside perspective on the school. *shrugs*
"The power of liberty going forward is in decentralization. Not in leaders, but in decentralized activism. In a market process." -- liberty student
Ill-defined, amateurish nonsense. What is a "practical" science? In this instance it probably means something akin to technology. Ethics is the paradigmatic "practical" science, if one takes practical to mean action-guiding. Economics is purely descriptive, i.e. speculative, i.e. theoretical. It starts with well-grounded empirical axioms then proceeds by way of deduction. As for the preferences bit, I think Solomon covered that well. Material relationships, like everything, lend themselves well to formal logic. What he might mean is that preferences can change. Yeah, Austrians have been pressing that point onwards for years...
Freedom of markets is positively correlated with the degree of evolution in any society...