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Critisms of austrian economics, any weight to them?

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Jackm Posted: Sat, Feb 4 2012 1:09 AM

Just some stuff I want to get people's thoughts on. The first one will offer the quickest read through:

http://www.economicshelp.org/dictionary/c/criticism-austrian-economics.html

http://www.huppi.com/kangaroo/L-ausmain.htm

http://world.std.com/~mhuben/austrian.html

 

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Gero replied on Sat, Feb 4 2012 1:30 PM

This

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They do a really sloppy job of it. I will address a few in the first link which I am more confident in:

The belief in the efficiency of markets is countered by many examples of market failure. E.g. growth of subprime mortgages / securitisation leading up to credit crisis of 2008

Austrians are the first to say that markets aren't perfect and they sometimes fail in some areas. Yet we do not have a free market, especially with the inflationary Fed policies and all the regulation. The above quote is meaningless.

citizens get a comprehensive welfare state, education and health care.

And? Doesn't mean it's good. And the next claim about healthcare is absurd as well, seeing that the US hardly has a free market in healthcare.

Controlling Money Supply is much more difficult in practise than theory suggests.

Idk, the charts do make it seem otherwise:

 

Models are too subjective and Vague.

That statement is too subjective and "V"ague...

Their policy prescriptions for the Great Depression are considered to be 'nihilistic' because they advocated no government intervention.

And? This statement suggests that the policies were actually implemented. Far from it.

They have also been criticised for shaping their political beliefs into economic policy.

As has everyone been criticized.

Often they exaggerate the differences with other economists.

By the same logic this list of bad aspects of AE also exaggerates the differences?

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MaikU replied on Sat, Feb 4 2012 3:58 PM

"market failure" always was and always will be a subjective term. So using it in economical debate is useless in my opinion.

"Dude... Roderick Long is the most anarchisty anarchist that has ever anarchisted!" - Evilsceptic

(english is not my native language, sorry for grammar.)

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The only valid criticism is that for anything to be successful it requires people to believe in it.  This criticism is equally true of all social systems.  Any social system from despotism to anarchy will work just fine if people believe it benefits them.

Once this understanding is achieved the ideas of freedom can be more successfully solicited.  It is not about selling ideas that work.  It is not about one system being superior.  It is about selling an idea that benefits the person your are soliciting it to.  This is how products are sold by emphasizing the benefits to the consumer and selling ideas are no different.

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Reference: http://www.huppi.com/kangaroo/L-aussm.htm

"To be a science, a school must produce theories that are falsifiable -- that is, verifiable."

What kind of statement is this? It's an a priori proposition! Let's just say that the empiricists-posivists don't actually practice what they preach. 

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Neodoxy replied on Sat, Feb 4 2012 6:29 PM

I would say that most criticisms of AE go wrong in one or more of these areas

1. Faulty understanding of Austrian Methodology

2. Fallacious attack upon the (rightly understood) Austrian Methodology

3. Appeals to fallacious concepts that do not fall into the other categories (such as, for instance, an appeal to calculated increases in the price level that are more than very general approximations)

4. Appeal to faulty data (for instance claiming X was a free market)

5. Attacking concepts that are not Austrian at all (for instance attacks upon Chicago School economists)

6. Appeals to untenable models

@Wheylous/anyone here in particular

The thing that I've always wondered about the TMS is why it is that it would appear that Austrian data doesn't align with ABCT in any but recent history

At last those coming came and they never looked back With blinding stars in their eyes but all they saw was black...
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" Any social system from despotism to anarchy will work just fine if people believe it benefits them."

I beg to differ.

Thing is, harsh reality will get in the way.

Say Social system X promises things it cannot deliver. Everyone believes the promises at first, but then they see that the promises do not  come true. You can guess the rest.

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Jackm,

Part of the fun is reading and listening to the resources on this amazing site until you can refute those articles by yourself.

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It's easy to refute an argument if you first misrepresent it. William Keizer

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Jackm replied on Mon, Feb 6 2012 4:16 AM

I know that, but I'll arrive at the answers much faster if I just ask you guys, and I do do some independent research.

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I beg to differ.

Thing is, harsh reality will get in the way.

Say Social system X promises things it cannot deliver. Everyone believes the promises at first, but then they see that the promises do not  come true. You can guess the rest.

Yayaya.... it has been stated free markets create the most prosperity, alleviate the most poverty, and many people believed the promise in early America...

If people believe

Social system X promises things

which benefit them, and

the promises do not  come true

then people no longer believe said social system benefits them.  That does not invalidate my point.  On the contrary it further validates what I stated.

" Any social system from despotism to anarchy will work just fine if people believe it benefits them."

Do you intend to argue people do not act based upon personal beliefs, which can be changed at any given point in time, to pursue their own perceived self satisfaction?  Do you intend to argue there are people who believe taxation is not theft?

It is actions derived from diversity in belief of governing that undermines a social system not unity of belief.

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So any system can work if people believe in it forever, I think you are saying.

Is this belief a cause or a symptom of success?

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I don't think qualifying a term of belief such as "forever" is relevant to my statement.  I believe social systems can change as beliefs of people change and I think history very much reflects such, not that I am trying to make an appeal to history fallacy.

I speculate beliefs are formed by individuals perceiving or reasoning.  Gotta love George Carlin.. "garbage in, garbage out" :)

In response to your question, I speculate belief for is a symptom of hope and belief against a cause of despair,

 

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And here I thought socialism was disproved by Mises...

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A frew quotes from the preface...

Does Mises discount belief?

At no point in history has a doctrine found such immediate and complete acceptance as that contained in these three principles of Marxism. The magnitude and persistence of its success is commonly underestimated.

The incomparable success of Marxism is due to the prospect it offers of fulfilling those dream-aspirations and dreams of vengeance which have been so deeply embedded in the human soul from time immemorial.

To the masses the catchwords of Socialism sound enticing and the people impetuously desire Socialism because in their infatuation they expect it to bring full salvation and satisfy their longing for revenge.

It is true that Socialism is today an article of faith for many, perhaps for most of its adherents.

What does Mises actually prove?

The arguments by which I demonstrated that, in a socialist community, economic calculation would not be possible have attracted especially wide notice.

It was easy to pick holes in their schemes; to prove that a society constructed on such principles must lack efficiency and vitality, and that it certainly would not come up to expectations.

Yet despite having proof...

But scientific inquiry into the problems of Socialism is not enough. We must also break down the wall of prejudice which at present blocks the way to an unbiased scrutiny of these problems. Any advocate of socialistic measures is looked upon as the friend of the Good, the Noble, and the Moral,

Only a complete critical study of the ideas of Socialism will enable us to understand what is happening around us.

I know only too well how hopeless it seems to convince impassioned supporters of the Socialist Idea by logical demonstration that their views are preposterous and absurd.

Source: http://mises.org/books/socialism/preface_second_german_edition.aspx

On a side note, I think one of the more useful phrases appears in the preface:

"economic democracy" or "consumer democracy"

For an individual to believe in economic democracy one must be willing to bear a cost of tolerance for the benefits of "efficiency" and "vitality."  Great "disproving" economic arguments we have but the sales pitch doesn't really bring people out in droves to buy capitalist ideas.

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The best critique of ABCT I've ever read come from Robert Vienneau : "Some Capital-Theoretic Fallacies in Garrison’s Exposition of ABCT". To my knowledge, austrians never respond to him.

But some empirical evidence confirms the ABCT. I dedicate a => long post <= on this topic. Unfortunately, I don't have the full access to the english version of Bismans & Mougeot study ("Austrian business cycle theory: Empirical evidence") so I cite the french version in my blog post. The other studies cited are in english.
 
(If someone here can give me the "full" english article of Bismans & Mougeot, I will re-edit my blog post)
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Is this not a response?
http://robertvienneau.blogspot.com/2010/02/garrison-orally-on-reswitching.html

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and this:

http://www.dreamscape.com/rvien/Economics/Essays/QJAEReviewerComments.pdf

 and this [sort of]:

http://mises.org/Community/forums/p/3841/52612.aspx#52612 [at the end]

 

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Smiling Dave,

I cannot consider the first and second link you gave me as an "austrian reply". And I know about the third link : Vienneau has already replied to Garrison and Murphy.
But this does not matter. ABCT is empirically confirmed, I have no doubt about that. Many studies confirmed that. 
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