" Austrian economics? Really? They don't even put any value into empiricism and rely heavily on axioms. I do not believe that the world can be understood by just thinking - you have to actually observe the world and see what happens, and build your knowledge from there. There should be no surprise that it's a heterodox school of economic thought, which I hear is a nice way of saying that most economists disagree with it. Hong Kong might be a good example of a free-market nation, but it's really easy to just show you good examples and not pay any attention to bad ones. Case in point: Chilé. Their rate of poverty rose after some guys from the Chicago school of economic thought came along and gave them some funny ideas of how to ruin an economy. When I took a class in the Chicago school of economics, their line of thinking wasn't that much better than Austrians: take a few axioms, make some generalizations about the world, and then the class proceeds to seek out examples of these market forces at work. "
I'm not too sure how to really break this one down, any suggestions Austrians?
I'm not going to give a full reply but
"I do not believe that the world can be understood by just thinking"
That's kind of a contradiction, unless you're going on a matter of faith.
Milton Friedman, the "head" of the Chicago school was as empirical an economist as you'll ever find.
Ask your friend whether or not it's possible for a person who has experienced no change other than an increase in desire for a good, to be willing to pay less for that good. If not, then he most likely agrees with the Austrian method, he just doesn't understand it.
We have to have some basis for understanding our universe before we attempt to explain that which we find.
he didnt produce any evidence that disputes AE. He simply said that he is ignorant of AE so he is going to state an opinion on something that he has no idea what hes talking about. Then he tries to prove his opinion by using evidence of the Chicago school screwing up Chile. Then he produces no evidence what they did, why they did it, or how they caused higher unemployment.
"take a few axioms, make some generalizations about the world, and then the class proceeds to seek out examples of these market forces at work." - i mean seriously. He is just making stuff up. Hes suggesting the Austrian theory has to dodge scenarios. Ask him to produce some hard evidence.
He has no clue what he is talking about.
TheIndividualist: " Austrian economics? Really? They don't even put any value into empiricism and rely heavily on axioms.
" Austrian economics? Really? They don't even put any value into empiricism and rely heavily on axioms.
Not quite. Empiricism is only disposed of in regards to developing economic theory. It is the position of the Austrian not to attempt to extrapolate economic theory from empirical data sets. If one read Austrian literature by Hazlitt or Rothbard, one would certainly note the plethora of data tables presented as evidence for certain historical claims. This, however, is the realm of economic history, which is study different than Economics proper.
I do not believe that the world can be understood by just thinking - you have to actually observe the world and see what happens, and build your knowledge from there.
Did you not just think this methodology up using ...... the power of thought? You will have to make your argument more specific. Do empiricist economists not also employ rational thinking when they propose a methodology of extrapolating theory from data? Is it not a rationalist claim that that is the proper methodology? If it isn't, how shall we test empirically that it is?
Oh, but no. That would be absurd. The absurdity of positivism is thus revealed, as the concept of experimentation requires the rational thought to conclude that it is an appropriate methodology. So now we see that the Austrian Perspective is not the only one guilty of attempting to use *gasp* rational thinking.
The Austrian Methodology is based on the truism that the methodology for the Natural Sciences cannot acceptably be applied to the Human Sciences, which are the fields of human action and not physical laws (such as gravity).
There should be no surprise that it's a heterodox school of economic thought, which I hear is a nice way of saying that most economists disagree with it.
Logical fallacy: appeal to authority/popularity
Hong Kong might be a good example of a free-market nation, but it's really easy to just show you good examples and not pay any attention to bad ones. Case in point: Chilé. Their rate of poverty rose after some guys from the Chicago school of economic thought came along and gave them some funny ideas of how to ruin an economy. When I took a class in the Chicago school of economics, their line of thinking wasn't that much better than Austrians: take a few axioms, make some generalizations about the world, and then the class proceeds to seek out examples of these market forces at work. "
If you are implying that Pinochet's Chile followed a libertarian model, you are both conflating Austrian perspective economics with libertarianism, and misattributing his regime with libertarianism. Nationalizing land and assets and then 'privatizing' them is not concordant with libertarian propositions, which recommends instead the homesteading path. In fact, such campaigns of 'privatization' are often nothing more than orgies of looting the public coffer by selling large plots of land to a few industrialists at a price which the original owners would have laughed at, thus flooding the supply of the labor market and centralizing economic control in the hands of those industrialists blessed/favored by the state. Also, murdering union bosses is not libertarian. There are certainly better ways to liberalize a country which result in a less centralized and inequal state of affairs. Unfortunately they are rarely employed.
Though Pinochet's regime was unsavory in many aspects, it did also turn the country away from socialism. Chilean democratic government often voted along Pinochet-ian lines for years after the infamous dictator stepped down from his position.
That said, it seems that your knowledge of the Austrian position is informed only by its critics and that you don't actually understand the epistemological foundations of Austrianism or economics general. I recommend you read the first 150 pages of Human Action or the small book "The Ultimate Foundation of Economic Science" so you can get it right from the horse's mouth.
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
Reminds me of this rant I found on some forum that really hated the Keynes vs Hayek rap battle:
This is a board for economists, of course we don'give arguments. Biologists don't discuss whether evolution happened, mathematicians don't discuss whether 0.99...=1, and psychologists don't discuss the effect of ascendents on personality.
Ironically an Austrian could find that statement favorable too, since they don't 'discuss whether humans act or not'.
Four letters: ABCT.
How does that answer the question?
It's simply how I would and am responding. As in, "how would an Austrian respond to this?" "ABCT"
... I don't think that's a very relevant response...
Well, the OP's statement was that of irrelevancy without making an actual point, therefore if someone said that to me directly I'd respond with ABCT. If I'm feeling up to it I'll expand on ABCT. I'm saying how I'd respond, and that's what was asked.
Oh no those awful fringe austrian economists using deductive reasoning to come to conclusions. They should learn to observe the world like real economists.
Praxeology is the study of human action, axioms is essentially deductive reasoning. Of course austrian economists observe the world, that is simply a ridiculous notion. Point the author in the op towards the book Economics in One Lesson
I think what the author in the op realy means is that real economists observe data that includes government activity and come to conclusions that favour a specific agenda.
TheIndividualist:Case in point: Chilé. Their rate of poverty rose after some guys from the Chicago school of economic thought came along and gave them some funny ideas of how to ruin an economy.
This reminds me a lot of the nonsense arguments in the book "Shock Doctrine" by Naomi Klein. Just go look up critiques of that book and you will likely run into lots of information demolishing that view.
You cant just let the facts speak for themselves.
Statistical data is good and all, but we must develop apriori theories before analyzing the data. Data is useless if you have no foundations upon which to analyze it.
“Since people are concerned that ‘X’ will not be provided, ‘X’ will naturally be provided by those who are concerned by its absence.""The sweetest of minds can harbor the harshest of men.”
http://voluntaryistreader.wordpress.org
Why not? The facts don't speak for themselves? You need some fancy pants bow-tie-wearing economists to tell you what your own eyes can see?
You do know the answer to that one, Jargon, I hope.
And fancy pants bow tie wearing is an oxymoron.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
Yes I do, but I'd like Kelvin to answer.