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Any Rebuttals to Critiques of Austrian Economics?

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gendou57 posted on Sat, Sep 20 2008 9:28 AM

Wow, first post.

 

Anyway, something that has always bothered me with Austrian Economics is that it is so fringe. While its true that classes are being taught at GMU and the Mises Institute keeps the writings of these great minds alive, there seems to be absolutely no talk of the Austrian Business Cycle Theory outside of Austrian circles. In most cases, people have never heard of the theory, and in some discussions I've had with non-libertarians, the very mention of "Austrian" or "Mises" or, gods forbid, "Rothbard" is met with immediate scorn and an end to debate (the general sentiment is that any argument I make from that point has been tainted or something).

 

But whatever, there are always ignorant people. What disturbs me most are the educated criticisms of Austrian Economics that I can not find rebuttals to.

 

Anyway, the entire point of this post, and the reason I joined in the first place is to ask: Are there any rebuttals to the following criticisms?

 

http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

Bryan Caplan- Why I am Not An Austrian Economist

 

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

The Austrian School is an example of Crank Science

 

http://www.slate.com/id/9593

The Hangover Theory - Paul Krugman (I know, I know, I said educated but humor me.)

 

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024311

Some Capital-Theoretic Fallacies of Austrian Economics- Robert L. Vienneau

-Gendou
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gendou57:
http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

Bryan Caplan- Why I am Not An Austrian Economist

Caplan's criticism is one of the few well-reasoned critiques, but it has received a number of responses. Most of these are actually responses to a paper he wrote in the Southern Economic Journal, "The Austrian Search for Realistic Foundations", which is very similar, so you should have no problem applying them to this particular critique. I'll list the responses in chronological order, and I'll include Caplan's own rebuttals:

"Economic Science and Neoclassicism", by Jörg Guido Hülsmann

"Austrian Theorizing: Recalling the Foundations", and the errata, by Walter Block

"Kaldor-Hicks Efficiency and the Problem of Central Planning", by Edward Stringham

"Probability, Common Sense, and Realism: A Reply to Hülsmann and Block", by Bryan Caplan

"Realism: Austrian vs. Neoclassical Economics, Reply to Caplan", by Walter Block

"Probability and the Synthetic A Priori: A Reply to Block", by Bryan Caplan

"Rejoinder to Caplan on Bayesian Economics", by Walter Block

Those are the direct responses, which directly quote and criticise Caplan. Caplan's criticisms are, however, recycled from years past, so if you really want a good understanding of Austrian Economics, I suggest you also read books and papers that deal with the specific issues (e.g. indifference) brought up. You can find a reading list here.

gendou57:
http://www.huppi.com/kangaroo/L-ausmain.htm

The Austrian School is an example of Crank Science

This is an amateur criticism. Not only does the author not appear to understand the Austrian school, he also doesn't seem to understand the "mainstream" approach he is promoting. Look at how many times he refers to Keynesianism, as if it didn't die in the 1970s to be replaced by neoclassical economics. If somebody tries to use this against you, I suggest pointing them out this quote from the page on the gold standard: "History bears this out: the U.S. suffered eight depressions while on commodity money; in the 60s years since, it has suffered none." Clearly, that is absurd; even ignoring the fact that Austrians criticise the fractional-reserve banking that caused the "depressions" while on commodity money, it's just ridiculous to say that we haven't suffered any "depressions" (he never defines what he means by a "depression", so we can only assume he means a recession as determined by the NBER) since then.

If that doesn't satisfy you, again I suggest reading some Austrian books and papers on the specific issues brought up. The list of literature is far too vast for me to list here (for business cycles alone, there are hundreds), but viewing the reading list I mentioned, and a search of mises.org should bring up anything relevant.

gendou57:
http://www.slate.com/id/9593

The Hangover Theory - Paul Krugman (I know, I know, I said educated but humor me.)

.

Krugman is a professional economist, but this article is very weak. Perhaps this is because he has written it for a popular audience (although, I can find no academic paper he has written on the subject), so you'll have to make due with "popular" Austrian responses, as opposed to the heavy academic discourse in journals à la Caplan.

"Contra Krugman", by Roger Garrison

"Epstein Responds", by Gene Epstein

"The Hangover Theory?", by John P. Cochran

"Keynesian Confusions", by David Gordon

For detailed expositions of the Austrian Business Cycle Theory, start with the reading list.

gendou57:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024311

Some Capital-Theoretic Fallacies of Austrian Economics- Robert L. Vienneau

This paper appears to be very new, so it's no surprise that there are no direct responses. However, the article seems to be invoking the concepts of capital reswitching and capital reversing, which have been dealt with before by Austrians:

"Austrian Capital Theory: The Early Controversies", by Roger Garrison

"Reflections on Reswitching and Roundaboutness", by Roger Garrison

"The Reswitching Question", by Robert P. Murphy

"Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings." ~ Ludwig von Mises | <°}}}}>{
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I found rebuttals to the ideas of at least two of those people:

 

Caplan:

http://mises.org/journals/qjae/pdf/qjae6_3_4.pdf

 

http://mises.org/misesreview_detail.aspx?control=267

 

Hangover theory:

https://mises.org/misesreview_detail.aspx?control=53

I am an eklektarchist not an anarchist.

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The first has been rebutted, the second is a stupid rant, the third has been rebutted and is utterly ignorant, the fourth has not addressed major problems that Austrian economists have posed for the system of its adherent.

-Jon

Freedom of markets is positively correlated with the degree of evolution in any society...

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nje5019 replied on Sat, Sep 20 2008 11:20 AM

a quick search on mises.org of 'krugman hangover theory gave me'

https://mises.org/story/103

https://mises.org/story/630

https://mises.org/story/1318

https://mises.org/misesreview_detail.aspx?control=53

 

There was a theread about the "Crank Science" Page on the forums a while ago where a lot of people rebutted all of the (very few) coherent arguments from that site if i recall  correctly, but i've having trouble finding it. I'll keep looking.

 

 

 

 

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gendou57 replied on Sat, Sep 20 2008 11:30 AM

Thanks everyone! I especially appreciate the rebuttals to Caplan, who made by far the best arguments.

 

Jon - I know the second and third were amateurish and rantish, but there were still arguments in them that I wanted to see rebutted. More notably the Krugman article, since I expect people to quote him, his being one of the more famous economists right now (and by that I mean I saw him on the news once or twice)>

 

-Gendou

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Krugman's article has been thoroughly refuted though. He misunderstands Austrian theory. Incredibly, he is an economist of global renown. As for the other, it's long, although I've seen the arguments it brings up regurgitated elsewhere. They're generally very weak, but if you want specific ones addressed, you might as well copy & paste them, so long as they're not too lengthy.

-Jon

Freedom of markets is positively correlated with the degree of evolution in any society...

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Jon Irenicus:

Krugman's article has been thoroughly refuted though. He misunderstands Austrian theory. Incredibly, he is an economist of global renown.

-Jon


This is where I am very cynical towards attitude of "it's better to have an opinion on ecnomics, as opposed to no opinion at all" (Alas, I mangled the original quote, & have forgotten who said it...).

"Look at me, I'm quoting another user to show how wrong I think they are, out of arrogance of my own position. Wait, this is my own quote, oh shi-" ~ Nitroadict

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gendou57:
http://www.gmu.edu/departments/economics/bcaplan/whyaust.htm

Bryan Caplan- Why I am Not An Austrian Economist

Caplan's criticism is one of the few well-reasoned critiques, but it has received a number of responses. Most of these are actually responses to a paper he wrote in the Southern Economic Journal, "The Austrian Search for Realistic Foundations", which is very similar, so you should have no problem applying them to this particular critique. I'll list the responses in chronological order, and I'll include Caplan's own rebuttals:

"Economic Science and Neoclassicism", by Jörg Guido Hülsmann

"Austrian Theorizing: Recalling the Foundations", and the errata, by Walter Block

"Kaldor-Hicks Efficiency and the Problem of Central Planning", by Edward Stringham

"Probability, Common Sense, and Realism: A Reply to Hülsmann and Block", by Bryan Caplan

"Realism: Austrian vs. Neoclassical Economics, Reply to Caplan", by Walter Block

"Probability and the Synthetic A Priori: A Reply to Block", by Bryan Caplan

"Rejoinder to Caplan on Bayesian Economics", by Walter Block

Those are the direct responses, which directly quote and criticise Caplan. Caplan's criticisms are, however, recycled from years past, so if you really want a good understanding of Austrian Economics, I suggest you also read books and papers that deal with the specific issues (e.g. indifference) brought up. You can find a reading list here.

gendou57:
http://www.huppi.com/kangaroo/L-ausmain.htm

The Austrian School is an example of Crank Science

This is an amateur criticism. Not only does the author not appear to understand the Austrian school, he also doesn't seem to understand the "mainstream" approach he is promoting. Look at how many times he refers to Keynesianism, as if it didn't die in the 1970s to be replaced by neoclassical economics. If somebody tries to use this against you, I suggest pointing them out this quote from the page on the gold standard: "History bears this out: the U.S. suffered eight depressions while on commodity money; in the 60s years since, it has suffered none." Clearly, that is absurd; even ignoring the fact that Austrians criticise the fractional-reserve banking that caused the "depressions" while on commodity money, it's just ridiculous to say that we haven't suffered any "depressions" (he never defines what he means by a "depression", so we can only assume he means a recession as determined by the NBER) since then.

If that doesn't satisfy you, again I suggest reading some Austrian books and papers on the specific issues brought up. The list of literature is far too vast for me to list here (for business cycles alone, there are hundreds), but viewing the reading list I mentioned, and a search of mises.org should bring up anything relevant.

gendou57:
http://www.slate.com/id/9593

The Hangover Theory - Paul Krugman (I know, I know, I said educated but humor me.)

.

Krugman is a professional economist, but this article is very weak. Perhaps this is because he has written it for a popular audience (although, I can find no academic paper he has written on the subject), so you'll have to make due with "popular" Austrian responses, as opposed to the heavy academic discourse in journals à la Caplan.

"Contra Krugman", by Roger Garrison

"Epstein Responds", by Gene Epstein

"The Hangover Theory?", by John P. Cochran

"Keynesian Confusions", by David Gordon

For detailed expositions of the Austrian Business Cycle Theory, start with the reading list.

gendou57:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1024311

Some Capital-Theoretic Fallacies of Austrian Economics- Robert L. Vienneau

This paper appears to be very new, so it's no surprise that there are no direct responses. However, the article seems to be invoking the concepts of capital reswitching and capital reversing, which have been dealt with before by Austrians:

"Austrian Capital Theory: The Early Controversies", by Roger Garrison

"Reflections on Reswitching and Roundaboutness", by Roger Garrison

"The Reswitching Question", by Robert P. Murphy

"Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings." ~ Ludwig von Mises | <°}}}}>{
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gendou57 replied on Sat, Sep 20 2008 12:04 PM

Hot diggity!

 

This should keep me busy for a few days... let alone that reading "list" (it looks like a library inventory!!!).

 

Thanks!

 

-Gendou

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Good post. FYI, the Garrison "Austrian Capital Theory" article isn't linking properly.

-Jon

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Sorry about that. I've fixed it now.

"Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings." ~ Ludwig von Mises | <°}}}}>{
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Dumky replied on Sat, Feb 13 2010 5:00 AM

gendou57:

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

The Austrian School is an example of Crank Science

I read through that one and captured comments for all the main points: http://dumky.posterous.com/a-critique-of-the-austrian-school-of-economic

Some arguments are clearly bogus, like "if austrian theory was good, it would be popular in academia", but the author also discusses some legitimate questions: methodology, monopolies, ABCT, ...

 

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