In discussing economics with a person, they made the claim that Austrian economics is unscientific. When asked how it is unscientific, they simply linked the following link.
How would mises.org respond to this:
http://www.huppi.com/kangaroo/L-aussm.htm
I am an Engineer. I will tell you this. To predict an outcome you must understand the fundamental principles underlying the topic under consideration. The principles of chemistry, physics, thermodynamics, electronics, etc.. are all logically derived from laws - facts. Principles that are derived from facts & laws (axioms) are sound and last the test of time. Austrian Econ. is a science, not necessarily based on statistics, mathematical models and theories, but based on logic derived principles from facts underlying human behavior.
Modern day economics consist of simplistic models, diagrams, math and jargon. Many created to model observed past statistics. This is not science. It's curve fitting. You cannot fundamentally predict the outcome of an event based on curve fitting. Modern day economics is not science. It's guess work.
sirmonty: Well I pointed that out, but he seems content on continually asserting that calculus and mathematical models are essential to economic theory. Now he says that it doesn't matter if the mathematical models don't reflect human action and real, life they are still useful. Followed shortly by a lame attempt at some sort of appeal to authority by saying that he is studying math and economics.... As is common, he has read nothing directly of the Austrian school and relies on quick google searches in "refutations" of it. I mean, I am certainly a n00b to economics in general, but even I can see how self-righteous and confused the guy is...
Well I pointed that out, but he seems content on continually asserting that calculus and mathematical models are essential to economic theory.
Now he says that it doesn't matter if the mathematical models don't reflect human action and real, life they are still useful. Followed shortly by a lame attempt at some sort of appeal to authority by saying that he is studying math and economics....
As is common, he has read nothing directly of the Austrian school and relies on quick google searches in "refutations" of it. I mean, I am certainly a n00b to economics in general, but even I can see how self-righteous and confused the guy is...
This is why I do not argue with people anymore. He will not listen to you, no matter how rational your arguments are, since he obviously does not have the capacity to understand logical fallacies.
At most, I think only 5% of the adult population would need to stop cooperating to have real change.
Spideynw: sirmonty: Well I pointed that out, but he seems content on continually asserting that calculus and mathematical models are essential to economic theory. Now he says that it doesn't matter if the mathematical models don't reflect human action and real, life they are still useful. Followed shortly by a lame attempt at some sort of appeal to authority by saying that he is studying math and economics.... As is common, he has read nothing directly of the Austrian school and relies on quick google searches in "refutations" of it. I mean, I am certainly a n00b to economics in general, but even I can see how self-righteous and confused the guy is... This is why I do not argue with people anymore. He will not listen to you, no matter how rational your arguments are, since he obviously does not have the capacity to understand logical fallacies.
I know. But I must admit that it is a bit amusing to watch him put his foot in his mouth and quickly attempt to change the nature of the debate.
Yeah. The person that wrote that is a fool. The answer to that nonsense is so obvious that it doesn't deserve me wasting any more time...
Ask him why the economy doesn't follow these simplistic mathematical models like it supposed to. The central bank has to tinker with interest rates and money supply to be at the economic steering wheel to correct the situation when the economy runs off course and doesn't follow the model.
Austrian Economics is a set of theories that are considered, by many, to be too simple of models to reflect reality. (Because Austrian economic principles tend to depend on certain ideal conditions, which do not exist in the real world) There are many instances where other economists see the austrian point of view as flawed and--at best--incomplete. This is a valid criticism. Whether or not something is a "science" is a distracting discussion. That, ultimately, is an issue of semantics. More important is whether or not its models are more accurate at predicting and describing reality.
The primary flaw of austrian economics is the several instances of market failure that can occur, and the inability to correct these failures using said system. For example the problem imposed by a market with a significant barrier to entry. In such a case firms can't smoothly enter and exit markets at a rate that pure competition demands. This spawns abusive, self-interested behavior and the price for services and goods must rise above the real value, this failure is mathematically simple because it can be demonstrated graphically using actual values.
The natural answer, of course, is to impose certain restrictions. Which requires some kind of legislative policy. Which has tremendous room for error and can be as flawed as the failing market or more so. But it doesn't have to be. Sound, sensible, lightweight policy is something that can greatly enhance the efficiency of a broken market, so long as it doesn't get in the way of another--as often happens.
But, as economists, we are seeking the optimal instead of the ideal, because the ideal is generally unachievable. And in this sense many describe the austrian viewpoint as less optimal because it doesn't have very good controls for situations of market failure. Relying instead on simpler smith-type principles and the invisible hand, but there are instances where this does not work, like my example above. So the optimal amount of policy is not zero, and it's not infinity either, it's some finite amount that everyone is just trying to estimate.
But be careful, regardless of which viewpoint you subscribe to, you must remember we are seeking the optimal level and not the ideal. It's too easy for students of a partiucular thought: keynsianism, neoclassical, austrian, etc, to be more interested in their school than discovering the truths of reality. This way of thinking is accurately described as non-scientific because it isn't objective. This is especially true about many self-proclaimed austrian economists, who feel the need to trumpet their own differences from the mainstream, hence the criticism.
CaseyKing:Because Austrian economic principles tend to depend on certain ideal conditions, which do not exist in the real world, there are many instances where other economists see the austrian point of view as flawed and--at best--incomplete.
*cough*cough* casey, are you sure your not confusing Austrian economics with the Neo-Classical synthesis?
what are the ideal conditions you have in mind?
baffling.
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
CaseyKing:Austrian Economics is a set of theory that is considered, by many, to be too simple a model to reflect reality. Because Austrian economic principles tend to depend on certain ideal conditions, which do not exist in the real world, there are many instances where other economists see the austrian point of view as flawed and--at best--incomplete. This is a valid criticism. Whether or not something is a "science" is a distracting discussion. That, ultimately, is an issue of semantics. More important is whether or not its models are more accurate at predicting and describing reality. The primary flaw of austrian economics are the several instances of market failure that can occur, and the inability to correct those failures using said system. For example the problem imposed by a market with a significan barrier to entry. In such a case firms can't smoothly enter and exit markets at a rate that pure competition demands. This spawns abusive, self-interested behavior and the price for services and goods must rise above the real value, this failure is mathematically simple because it can be demonstrated graphically using actual values.
There's no such thing as pure competition in Austrian economics. You're thinking of neoclassical economics. I recommend that you become knowledgeable in a science before you start criticising it in order to avoid such amateurish mistakes.
The fallacies of intellectual communism, a compilation - On the nature of power
I hadn't even finished revising my post and I'm already getting hit with arrogant condescending remarks. If you want me to I'll elaborate, but you have to be patient.
Stranger is correct. Nothing "arrogant" in his response to you.
Freedom of markets is positively correlated with the degree of evolution in any society...
I'm not going to claim to know more about your way of thinking than you do, but I'm not as ignorant a syou think. I have studied economics for a great many years. Perhaps longer than you, though that isn't important. But I would appreciate a more civilized tone than you are offering in our discourse.
Now, concerning the austrian viewpoint. Would it not be correct to describe it as generally laissez faire?
Jon, I appreciate your attempt at being the "authority" but if you have nothing related to add to the discussion I'd consider it a personal favor if you didn't participate.
I appreciate your attempt at futile condescension, but if you try that again consider yourself banned. Comprende?
Stranger:There's no such thing as pure competition in Austrian economics. You're thinking of neoclassical economics. I recommend that you become knowledgeable in a science before you start criticising it in order to avoid such amateurish mistakes.
OK here is the logic pattern. Show me the error.
1. Austrian Economics is at its most fundamental level a Laissez Faire approach, arguing otherwise is asinine.
2. Laissez-faire seeks to limit or (ideally) eliminate all government intervention, anting all markets to be private
3. In a private market, in order to avoid failure an ideal level of competition must exist. Otherwise the invisible hand doesn't work. For instance, if I own a pizza parlor and I start charging ridiculous amounts for my pizza (and let's pretend for a minute that pizza is an inellastic good), then the ideal market austrian eocnomics hinges on expects the invisible hand to give me the thumbs down, someone else will open up a pizza parlor and I'll either cut prices and costs to compete with him or I'll be driven out of business. Simple enough, I hope. But suppose the fixed costs for opening a pizza parlor are so high that that someone else is unable to compete with me. (as is the case for several industries, think steel and railroads in the 19th century) then there is nothing stopping me from charging prices well above the true value. And since my product is inelastic, there is nothing the market can do to correct it.
Pizza is a bad example, because it is almost completely elastic. But I hope you get the point.
There is certainly nothing "amateurish" about this.
jon,
This is the first time I've met a libertarian who discouraged discussing an alternate viewpoint. i was under the impression that you were logically inclined people who enjoyed discussion and a higher degree of thought, most especially a liberty of speech and ideas. Was that assessment incorrect?
PS: Baldur's Gate 2 is a great game.