I've been searching and I can't find a solidly constructed argument anywhere. There must be some conception of economics that allows for a somewhat logical argument against austrian theories. Is the best argument against it simply that it hasn't actually been tried? This is all I can come up with that is reasonable. The other criticism that I've run into is that the pressupositions of austrian economics aren't necessarily true. This doesn't make sense to me, as the presuppositions I'm aware of (scarcity of resources, acting to fulfill desires) seem pretty much to reflect reality. The ones I'm going off of are from the first section of Man Economy and State.
any thoughts?
Here's the best one I've heard: if gold were used as currency men would have to carry purses instead of wallets. (As of yet, I'm not completely convinced of Austrianism's inadequacy as an economic theory, though ).
Diminishing Marginal Utility - IT'S THE LAW!
The best criticism I have seen anywhere is Caplan's. However, all of his main points have been refuted by Block and Long, at least in my eyes.
Market anarchist, Linux geek, aspiring Perl hacker, and student of the neo-Aristotelians, the classical individualist anarchists, and the Austrian school.
For what it's worth: my two cents on the limits of the Austrian approach. But I don't think anyone's going to want to argue that Austrian economics is, as a research program and economic paradigm, simply wrong. One could coherently argue that certain claims made by Austrians have been mistaken, or that some of the insights put forth by Austrians are more limited in application than some give them credit for being, or that there's not as much that sets the Austrian school apart from other schools of economic thought as some people think. But to find someone issuing a blanket objection to the entirety of Austrian economics would be pretty odd. The closest things I can think of might be Caplan's "Why I Am Not an Austrian Economist," and section IV of Boettke's "What is wrong with Neoclassical economics (And what is still wrong with Austrian economics)." I should point out, though, that I'm not an economist by training or focus, so I might be missing something.
Regarding Caplan, there's a number of articles addressing his claims. Nozick also attempted a critique of the Austrian School on indifference analysis IIRC, and has also been responded to. A lot of "critics of Austrian economics" sites (invariably run by partisan hacks) usually "forget" to list these, so I feel I should mention it.
Freedom of markets is positively correlated with the degree of evolution in any society...
wombatron: The best criticism I have seen anywhere is Caplan's. However, all of his main points have been refuted by Block and Long, at least in my eyes.
I will check into this. thank you.
like I said, the most reasonable thing I've heard is that the presuppositions are basically arbitrary. But since I'm not sure which presuppositions the original speaker was referring to an argument never materialized.
I think I just need to read Human Action.
edit: read caplan, the non-technical aspects involved enough bull shit that I'm unwilling to unravel the technical bits. according to caplan people are supposed to be able to predict the future for the economy to work. he basically admits that under the current system success comes from guessing which way the government will jump next.
onto Boetke.
Edit: Whoa! am i reading Boetke right? it seems like his main point is that Austrian economics are irrelevant because theories only work in sterile environments?
Couldn't that point be made about any system ever?
It also seems to say that since we are not living within a system founded upon Austrian theories that we can't use Austrian solutions to problems. This just strikes me as being unable or unwilling to go beyond the current paradigm.
Donny with an A:For what it's worth: my two cents on the limits of the Austrian approach.
I agree with you insofar as the qualitative predictions of austrian economics are't well suited to short term prediction. They do, however, seem to yield much better predictions long term than any competing theory.
edit: after doing a lot more reading it seems that my nagging feeling was correct. I would say the most devastating critique of austrian economics is that it doesn't make falsifiable predictions and would therefore not be considered science by some. everything is built on the priori assumption that human action is both deliberate and purposeful.
The way I see it, it's sort of like this: It's not that action isn't purposeful; if we define an "action" as involving deliberation, choice, and execution, then it's true that action is purposeful. This is true because of the way we've defined "action;" it's an analytical truth. But some people (myself included) would point out that not everything we do involves deliberation, choice, and execution. The most obvious examples are reflexive or conditioned behaviours: when you strike my knee, my leg shoots up; when I sneeze, my hand automatically darts to cover my mouth; when someone asks me how I am, I rarely think before responding, "I'm doing alright." If I don't deliberatively choose to do these things, then the Austrian logic falls apart; it's no longer true a priori that I purposefully did them, or that I believed that doing what I did was for the best. One may be able to argue that I didn't actively restrain myself from doing those things, but the Austrian claims don't apply to unintentional ommissions, they apply to actions.
The same sort of problem presents itself in other areas: Austrian analyses are correct, but they sometimes don't apply. For another example, if a business actively chooses to not hire an additional employee, it can be presumed that they didn't believe that doing so would be profitable; in their eyes, the marginal cost of the employee would be larger than her marginal product. But if the business never considers hiring a new employee, we can't say anything.
Austrians could argue (and often have to me) that economics can't be concerned with anything besides actions; we simply can't say anything useful about non-purposeful behavior. And that may be true. But it does limit our ability to look at the real world and arrive at any conclusions: concepts like "demonstrated preference," for example, can be seen to be troublesome when we don't understand exactly what was deliberately chosen (or what people thought they were deliberately choosing), and the all-too-typical Austrian tendency to look at market processes with satisfaction can be seen to be wanting for the kind of entrepreneurial perspective that the Austrians themselves pioneered. To be clear, I don't mean to suggest that Austrians don't possess the tools to think properly about these things; they clearly do. Mises, Hayek, and Kirzner were the ones who introduced me to these problems, and the more perceptive Austrians are well aware of them. But as I noted in my blog post, these factors inherently limit the capacity of Austrian theories to be applied to real-world events. We often simply cannot know that the phenomena we observe warrant the descriptive terms used by Austrian analyses, and if we can't correctly apply those descriptors, the cogent a priori analysis flatly does not follow.
Of course, there's also the (left wing) Anarchist's critique of Austrian economics in their FAQ.
I wouldn't say that it's a particularly robust critique of Austrian economics but it makes quite an entertaining read.
Hey! Haven't seen you around in a while; welcome back!
Alright, matey?
I just float about not posting much these days (I still prefer the old forum)...
Agreed; I was a holdout for a while, but the company all but vanished.