I have read some works by Milton Friedman, Ludwig Von Mises, Adam Smith, and Ayn Rand; and they all seem to be correct!
What are the primary philosophical differences between these individuals, especially Milton Friedman and Ludwig Von Mises.
Furthermore, what distinguishes that Austrian School from classical-liberal economics, or free-market economics?
I am a thinker and a student of history, political science, trends, and international relations, but economics is my weakness. I intuitively know that free market economics is correct, and history demonstrates that. But within the very general "free-market economics," what are the different variants? What are the great debates between free market economic thinkers? What are the different schools of economics that consider themselves to be free-market oriented?
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I am seeking to start a private equity fund with the intent of "betting" against the commercial real estate and retail sectors in the United States. As the basis of our business plan will be rooted in economic theory to justify why betting against these sectors through short-selling etc will be feasible, I must fully understand why these sectors are doomed to collapse. I need some answers fast. I believe that economics, as with most mathematical problems, has one correct answer and many false answers. I do not view economics as matter of different opinions, but rather as a science in which there is one correct school of economics with all others being incorrect. I am a firm believer in the power of the free, deregulated market to sustain a high standard of living and elevate societies from poverty to wealth. I blame the actions of government for the current economic crisis (manipulation of interest rates, high taxes, federal reserve system, abolition of gold standard, inflationary spending etc.). What I am getting at here is this: I intuitively know that the answers to our current economic crisis can be found in the literature and philosophies that support free market economics. However, within free-market economics and/or libertarian economics are many different variants. In seeking to predict future trends one must adhere to the correct school of economics. Are there are free market economists or thinkers out there that can explain to me some of the different schools of economic thought within 'free-market economics' and give me the differences between them? Can anybody provide me with a compelling argument for a single school of economic thought within laissez-faire economics that is the most accurate school thus conceived of? Any help would be greatly appreciated. Feel free to respond to this post of just email me.
Any insight would be greatly appreciated.
Thanks,
Stephen Estes
University of Southern California
I'd give this a read for a summary on how the Austrian school differs from other free market schools. With regard to the classicals, George Reisman has attempted to fuse their work with the Austrian School, in case you're interested.
Freedom of markets is positively correlated with the degree of evolution in any society...
StephenEstes:I need some answers fast.
What will you pay for them?
StephenEstes:I am seeking to start a private equity fund with the intent of "betting" against the commercial real estate and retail sectors in the United States. As the basis of our business plan will be rooted in economic theory to justify why betting against these sectors through short-selling etc will be feasible, I must fully understand why these sectors are doomed to collapse.
So let me get this right. You are going to start a private equity fund, to bet against a market, without knowing why that market is doomed to collapse.
You could probably get a job at the FED.
StephenEstes:I believe that economics, as with most mathematical problems, has one correct answer and many false answers.
What you believe is wrong. So we have ruled out what you believe, and what you know. What is left?
StephenEstes:Can anybody provide me with a compelling argument for a single school of economic thought within laissez-faire economics that is the most accurate school thus conceived of?
A better question would be, "why should anyone provide you with a compelling argument?"
You join, presume we owe you answers, for your own commercial gain, demand them quickly, oh, and be sure to email them.
You want a free lunch so you can get rich quick.
Liberty Student,Perhaps I worded my post in an offensive manner. (And apparently everything I know is wrong. Thanks for that one.)Here is what I do know. Market forces are greater than the power of the government to alter them; and right now the market is spiraling, like a wave: first the mortgage bubble burst and we have seen a decline in consumer spending. This decline in consumer spending has consequently produced a decline in retail sales. This decline in retail sales will inevitably lead to a decline in commercial rents, the decline in rents will lead to a decline in commercial property values. At the same time credit card companies will face astronomical levels of defaults and late payments. Thus, the next logical bubbles to burst will be the retail sector, the commercial real estate sector, the credit card sector, and ultimately the US dollar.I am an investor, not an economist. I see forces on the move that will inevitably produce and destroy great fortunes and I was simply seeking some empirical data and scholarly insight into the science behind these forces.
StephenEstes:Perhaps I worded my post in an offensive manner. (And apparently everything I know is wrong. Thanks for that one.)
You did, and it's true.
StephenEstes:Here is what I do know. Market forces are greater than the power of the government to alter them; and right now the market is spiraling, like a wave: first the mortgage bubble burst and we have seen a decline in consumer spending. This decline in consumer spending has consequently produced a decline in retail sales. This decline in retail sales will inevitably lead to a decline in commercial rents, the decline in rents will lead to a decline in commercial property values. At the same time credit card companies will face astronomical levels of defaults and late payments. Thus, the next logical bubbles to burst will be the retail sector, the commercial real estate sector, the credit card sector, and ultimately the US dollar.
I listen to Gerald Celente interviews too.
StephenEstes:I am an investor, not an economist.
How can you invest in an economy, without knowing economics? Sounds to me like you're a speculator, not an investor.
StephenEstes:I see forces on the move that will inevitably produce and destroy great fortunes and I was simply seeking some empirical data and scholarly insight into the science behind these forces.
Well, you won't find that here. There are no secret Austrian mathematical models or forumulas. The Austrian school is based on praxeology, which is the study of human action. While we could make reasonable guesses at the future, we also understand that man has free will, and the collective calculation of a national, let alone global economy is beyond our capacity to comprehend.
We're not about fast, slick answers, models and formulas. If you want to learn economics, there are no shortcuts. If you're interested in making a fast buck, there are hundreds of forums filled with people who will tell you things they do not know, and share facts that are simply untrue.
At least once every two weeks, some guy comes on here and wants to know how to get a good mortgage, how high gold will go, or how to invest. While some folks here have an interest in that, Mises.org is about spreading the scholarship of liberty and rational economics, not forecasting market trends for economic gamblers.
So by all means, sit down, take off your hat and stay awhile. But if your motive is to get reassurance or confirmation for your venture, we're simply not here for that purpose.
Thanks
Science is the effort to discover and increase human understanding of how reality works.Once one gains an understanding of how something works (whether is is a car engine or a global economy), one can theoretically predict future behavior.
I did sit down, I am staying a while. I am going to browse this site until I have read everything relevant.
I have taken basic college courses in micro and macro economics (and I seek to further that education indefinitely). I have also taken a course titled "the Nature of Scientific Inquiry." What I gained from that course was an understanding of what science is. Science seeks to create understandable models that can explain complex events and forces. The ultimate goal of science is understanding followed by prediction. With a basic understanding that Earth revolves around the sun and is stuck in its orbit through gravitational forces, we can say with near certainty that Earth's orbit around the sun will continue for the forseeable future.
Why should economics be any different (is is at least attempting to be a science)? Unfortunataly, I think you may have a tainted view of the purpose of the field of economics. If it does not exist to come up with models that can help predict future events, than what is the point of "economics?" What good is understanding, without making use of that understanding to help shape, or at least prepare, for future events. I know that the Austrian School of economics, or at least Ron Paul who claims to subscribe to the Austrian School, predicted this crisis long ago based upon the actions our government was taking then. So why should we not attempt to foresee what tomorrow has in store for us based upon the actions our government is taking today, coupled with market forces.
There are no easy answers, or quick answers. I understand that. I am seeking enlightenment.
I understand that you know a lot more about the Austrian School than I do. You regard me as a greedy, entitled, short-sighted fool. I do not take that personally. Putting aside what you may think of me, do you , LIberty Student, reccommend any particular article for me to read that gives the run-down on Austrian Economics in comparison to other schools?
StephenEstes:I have read some works by Milton Friedman, Ludwig Von Mises, Adam Smith, and Ayn Rand; and they all seem to be correct! What are the primary philosophical differences between these individuals, especially Milton Friedman and Ludwig Von Mises. Furthermore, what distinguishes that Austrian School from classical-liberal economics, or free-market economics?
Read Murray N. Rothbard. You'll soon see why...
StephenEstes:Why should economics be any different (is is at least attempting to be a science)? Unfortunataly, I think you may have a tainted view of the purpose of the field of economics. If it does not exist to come up with models that can help predict future events, than what is the point of "economics?" What good is understanding, without making use of that understanding to help shape, or at least prepare, for future events. I know that the Austrian School of economics, or at least Ron Paul who claims to subscribe to the Austrian School, predicted this crisis long ago based upon the actions our government was taking then. So why should we not attempt to foresee what tomorrow has in store for us based upon the actions our government is taking today, coupled with market forces.
I accidentally pressed 'suggest this as an answer' when I tried to hit reply if anyone is wondering.
I don't personally know a lot about the Austrian School of Economics other than a little reading here and there, but I'm under the impression from what I have read that it focuses more on human nature (which is often irrational, and often hard to predict) than the nature of an economy itself. Under the current system, you will not have an easy time predicting the economy that well because it's not based on market principles, but relies too heavily on the impression that people will act with absolute reason. Sometimes the system will work, and sometimes it wont.
I think that this community recognizes that if you want to predict the economy, you need a system based more on capitalism and markets than on state intervention. To judge the future of the economy based on mathematics and theorums when the system works heavily with the state (which contributes emotional forces into the equation) is impossible.
While Ron Paul has certainly been right about a lot of things in regards to the economy, he hasn't been right about everything. In his own words, he is suprised that the economy has stabalized itself for so long. There are so many factors and variables in our system that it becomes very hard to predict future outcomes, and it's not always going to be doom and gloom, and it wont always be sunny and nice. It can be the extremes and it can be in the middle.Though our current system can't sustain itself forever is obvious. When it fails however is anyones guess.
However, like I said, I'm no expert and haven't done enough reading into it. If anyone more versed in Austrian Economics finds fault with what I've said, please correct me.
When you create the computer model that can record in real time all human action please get back to us. The computer illiteracy rate is astonding.
The predictions you can make are more generalized. Such as people will generally do what is in their own self-interest and government intervention in the economy only makes things worse. The when, where and how much is much more uncertain.
The fact that you use a subjective word such as "greedy" only proves you have no remote understanding of economics.
"Anarchism misunderstands the real nature of man. It would be practicable only in a world of angels and saints" - Ludwig von Mises
StephenEstes: Science is the effort to discover and increase human understanding of how reality works.Once one gains an understanding of how something works (whether is is a car engine or a global economy), one can theoretically predict future behavior.
This is not true. You are implicitly assuming the constancy principle. You can assume this in the physical and biological sciences - a planet, a stone, a cell, etc, will always react the same way to the same stimulus. Humans are different. Humans can choose what they do. This means that empiricism (which presupposes the constancy principle) is inappropriate for economics. This invalidates all schools of economics other than the Austrian school, since all other schools are empirical. The Austrian school is the only one that recognises the nature of human beings. It recognises that economics is a branch of praxeology: the study of the logical implications of the axiom of human action.
Your definition of science is far too narrow. Science is simply organised knowledge. It can be either empirical (physics, biology, etc) or axiomatic-deductive (mathematics, logic, praxeology). It sounds like your college course completely ignored axiomatic-deductive science.
Government Explained 2: The Special Piece of Paper
Law without Government
Patrick Knight: Under the current system, you will not have an easy time predicting the economy that well because it's not based on market principles, but relies too heavily on the impression that people will act with absolute reason. Sometimes the system will work, and sometimes it wont. I think that this community recognizes that if you want to predict the economy, you need a system based more on capitalism and markets than on state intervention. To judge the future of the economy based on mathematics and theorums when the system works heavily with the state (which contributes emotional forces into the equation) is impossible.
Under the current system, you will not have an easy time predicting the economy that well because it's not based on market principles, but relies too heavily on the impression that people will act with absolute reason. Sometimes the system will work, and sometimes it wont.
Not quite. It's not the current system which is hard (impossible) to predict. It's human actions. Even if we had a free society, we could still not make predictions with any accuracy or confidence. Economics is not about predicting the future.
StephenEstes:With a basic understanding that Earth revolves around the sun and is stuck in its orbit through gravitational forces, we can say with near certainty that Earth's orbit around the sun will continue for the forseeable future.
You can't know what you do not know, so while you believe that prediction to be accurate, it's impossible for you to know what unknowns could alter it.
I really think you would benefit from exposing yourself to Nassim Nicolas Taleb.
StephenEstes:You regard me as a greedy, entitled, short-sighted fool.
I do, but not for reasons you already understand. I've seen guys like you in business before. One in one million makes it, and that one because he is lucky, then he immediately establishes a confirmation bias that his success means he knows what he is doing.
Don't destroy capital by gambing, and don't tell people you are a free marketer. That looks bad for all of us.
If you follow guys like Jim Rogers or Peter Schiff, they are into longs more than shorts. Because they understand that while AE gives insight into the performance of markets, even statist markets, they also know it is impossible to time markets. This is also why Ron Paul makes accurate predictions, without giving dates. It's all fun and games when you give Schiff your money, and then the dollar rallies, you get hosed, because we might be 5 or 10 years from a dollar collapse, not as soon as his media performances seem to indicate.
StephenEstes: Putting aside what you may think of me, do you , LIberty Student, reccommend any particular article for me to read that gives the run-down on Austrian Economics in comparison to other schools?
From what you've written, sounds like you have a lot of unlearning to do first. It's more important to understand economics than to understand what schools there are. The question is, are you learning because you want to understand and profit in a general sense, or are you only interested in understanding for this particular scheme and profit motive?
StephenEstes:If it does not exist to come up with models that can help predict future events, than what is the point of "economics?" What good is understanding, without making use of that understanding to help shape, or at least prepare, for future events.
The point of economics is to understand that some things cannot be modeled, to sort out what is known from what is unknown, and what is true from what is false. Personally, I like economics because it helps me better understand the world. I'm engaged in less economic activity, but more responsible and sustainable activity.
StephenEstes:LIberty Student, reccommend any particular article for me to read that gives the run-down on Austrian Economics in comparison to other schools?
I don't know of any. But why not just learn what AE is? I don't think you will be able to make an intelligent analysis by consulting a checklist. Knowledge is not like grocery shopping. Skipping straight to conclusions without understanding is precisely what I have been talking about. Do the work. It's an investment into your life.
The article i provided does summarise the core differences, but I agree he should learn by reading the main body of Austrian theory for himself.
StephenEstes:I do not take that personally.
Whether you did or did not, I owe you an apology. I've been too difficult with your request and it was inappropriate.