Hi,
I saw Jeffrey Tucker make this comment:
After Rothbard, I seriously doubt that minarchism has a future in libertarian thought. The anarchism in Austrian ranks is nearly 100% - but the anarchism can exist within a Hayekian, Misesian, Lachmannian, Kirznerian, or even Chicagoite theoretical structure. To be a libertarian anarchist does not necessary mean you are a Rothbardian in all respects, and to be a Rothbardian does not imply unwillingness to learn from others. - http://mises.org/Community/forums/p/12848/281261.aspx#281261
What are the main differences between those different theoretical structures?
Hayek comes from the Wiesnerian school of thought, so he wanted to focus on a more objective (as opposed to subjective) view of the economy and wanted to create a sort of austrian general equilibrium analysis. So he also used math but not the degree of regular neoclassicals.
Lachmann was an ultra-subjectivist who praised keynes. He didn't believe that entrepreneurs tended to direct the market towards an unattainable equilibrium since he thought such an idea was too objective. He viewed all of economic life as a kaleidoscope -things don't equilibriate in a kaleidoscope but they rather change in certain patterns and this was to distinguish himself from everybody else who supposedly believed in pendulum like change -change that does tend towards an equilibrium.
Mises believed that monopolies were bad which was different from rothbard who didn't think monopolies were so anti-free market.
@fakename
I must disagree with your characterisation of Hayek. I understand that Salerno, Hoppe, Rothbard and other explicit members of the Mises school see Hayek as being a “verbal equilibrium theorist”, I make no argument against that statement, I would just point out that the issue is still disputed.
However this -
“so he wanted to focus on a more objective (as opposed to subjective) view of the economy”
seems a little strange from the man who said.
“It is probably no exaggeration to say that every important advance in economic theory during the last hundred years was a further step in the consistent application of subjectivism.”
Also
“So he also used math but not the degree of regular neoclassicals”.
I would be genuinely interested in examples of this. I have never seen Hayek use so much as an single equation. And he was as against econometrics and positivism as much as Mises or any other Austrian. Also to try and answer consultants question the Kirznerian, and mainstream neoclassical(of which Chicagoite is a subcategory) way of thinking are dealt with in Kirzners essay 'How Markets Work'. The difference is basically between entrepreneurial discovery and assumed static equilibrium states. As a bonus it also discusses the positions of Hayek and Mises.
Copy and paste the Url for the PDF
http://www.iea.org.uk/files/upld-book104pdf?.pdf
Well the faults are entirely mine as I once heard that Wiesner used math so I figured that hayek used it too. But I also thought that since the question was about schools of thought, that it would be approriate to mention math in some way (as Wiesner did use math). But I didn't mean to imply that hayek necessarily used math, but since I didn't know exactly what hayek used, I figured I would write the paragraph as ambigously as I could knowing that someone more knowledgeable than I would correct any mistakes.
Lachmann was waaaay out there. He took subjectivism to new extremes. At some point in my life I want to study Lachmann in depth.
Political Atheists Blog
Seconded. From what I've read by Lachmann the uncertainty would necessitate the state just so markets could function at all. So I'm not sure what (or who) Jeffrey Tucker was referring to.
Thanks to all of you. Faustus, thanks for that paper, looks very promising and ideal in length too. It's on my to-do list.
Krazy Kaju, could you please elaborate on what "taking subjectivism to new extremes" implies?
In what way can you go further (or less far) in subjectivism or praxeology than Mises? (Other than applying same methods to new areas, such as ancap free market law and defense.)
"It has indeed become evident in recent years that there are three very different and clashing paradigms within Austrian economics: the original Misesian or praxeological paradigm, to which the present author adheres; the Hayekian paradigm, stressing “knowledge” and “discovery” rather than the praxeological “action” and “choice,” and whose leading exponent now is Professor Israel Kirzner; and the nihilistic view of the late Ludwig Lachmann, an institutionalist anti-theory approach taken from the English “subjectivist” - Keynesian G.L.S. Shackle.
For the latest on the three Austrian paradigms, the reader is referred to the Mises Institute Working Paper by the present author, “The Present State of Austrian Economics” (November, 1992)."
- Murray Rothbard, Preface to Man, Economy, & State, Scholars Edition, 1993
edit: I'm not necessarily suggesting I believe Murray Rothbard's words to be the final say. I just happened to be familiar with this quote, and posted it for your further reading.
Consultant: Krazy Kaju, could you please elaborate on what "taking subjectivism to new extremes" implies? In what way can you go further (or less far) in subjectivism or praxeology than Mises? (Other than applying same methods to new areas, such as ancap free market law and defense.)
It all pertains to how uncertain the future is. Lachmann thought there was no certainty therefore economic law does not exist. While there maybe uncertainty it future action, it does not cancel out axiomatic laws of economic interaction. It is not as if in the future someone will be able to choose their second highest value instead of their first or that economic trade will someone turn into a trade based on an equality between goods.
'Men do not change, they unmask themselves' - Germaine de Stael
Before giving my take on this, we should never-ever-ever forget that, no matter what differences there are in the 'Austrian' school, that 'we' are more connected to one another, then we are to the mainstream 'in general'. Adding to that: we should also remember that the mainstream is becoming more and more 'Austrian' - no matter how you define it. Compare Samuelson's 'Economics' to Man, Economy & State: you'll see 2 different worlds; as if they weren't talking about the same thing.
If you, however, compare Mankiw's economics too MES or other stuff published by Austrian's now a days: you'll see more and more overlap. We mustn't forget that 'most' economics - especially the ones who make valuable contributions - in the mainstream acknowledge that the market isn't a static, perfect competition thing in real life. That doesn't mean they will acknowledge praxeology, entrepreneurship as fundamentally uncertainty bearing or whatever. It does mean that they will acknowledge more arguments that Austrian stress then 50 years ago.
I've got to admit; I'm more of a big tent Austrian, by which I mean a lot of economics can be reconciled with Austrian insights, e.g. modern New Institutional Economics, Public Choice, etc. The reason why I call myself an Austrian, is because the quintessential way I see the methodology of studying the market - and the market itself - through Austrian glasses: cause and effect, realism, change, useage of ERE, verstehen in stead of erklären, etc.
On the differences between Shackle, Lachmann and Hayek with 'standard' Rothbardian thought, the paper to read is Selgin's 'Praxeology & Understanding'. You can find the link here.
Basically it pertains to the uncertainty of the future, i.e. lachmann thinks of the world being 'Kaleidic' with radical uncertainty, while the standard Misesian vision is that there is such a thing as uncertainty, but it amounts to caseprobability, i.e. you can make reasonable and less reasonable statements about it and act upon it. There is uncertainty that you might not leave your house today, but nonetheless you can make a reasonable guess what will the most likely outcome to the question wether or not you'll leave your house today.
I would argue that a lot of the 'differences' between the 2 main lines - one associated with GMU and one with the Mises Institute - isn't as a big as some would like to argue. (Obviously; I'm not talking about strategy, personal differences, etc. I'm talking about the way they do and see economics.) E.g. Klein's new book on enterpreneurship is very interesting and gives a different focus then Kirzner's 'Competition and Entrepreneurship', but I would argue that the difference is smaller then some (including Klein, I think) would argue. The whole discussion on 'full' or 'fractional' reserve banking is completely irrelevant, in the sense that the economics behind is, for the most part, identical. 'Monetary equilibriumtheory' isn't that much different as the analysis behind full reserve banking. The usage of equilibrium - between Hayek and Mises - isn't that much different; the only thing that Hayek wanted to add is that economics should also take into account the way people learn in rl - whilst, if you stick to a pure a priori reasoning, you can just accept the fact the people learn and make mistakes. There is nothing wrong with that, but you can expand the body of knowledge if you think about those mechanisms too. Another example is the concept of appraisement: Salerno stresses this point - and deservingly so - but that doesn't mean that the Hayekian point of being confronted with prices isn't true also. (Only in a world were people appraise situations perfectly, there wouldn't be a need for the Hayekian point.) Etc.
Summing up: it's not bad to know the differences, but far more important than knowing the differences, is knowing the similarities and the way the mainstream is becoming infected with issues the Austrians have taken into account for years now. So we will be able to make valuable contributions. Yes, yes, they still take regressions. But the new and excited stuff in the 'mainstream' isn't the next regression; it's theoretical insights, who are more or less based on the recognition of causal mechanisms.
The state is not the enemy. The idea of the state is.
what is ERE and GMU please
The ERE is the equilibrium concept that MIses (& Rothbard & others) used. It's the concept of the 'Evenly Rotating Economy', i.e. an economy where nothing ever changes. It's important to explain the differences between interest and (entrepreneurial) profit/loss.
GMU is George Mason University, where a lot of good Austrians work: Peter Boettke, Lawrence White, Chris Coyne & Peter Leesson. And people like Steve Horwitz are also associated with it - because he's a good friend of them and goes there for a special seminar. But they have a bit of a difference in opinion with people like Salerno, as far as I know. They have a different emphasis, different visions on certain things, different visions on how to approach the main stream, etc.
But, again; I would consider that to be of subsidiary importance: they all produce good stuff.