Help for a beginner to Austrian economics.

Jeff posted on Wed, Jun 17 2009 5:25 PM

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I was recently in a discussion about economics on a message board and was basically making some general  statements about Austrian economics being superior to Keynesianism etc. A poster got involved with the discussion and brought up some criticism of Rothbard and Mises that involves some concepts I’m not familiar with yet and I was hoping members of this board could offer a rebuttal not just so I have something to say to the poster but to also help further my understanding. Below are the posters claims:

“To subscribe accept a large portion of Mises and Rothbard’s writings one has to reject mathematically substantiated key elements of neoclassical economics.”

“In Rothbard's rejection of utility functions in favor “value scales”, he uses the argument of ordinality over cardinality. This demonstrates an incomplete understanding of utility functions. The same ordinality that Rothbard claims with “value scales” exists within utility function. Unfortunately, insufficiencies exist with “value scales” in regards to backward bending supply curves. This forces Rothbard to make concessions in his writings concerning labor and land or economics of taxation.”

“Mises and Rothbard both considered the concept of indifference incoherent thus, rejecting the use of indifference curves in their economics. Their assumption is that if no preference exists, then no choice can be revealed in action. This is clearly preposterous.”

“Mises and Rothbard also take objection to continuity… Supply and demand curves cannot be continuous. Since a function that is not continuous cannot be differentiated, the use of calculus cannot be used to support Mises and Rothbard’s formulae. Not much of problem for Mises since he uses very little mathematics in his support. A big one though for Rothbard, as his works are filled with simple algebraic constructs as even Rothbard’s simple algebra fails without the underlying support of calculus.”

“Rothbard’s statement “Every market transaction benefits all participants, while every government intervention benefits some at the expense of others” is naïve. This is the “free market” mantra and needs to be examined closely. While a majority would agree with the second half of the statement, the first half is clearly questionable.

While the Austrian school of thought (using economics as it’s application) have provided interesting theoretical insight into the study of human behavior and as a by product provided some ideas into economic impact of that behavior, the foundation upon which it is built is not sound soil.

While these opinions may be mine, it seems that they are shared by all but a handful of educational institutions.”

Any thoughts?thx in advance to those that reply.