Economics Questions

Re: Was Rothbard an Austrian Economist?

Kirznerian — Fri, 01 Feb 2008 04:48:44 GMT

Physiocrat:

If people had no ends they wouldn't act. Since they do act they must have ends and thus know they have them.

Sorry, I forgot to put one word in the sentence. Austrian economic theory is based on the fact that people do not know ALL the consequences of their actions. This means that people do not have perfect knowledge about the means and ends possible. And that this knowledge is dynamic, because during the process of acting, people learn about their mistakes.

Read this article:

Economics and Knowledge

Oh so Block, Hoppe and Hulsmann are early 20th century Austrians then.

No, but they appear to think like Austrians trained in Vienna during the 20's.

I havent read any of Robbins so I can't comment. However what I can comment on is modern micro because I unfortunately study it. Indifference curve analysis, continuous utility functions, objective budget constraints, assumption of consistency, technological based production functions, objective consumer surpluses, equivilating variations, income effects (I'm with Salin equivilatingrfect competition, unrealistic assumptSalinof perfect knowledge, the lack of a proper price formation theory, and these are all in the Austrian tradition?!

These are all minor differences. And the general equilibrium theory with perfect competitive markets describes the equilibrium position that is part of austrian economics. What is the main difference between austrian economics and modern microeconomics? The main difference is explained by Kirzner in this interview:

Kirzner inverview

Re: Was Rothbard an Austrian Economist?

Physiocrat — Thu, 31 Jan 2008 01:11:24 GMT

Kirznerian:
Not exactly. Hayek's theory denies the assumption that individuals KNOW theirs means and ends. This means that individuals do not maximize their utility. In neoclassical terms, in the theories of mises, hayek and kirzner, individuals are not always rational. Mises definition of rationality is different than the neoclassical definition. In Mises and Rothbard this notion of knowledge is only implicit in their though.

If people had no ends they wouldn't act. Since they do act they must have ends and thus know they have them.

Kirznerian:
I think that Rothbard was an austrian. But he failed to understand the more recent austrian contributions. He was like an early 20th century austrian.

Also, by your definition Robbins was an austrian. And modern microeconomics too.

Oh so Block, Hoppe and Hulsmann are early 20th century Austrians then?!!!!

I haven't read any of Robbins so I can't comment. However what I can comment on is modern micro because I unfortunately study it. Indifference curve analysis, continuous utility functions, objective budget constraints, assumption of consistency, technological based production functions, objective consumer surpluses, equivilating variations, income effects (I'm with Salin on this), perfect competition, unrealistic assumptions of perfect knowledge, the lack of a proper price formation theory, and these are all in the Austrian tradition?!

Re: Was Rothbard an Austrian Economist?

Kirznerian — Wed, 30 Jan 2008 22:41:07 GMT

Physiocrat:
The idea of entrepeneurial discovery was devised by Hayek and his spontaneous order malarkey. This denies conscious action of individuals using means to attain ends.

Not exactly. Hayek's theory denies the assumption that individuals KNOW theirs means and ends. This means that individuals do not maximize their utility. In neoclassical terms, in the theories of mises, hayek and kirzner, individuals are not always rational. Mises definition of rationality is different than the neoclassical definition. In Mises and Rothbard this notion of knowledge is only implicit in their though.

I think that Hayek's work only made explict what was implicit in Mises's theory.

Further Hayek deviated from the Rationalist Deductivist approach of Menger, Bohm-Bawerk and Mises. Hayek was a Wiserian- Wiser Mises argued was a member of the Lausanne School. It is actually Hayek, Kirzner, Lawrence White etc who are not the Austrians. To declare that Rothbard wasn't an Austrian, though there is no other work more closely related to Human Action than MES, is completely and utterly absurd.

I think that Rothbard was an austrian. But he failed to understand the more recent austrian contributions. He was like an early 20th century austrian.

Also, by your definition Robbins was an austrian. And modern microeconomics too.

Re: Was Rothbard an Austrian Economist?

kaxahdan — Wed, 30 Jan 2008 06:14:36 GMT

Kirznerian:
I think that Rothbard had a very weak understanding of the problem caused by monopolies. And exactly why they are though to be inefficient. His arguments do not reach the core of the problem. He does not appear to understand the Austrian notion of competition as a dynamic process of entrepreneurial discovery. This is one of the main points against the idea that rothbard was an economist of the Austrian tradition.

I have to disagree. Armentano in "A Critique of Neoclassical and Austrian Monopoly Theory", also Block in "Austrian Monopoly THeory - a Critique" pointed out the weaknesses in both Mises' and Kirzner's views on monopoly. Murphy said the contribution of Rothbard in this field was ahead of its time. As far as I know of monopoly theories, Rothbard's insight stemmed precisely from his understanding of the dynamics in entrepreneurship, the role of consumers, and the state's intervention. Was Rothbard an Austrian Economist is really what a question in the first place.

Re: Was Rothbard an Austrian Economist?

Inquisitor — Wed, 30 Jan 2008 03:21:25 GMT

Kirzner is an Austrian IMO. There's no point in excluding him. As far as I know he is also favourable to the idea of an axiomatic-deductive methodology. I don't think his departures are as serious as those of Hayek. Rothbard is definitely an Austrian, no question about it. The more interesting case is that of Schumpeter, and to an extent that of Reisman, although I consider the latter to be an Austrian.

Re: Was Rothbard an Austrian Economist?

Physiocrat — Wed, 30 Jan 2008 00:53:54 GMT

Kirznerian:
I think that Rothbard had a very weak understanding of the problem caused by monopolies. And exactly why they are though to be inefficient. His arguments do not reach the core of the problem. He does not appear to understand the Austrian notion of competition as a dynamic process of entrepreneurial discovery. This is one of the main points against the idea that rothbard was an economist of the Austrian tradition.

The idea of entrepeneurial discovery was devised by Hayek and his spontaneous order malarkey. This denies conscious action of individuals using means to attain ends. Further Hayek deviated from the Rationalist Deductivist approach of Menger, Bohm-Bawerk and Mises. Hayek was a Wiserian- Wiser Mises argued was a member of the Lausanne School. It is actually Hayek, Kirzner, Lawrence White etc who are not the Austrians. To declare that Rothbard wasn't an Austrian, though there is no other work more closely related to Human Action than MES, is completely and utterly absurd.

Re: Was Rothbard an Austrian Economist?

eric lansing — Tue, 29 Jan 2008 20:38:03 GMT

Hayek believed everyone should be allowed to issue "Hayeks" etc - kind of like Mike Sproul. Rothbard was a gold standard guy. I can't take the idea that "Rothbard was not an Austrian" seriously.

Re: Was Rothbard an Austrian Economist?

Kirznerian — Tue, 29 Jan 2008 19:50:32 GMT

jtucker:
The grain of truth here is that Rothbard went beyond Mises and Hayek in some areas, e.g. monopoly theory,

I think that Rothbard had a very weak understanding of the problem caused by monopolies. And exactly why they are though to be inefficient. His arguments do not reach the core of the problem. He does not appear to understand the Austrian notion of competition as a dynamic process of entrepreneurial discovery. This is one of the main points against the idea that rothbard was an economist of the Austrian tradition.

public goods, analysis of taxation, history of thought, and policy generally.

I agree that in these areas Rothbard made some very productive contributions. But these fields are not part of the distinctive aspect of Austrian economics: the idea that individuals do not know all means available to reach their ends. This idea is the dynamic aspect of economics, that during the passing of time the knowledge about the framework of possible actions is changing.

But there is a difference between a development and a departure. This article treats every contribution as a departure, and is filled with thinly veiled invective that I seriously doubt the author would endorse today.

The article is too aggressive, but it is clear to me that Rothbard was a neoclassical economist with some Austrian influences rather than an Austrian economist in the tradition of Mises and Hayek.

Re: Was Rothbard an Austrian Economist?

Brainpolice — Mon, 28 Jan 2008 18:22:15 GMT

I'd say that Rothbard is a logical extension of Mises. As Tucker says, deviation need not be a departure, it may be an extension.

Re: Was Rothbard an Austrian Economist?

jtucker — Mon, 28 Jan 2008 15:04:33 GMT

The grain of truth here is that Rothbard went beyond Mises and Hayek in some areas, e.g. monopoly theory, public goods, analysis of taxation, history of thought, and policy generally. But there is a difference between a development and a departure. This article treats every contribution as a departure, and is filled with thinly veiled invective that I seriously doubt the author would endorse today.

Was Rothbard an Austrian Economist?

Kirznerian — Mon, 28 Jan 2008 06:05:04 GMT

I read o lot of Rothbard's books, but after a profound study of him, I think that Rothbard wasn't a "pure" Austrian in the way that Mises and Hayek were.

http://economics.gmu.edu/pboettke/pubs/econ_liberty_rothbard.pdf

This article is a bit to extreme, but I agree that there are some profound differences in Rothbard's though and the line of though that is associated with the modern Austrian School.