#AustrianEconomics #EconomicTheory #SchoolsOfThought
Hey there! 👋 So, I’ve been diving into the world of economics lately and I can’t help but notice that Austrian economics seems to get a pretty bad rap. I mean, why does it seem like everyone hates on it?
Here are a few thoughts on why Austrian economics might be perceived negatively:
– Lack of mathematical models 📉
– Emphasis on free market principles 📈
– Resistance to government intervention 🏛️
But hey, don’t let the haters discourage you! Austrian economics has some valuable insights to offer, such as:
– Focus on individual action 💼
– Emphasis on subjective value theory 💰
– Critique of central planning 🔄
So, what do you think? Ready to give Austrian economics a fair shake and explore it with an open mind? Let’s keep the discussion going and learn from each other! 🤓 #OpenMinds #LearnTogether
>Since then I’ve become intrigued with the various schools of thought and enjoy looking at them like philosophies, without personally identifying with one strongly yet.
I’m going to expand on the other two comments on why the contemporary field has almost entirely moved away from normative discourse in general, and why schools of thought are an inefficient way of approaching the discipline.
Schools of thought were important in the early days of economic thinking because we did not have ways of precisely mathematically describe reality or the data to validate one’s theories. People told stories not because stories are the best way to advance human understanding, but because they didn’t know what RCTs were and couldn’t solve a Lagrangian. It doesn’t take away from Marx or Smith or Hayek’s insights, but there’s little point in using such outdated tools if your goal is to advance our understanding of the world and facilitate economic growth.
If you wrote down and calibrated a model to conclude that medicare for all would reduce the deficit, and I wrote down a different model that came to the opposite conclusion, then we’ve collectively advanced the field. Perhaps a more extensive approach would bridge the difference, and perhaps eventually lead to policy and better outcomes. If you wrote a treatise about how a public option infringes on some nebulous right, while I wrote one about how healthcare is a human right, very little of value has been created.
It’s still possible for people to talk past each other in the first case, yet by being mathematical and relying on data, economics has created a tremendous amount of value in the last half-century, while many non-technical disciplines have failed at any sort of common project.
This isn’t specific to the Austrians, but the Austrians in particular elevate a surface-level understanding of basic theory and have all but turned it into a religion. The thing is, the vast majority of ideas and findings in the field don’t need to appeal to morality or rights (beyond, say, the Coase theorem). We know that it’s a good idea to smooth economic cycles. We know that some goods should be provided by the state. Rejecting those ideas on grounds of morality is no different from a creationist rejecting the existence of dinosaurs.
I have been involved in libertarian communities for about 15-16 years now and the people that are pro “Austrian” school are less interested in economics and more interested in being dogmatic libertarians. Even Ludwig von Mises had a bit of dogmatism in him (when he heard people in the Mont Pelerin Society talking about the best way to tax, he called them a bunch of socialists). However, it was really Murray Rothbard and Hans-Hermann Hoppe that made this huge push that government could do absolutely nothing good and that negative rights were absolute, universal, and should never be violated in any circumstance.
This message was pushed heavily along with basic economics to back it up. This message resonates with a lot of people (myself included when I was much younger). The logic of basic microeconomics is so strong that, when coupled with a philosophy about negative rights being *the* moral center of attention, it is very influential. In my opinion, the people that push this ideology do not care about economics as much as they care about politics and morality.
I am going to be very blunt:
1. Murray Rothbard’s only good at explaining, very topically, how fractional reserve banking works. Outside of that, he is not an economist that anyone in the field takes serious — unlike previous Austrians like Hayek and Mises.
2. Hans-Hermann Hoppe is not respected by any philosopher that is in libertarian circles (as far as I know) and he most *certainly* is not respected by any philosopher outside of libertarian circles. It’s not because he’s a jerk or anything like that. He is just a dogmatist and doesn’t have many good arguments for his ideas.
3. The only contribution that Murray Rothbard has made outside of the explanation of fractional reserve banking is his history of banking in the United States.
This doesn’t mean *all* Austrian economists are bad. Obviously the Austrian School of Thought has been very influential since its inception, but *most* *modern* Austrian economists are mostly just dogmatic. There are some exceptions like Roger Garrison, Peter Boettke, and Bob Murphy. Many, many others in the field, and *especially the fans/libertarians*, are *not* interested in *actual* economics as much as they are about pushing their own ideology and agenda.
By the way, before anyone downvotes, I am a libertarian and you’ve probably liked some of the work I put out behind the scenes (i.e. I’ve worked with some of your favorite non-profits).
***EDIT:*** I want to really emphasize that “schools of thought” do not largely show up in academic economics anymore. I am even baffled and disappointed when great economists make stupid references to “neoliberal” or calling some economists “free market economists.” If anyone is interested in having an actual fact-based field of research, then we should all be working together to solve problems. Not every problem is going to have one single solution.
Austrian economics is pretty much dead. Schools of thought in general are dead. There is just “economics” now. Over the past decades, economics has moved much more towards a consensus and in the process of that lost any real need for “schools of thought”.
Exceptions exist of course, but this has certain implications for those who despite this still stick to aligning themselves with specific schools of thought.
For the Austrians, you get a few people you could vaguely still call economists that are just stuck in the past and missed the last 50 years or so of development. At best those are just not interesting.
But then you also get a lot of “internet Austrians” that find whatever image they have of Austrian economics appealing without really actually understanding too much. These are often goldbugs, bitcoin bros, libertarians, and other basically inherently unpleasant folks. Oh, and don’t forget the people who love to misuse that one Friedman quote, those are on my very personal shitlist.
This mostly isn’t different in principle for say Marxists or other various groups economics stopped caring about ages ago.
So calling yourself an Austrian often conveys something between “I really don’t know much about modern economics” and “I am an Austrian because I pick my economics after my political ideology instead of letting my political opinions be informed by state of the art science”. And really, the debates have been had. Especially internet Austrians are usually not really particularly original in their arguments and have a very shallow understanding so it’s just repetitive and not interesting, so why even engage?