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0 sats \ 15 replies \ @Rothbardian_fanatic OP 12 Dec \ parent \ on: What Modern Economists Can Learn from the Austrian School of Economics econ
The whole problem with that is the empirical vs apriorism is that you have to start somewhere. They use observed data and hypothesis and we use the basic premise to a logic tree. They look for observable data, we look for deductive logic from a beginning foundation. I still think ours works better.
Sometimes people have trouble with the idea of starting with individual action and working up the chain from there.
I think it's a false dichotomy. First, modern economists do build up from deductive reasoning about individual human action. Second, without empiricism then many of deductive chains of reasoning just end up in "it depends."
I'll be honest, I have a hard time understanding the Austrian critique of mainstream economics. It feels like they are criticizing a straw man.
I'll fully acknowledge that mainstream economists are too quick to suggest government action as a response to so-called "market failures", and I would heartily agree that many of them put too much faith in their models and econometrics.
But to me, the issues with modern economics doesn't stem from the methodology, but instead from a lack of humility and a lack of wisdom.
That being said, I would support the bringing back of dialectic and qualitative argument back into mainstream economics. These days, the profession has become so enamored with its illusory "mathematical rigor" that you can't publish without some heavy math or econometrics.
So, to sum up, I'm pretty sympathetic to the Austrian viewpoint. I just think they are too dogmatic about methodology. The critique should be the degree of trust we place in mainstream methods, not in whether or not those methods are legitimate or useful.
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There are times when dialectic will not work. You cannot compromise some things without destroying both. They criticize trying to make humans into homo economus and the mathematical, statistical and econometric models of human action. They don’t seem to work very well or reflect reality.
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Any serious economist knows that the homo economicus model is only a simplification of reality. Some Chicago types have gone overboard in believing it to be true, but they're outliers.
Austrians make simplifying assumptions, too. What I see as the important distinction is that Austrians are usually more aware of the significance of their assumptions and the assumptions are made for the purpose of clarification rather than tractability.
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Often the simplification assumptions that Austrians make are, on a granular basis, not much different from the real case. But I guess you could say that for almost all simplifying assumtions.
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One of the other pillars of Austrian economics is called "epistemological humility". That might be the critique that would resonate with you more.
On these two points (apriorism and individualism), my issue is largely that economists aren't generally aware of the significance. Basically, I don't think economists tend to actually understand the philosophical underpinnings of our discipline and don't generally care to do so.
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Oh, yes, I think the entire world of academia could use a good dose of epistemological humility. And, I think they are getting it... look at how many people voted for Donald Trump and the utter embarrassment that Harvard has become.
I'm curious what the philosophical underpinnings of Austrianism are. I think I sort of understand the words apriorism and individualism, but maybe not the specific nuances as to how they influence Austrian theory.
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I recommend reading the first part of Human Action. It's my favorite part of the book and it's devoted to the philosophy of economics. The rest of the book is also great, but you may not have the spare time for a dense thousand page treatise.
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The beginning of Rothbard’s Man, Economy and State Power and Market at:
https://mises.org/library/book/man-economy-and-state-power-and-market
This is a good reference, but rather longish.
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Will do
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I have no sympathy for any of the academics that brought this situation on themselves. They took the route they thought best and are doing what they chose. Now, the accountability for the responsibilities they had is coming home to roost.
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I generally recommend starting by reading these book (they run from easy to more difficult:
Hazlitt's Economics in One Lesson (1946)
Gene Callahan’s Economics for Real People: An Introduction to the Austrian School
Mises’ Human Action
Rothbard’s Man, Economy State with Power and Market
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SimpleStacker is an economist, so I'm pretty sure he can dive right into the deep end.
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OK, I wasn’t exactly sure. This is what I recommend to people that ask me in general. I am never sure how much economics they understand when they start out.
BTW, thanks for the heads up on his status as an economist.
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If you can, try to get the Scholars Edition. You can also get a PDF directly, for free from the Mises Institute at www.mises.org
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I think one of the reasons for this is that they do a lot of aggregation of households, businesses and government with no regard for the individuals involved. Once you start looking at collective you cannot see individuals. It is like only seeing the forest and not the trees.
BTW, I spent a beautiful part of the morning looking out at the trees and pondering them in the sub-zero temperatures! It was very relaxing and calming.
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