October 2007 - Posts

I've uploaded a new video in my youtube channel:

http://www.youtube.com/watch?v=hjctX7hmYLY

It's an excerpt of: "Israel M. Kirzner, The Intellectual Portrait Series: A Conversation with Israel Kirzner [2000]" from Liberty Fund. You can find the complete interview here:

http://oll.libertyfund.org//files/978/KirznerMP3.mp3

He talks about the differences between Lionel Robbins and Mises' view of economics, the possibility of making predictions in economics, according to both Robbins and Mises and the differences between mainstream and Austrian economics about competition. He makes these points quite clear.

Lionel Robbins was influenced by the Austrian school as he studied in the Private Seminar of Mises, but there are important and big differences. Kirzner says that it became apparent to him that the different between Robbins and Mises's approaches was fundamental. Whereas for Robbins the economic problem consisted of manipulating scarce means (which are given) to achieve some given ends; so, the economic problem consists of a mathematical problem, you just have to maximize an objective function with some given restrictions.
Nonetheless, Mises' view is about action rather than decision. In this approach, human beings, at the same time they are arranging means to achieve goals, they are identifying what he believes to be the right means (he may get wrong) to achieve the given goals. This is when subjectivism appears.
What Kirzner critiques of Robbins approach is not its usefulness but its completeness.

Robbins had a huge influence in neoclassical Microeconomics and his definition of 'economics' is one of the most known, specially in textbooks.
In the mainstream view, as everything is given, predictions are possible, because the solution of the mathematical problem is implicit in the data. But if we take Mises approach, it's not possible to make any predictions, we can't really know what individuals believe, expect or are going to do. Kirzner says that Mises didn't make predictions as an economist but as a wise man of the world.

The feature of entrepeneurship is essential for Austrians, they are the ones who drive the market process. But for Mainstream economics, entrepeneurs are an "analytical pest, a nuisance".
In this context, competition for both austrians and neoclassics is totally different. Mainstream economics see competition as a perfect competitive model, an ideal model we should be able to reach. But, this isn't what competition is in the real world. Austrians see competition as a discovery dynamic process driven by the entrepeneur, a process of rivalry.

Firstly, I would like to introduce myself. I don't know if I'll post much on here, but anyway an introduction is never inappropriate.

I'm Spanish, studying 2nd course of Economics. I'm very interested in Austrian economics, although I haven't read much, but thanks to Mises.com I'm learning quite a lot. I started reading about Austrian School thanks to 'Instituto Juan de Mariana', a Spanish libertarian think tank. As I study mainstream economics, I'm specially interested in contrasting both views and choose the right theory, to be able to refute the wrong one by giving reasonable arguments.

I hope to post frequently, whether in English or Spanish. I had thought of translating some short excerpts of Jesus Huerta de Soto or others Spanish scholars' writings into English. Time will tell.