The problems with the Keynesian and Neoclassical paradigms have been beaten to death on this forum, but it is my belief that the Austrian paradigm hasn't been sufficiently criticized. Schools of thought must always be subject to scrutiny in order to progress and Austrian economics is no exception.
What is the biggest methodological or theoretical shortcoming of Austrian economics? Also, what should be done to address it?
"I cannot prove, but am prepared to affirm, that if you take care of clarity in reasoning, most good causes will take care of themselves, while some bad ones are taken care of as a matter of course." -Anthony de Jasay
Didn't we have a thread like this a couple of weeks ago? Anyway, my main problem would be with the language we use to communicate our methodological views. It can be hard for anything but a philosopher to understand, and it makes Austrianism seem excessively disconnected from reality when the exact reverse is true.
To darkness I condemn you...
I have some concerns about the nature of welfare economics not being value free. An exchange is deemed a Pareto improvement even if others object to it, for example.
scineram: I have some concerns about the nature of welfare economics not being value free. An exchange is deemed a Pareto improvement even if others object to it, for example.
I'm not sure what you mean by that. Are you saying if people object even when they aren't being made worse off? If others are made worse off by a given transaction than it isn't a pareto improvement.
Because our views are based upon reason and logic rather than pretty charts, it it hard for us to communicate it to a largely illogical world. We speak of AE in philosophical forms, and expect people to understand it. I dont beleive many people would be able to jump onto this forum and 'get' what we say without having read a great deal about economics, from Classical through Keynesian and Neoclassical. Not to mention Mises, Rothbard, Rand, et al.
Our issue is communicating with people who don't care enough to learn on their own. We often are elitist, and that leads to us being labled as snobs. To address this, we need to develope a way to clearly communicate our views so the masses can appreciate them. Education seems to be the best way to do this, else we end up answering the same thousand questions over and over again.
Who cares about their opinions? No force is being used on them. It's up to them to change them...
Jon Irenicus: Didn't we have a thread like this a couple of weeks ago? Anyway, my main problem would be with the language we use to communicate our methodological views. It can be hard for anything but a philosopher to understand, and it makes Austrianism seem excessively disconnected from reality when the exact reverse is true.
Do you have any kind of solution in mind? How would one go about correcting the situation?
Also, this thread is going off course from where I intended it to go. Instead of criticizing Austrian economics for being less popular than it should be or with the problems of Austrian economists to convince mainstream economists, I was asking about the porblems with the Austrian paradigm. In other words, is there any part of Austrian theory that is weak and should be improved upon? Are there any questions in economics that could be better answered using empirical research instead of praxeological methods? Is the focus on ABCT misplaced? Are there any theories which seem to be derived improperly from the human action axiom? Am I making myself clear?
I think Geoffrey Plauche's paper on Aristotelianism and praxeology moves in the right direction.
As to the rest, I've not yet seen any significant errors or problems in it.
economics reminds me of evolution. for many years the field was rife with naive assumptions. things that intuitively sounded good were being passed off as rigorous scientific knowledge. It is only recently that this has changed. A lot of the dreck has been thrown out due to the advances in biology.
economics suffers exactly the same problem. because it seems as deceptively simple as something like natural selection, people make a lot of assumptions about it. and of course a lot of those assumptions turn out to be wrong because reality is not always intuitive. due to cognitive bias, you have famous economists making simple mistakes, because anywhere that their knowledge has gaps they fall back on intuition. what has the history of keynesian thought been if not intuitive extrapolations of some fundamentally fallacious basic principles?
nazgulnarsil: economics reminds me of evolution. for many years the field was rife with naive assumptions. things that intuitively sounded good were being passed off as rigorous scientific knowledge. It is only recently that this has changed. A lot of the dreck has been thrown out due to the advances in biology. economics suffers exactly the same problem. because it seems as deceptively simple as something like natural selection, people make a lot of assumptions about it. and of course a lot of those assumptions turn out to be wrong because reality is not always intuitive. due to cognitive bias, you have famous economists making simple mistakes, because anywhere that their knowledge has gaps they fall back on intuition. what has the history of keynesian thought been if not intuitive extrapolations of some fundamentally fallacious basic principles?
I find orthodox Keynesianism to be anything but intuitive. I get the jist of what you're saying though. All immature sciences go through these stages.
Solid_Choke: Jon Irenicus: Didn't we have a thread like this a couple of weeks ago? Anyway, my main problem would be with the language we use to communicate our methodological views. It can be hard for anything but a philosopher to understand, and it makes Austrianism seem excessively disconnected from reality when the exact reverse is true. Do you have any kind of solution in mind? How would one go about correcting the situation? Also, this thread is going off course from where I intended it to go. Instead of criticizing Austrian economics for being less popular than it should be or with the problems of Austrian economists to convince mainstream economists, I was asking about the porblems with the Austrian paradigm. In other words, is there any part of Austrian theory that is weak and should be improved upon? Are there any questions in economics that could be better answered using empirical research instead of praxeological methods? Is the focus on ABCT misplaced? Are there any theories which seem to be derived improperly from the human action axiom? Am I making myself clear?
I personally think that it may become more accepted by the mainstream if it is put under a rigourised formal mathematical system, but I've brought this up before and have gotten minimal response.
"Keynesianomics is a Ponzi scheme."
"You are correct in that Capitalism does not help with poverty, because it eliminates poverty altogether..."
"That wonderful strawman: greed."
Inequality bad.
I think you should find people interested in such an attempt and go ahead with it. Ludwig van den Hauwe has expressed an interest in this, as have individuals I know. I can see the appeal to it but a lot of people believe it's just parsing literary economics into a formal language (and anyone who has done formal logic will know why this is not an easy task) and then back into literary econ. So perhaps a demonstration would be in order, first.
Jon Irenicus:Who cares about their opinions? No force is being used on them. It's up to them to change them...
I'm not sure whether this counts as pertaining to the Austrian paradigm, but the theory of man-made climate change through greenhouse gas emissions has, to my knowledge, not been aligned with Austrian economics so far.I know of Reisman's approach that stresses the effectiveness of capitalist production, however, it misses the point of property protection and compensation. Other schools of economics may accept carbon taxes or cap and trade as an option, but I do not think this is the case for Austrians. Looks like a field for research.
even among clear anarchists like rothbard the "the freer the better" fallacy regarding markets. which results in many austrians and even rothbard praising the 19th century corporatism and imperialism as the best time of economic liberty. i understand that all know that the 19th century europe wasnt free market, but they still praise it as a great time.
Exactly. Your argument is based on libertarian ethical principles. Definetly not value-free.
No, it's merely the fact that anything one does can be considered sub-optimal once we define things that loosely.
Solid_Choke: Jon Irenicus: Didn't we have a thread like this a couple of weeks ago? Anyway, my main problem would be with the language we use to communicate our methodological views. It can be hard for anything but a philosopher to understand, and it makes Austrianism seem excessively disconnected from reality when the exact reverse is true. Do you have any kind of solution in mind? How would one go about correcting the situation?
Don't mean to continue to rail this thread off course- but I think we already have some examples of how to communicate our views a bit more to the mainstream. Just look at the way Ron Paul or Peter Schiff talk about the economy. Not only do they make it simple to understand- but it becomes very engaging even if you had no interest in economics before. Those two guys are one of the reasons more people have been introduced to austrian economics in the past 2 years.
auctionguy10: Solid_Choke: Jon Irenicus: Didn't we have a thread like this a couple of weeks ago? Anyway, my main problem would be with the language we use to communicate our methodological views. It can be hard for anything but a philosopher to understand, and it makes Austrianism seem excessively disconnected from reality when the exact reverse is true. Do you have any kind of solution in mind? How would one go about correcting the situation? Don't mean to continue to rail this thread off course- but I think we already have some examples of how to communicate our views a bit more to the mainstream. Just look at the way Ron Paul or Peter Schiff talk about the economy. Not only do they make it simple to understand- but it becomes very engaging even if you had no interest in economics before. Those two guys are one of the reasons more people have been introduced to austrian economics in the past 2 years.
I agree wholeheartedly
garegin: even among clear anarchists like rothbard the "the freer the better" fallacy regarding markets. which results in many austrians and even rothbard praising the 19th century corporatism and imperialism as the best time of economic liberty. i understand that all know that the 19th century europe wasnt free market, but they still praise it as a great time.
This is one area where I think Austrian economics can improve greatly. I am sure that there are many instances where "more regulation" is better than "less regulation" that contains a more detrimental component. The current majorty view of Austrain economists is too simplistic in this case and should be rethought. Bringing in insights from institutional economics might prove fruitful in this case.
Solid_Choke: garegin: even among clear anarchists like rothbard the "the freer the better" fallacy regarding markets. which results in many austrians and even rothbard praising the 19th century corporatism and imperialism as the best time of economic liberty. i understand that all know that the 19th century europe wasnt free market, but they still praise it as a great time. This is one area where I think Austrian economics can improve greatly. I am sure that there are many instances where "more regulation" is better than "less regulation" that contains a more detrimental component. The current majorty view of Austrain economists is too simplistic in this case and should be rethought. Bringing in insights from institutional economics might prove fruitful in this case.
When you say bringing in insights from institutional economics do you mean saying given that currently the institutional structure has x properties it makes sense to do y rather than z? If so, I would agree.
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