Economics Questions

Re: How Do YOU Define Austrian Economics?

Kirznerian — Wed, 26 Dec 2007 20:43:50 GMT

That's how Kirzner defines the Austrian School:

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

Re: How Do YOU Define Austrian Economics?

libertarian — Wed, 26 Dec 2007 17:52:05 GMT

I believe that the majority of our population would define it as a school of extremist economic thought advocated by selfish upper class White Men, that promotes a "market fundamentalist" religion and social Darwinism.

Re: How Do YOU Define Austrian Economics?

newson — Mon, 24 Dec 2007 06:34:17 GMT

JAlanKatz:
Austrian Economics is an approach to economics which does not assume away real people.

How's that for simplicity?

whilst i think the other posts are accurate, jalankatz gets my vote. concise, but not at the price of dumbing down. i can't tell you how often i see the term "economic rationalist" used as an insult. the implication is something robotic, cold and sub-human. this definition is the perfect foil.

i quite like this comparison by gary north (pages 2 and 3) give a clear summary of the different approaches of the keynesians, monetarists and austrians.

http://garynorth.com/MonetaryStats.pdf.

Re: How Do YOU Define Austrian Economics?

Niccolò — Sun, 23 Dec 2007 05:00:48 GMT

martinf:
I think the definitions have been given are quite good.

Although, you can watch this video. It's an interview with Kirzner, who explains the differences between the mainstream (from the classical definition of economics by Lionel Robbins) and Mises' views. During the interview (not in the video) he also explains the main tenets of Austrian economics. Quite interesting.

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

By the way, is there ANY Austrian economist who is NOT an advocate of free markets? I don't think so, but who knows....

I hear tale that Bawerk wasn't all Libertarian.

Re: How Do YOU Define Austrian Economics?

Niccolò — Sun, 23 Dec 2007 04:55:51 GMT

Inquisitor:
Do their actual economics really differ all that much from those of other Austrians though? Especially Kirzner's, I'd be extremely reluctant to exclude him from the Austrian camp. I think confusion on methodology is insufficient to render one non-Austrian. Reisman is arguably an Austrian, even though his economics are largely a fusion of classical and Austrian economics. Perhaps on such a ground Hayek could also be seen as an Austrian, although not a full-blooded one?

It's not as though Kirzner and Hayek were even entirely outside of the rational causal analysis approach either. They merely associated themselves with the general equilibrium branch of Walresian economics as well; something I do by the same token.

Though I generally do understand and use a general equilibrium approach in certain areas as well, I still consider myself a full fledged Austrian.

Re: How Do YOU Define Austrian Economics?

martinf — Sat, 22 Dec 2007 18:59:24 GMT

I think the definitions have been given are quite good.

Although, you can watch this video. It's an interview with Kirzner, who explains the differences between the mainstream (from the classical definition of economics by Lionel Robbins) and Mises' views. During the interview (not in the video) he also explains the main tenets of Austrian economics. Quite interesting.

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

By the way, is there ANY Austrian economist who is NOT an advocate of free markets? I don't think so, but who knows....

Re: How Do YOU Define Austrian Economics?

Inquisitor — Sat, 22 Dec 2007 14:58:51 GMT

I'll take a shot at it: the Austrian School attempts to study human action in the face of scarcity. Rather than relying on abstract models and mathematics (even though it is not outright hostile to either; some Austrians do see a place for mathematics), it is based on realistic assumptions and logical analysis from what flows therefrom. Rather than treating human action in a deterministic form, it realizes it is inherently end-oriented (teleological) and purposive, and thus is difficult to predict; furthermore, it is adaptive. Its analysis leads it to conclude that governments at best can intervene as little as possible, at most should have no role whatsoever in the economy (provided one's goal is prosperity), and that the economy is best at adjusting itself to changing conditions, via the price mechanism.

Re: How Do YOU Define Austrian Economics?

CarlvH — Sat, 22 Dec 2007 05:35:18 GMT

Yes, that is a true and simple statement, but how useful is it to explain Austrian economics to someone that does not know.

I did a 500km trip in my car yesterday and was thinking that maybe we should change the format a bit. Austrian Economics have a few pillars and maybe we should identify the (say 4 or 5) most essential ones and state that. Something like: Austrian Economists believe:· That economics is the study of purposeful human action whereby the individual tries to maximize benefits at minimum cost· That only the individual can decide subjectively what the cost and benefits are according to his/hers own unique value scale and whether his/her actions are efficient or not· That the individual’s actions take place through time among the rivalrous (self-serving) actions of many other individuals and the end result can therefore not be predicted · That governments should not interfere in this process by trying to manage it, but at best only facilitate it, as it is only possible for the government to know a tiny fraction of the information available to all individuals and it will therefore just stifle the economic process· Etc. Please comment and add or delete. Maybe the last point is taking it too far ?

Re: How Do YOU Define Austrian Economics?

JAlanKatz — Sat, 22 Dec 2007 05:21:38 GMT

Austrian Economics is an approach to economics which does not assume away real people.

How's that for simplicity?

Re: How Do YOU Define Austrian Economics?

Physiocrat — Fri, 21 Dec 2007 15:20:49 GMT

CarlvH:
Thanks Physiocrat!

The neo-classical position seems clearer form this explanation than the Austrian position. Maybe we can do something with

The end is given and can be anything the individual wishes it to be. Add the fact that working is hard work and you can deduce the laws of economics from these foundations.

The end is that which the individual believes will increase his welfare most and is hence subjective in nature. Add the realistic assumption that labouring is hard work, if you could you would rather not work, then you can deduce the laws of economics.

How's that?

Re: How Do YOU Define Austrian Economics?

CarlvH — Fri, 21 Dec 2007 11:43:54 GMT

Thanks Physiocrat!

The neo-classical position seems clearer form this explanation than the Austrian position. Maybe we can do something with

The end is given and can be anything the individual wishes it to be. Add the fact that working is hard work and you can deduce the laws of economics from these foundations.

Re: How Do YOU Define Austrian Economics?

Physiocrat — Thu, 20 Dec 2007 15:39:59 GMT

CarlvH:
wgeary:
I was recently discussing my reasons for opposing the minimum wage with someone not very well educated in economics (so naturally they were pro-minimum wage). I mentioned the school of Austrian Economic thought, and they asked what is that?

I said, "It's a school of economic thought based on the theory that all voluntary action is intended to increase one's satisfaction." This didn't really make sense to the person I was talking to. How do you explain what Austrian economics are to some one who is not a pro at economics?

The question was how to explain the nature of Austrian Economics to someone who knows very little about economics. If a novice reads any of the replies, he/she would still not know. I am sure wgeary did not go back to his friend with any of the replies that followed.

As my philosophy professor used to say: If you cannot explain it in plain English, you do not understand. While the responses were clearly from knowledgeable people, it did not answer the question usefully. So can this be a challange - a definition of Austrian economics for the novice? And how does it differ from other branches/ views of economics?

...in a common man's (or woman's) language.

OK then. Austrian economics focuses on the individuals use of scarce means to satisfy his own ends. The end is given and can be anything the individual wishes it to be. Add the fact that working is hard work and you can deduce the laws of economics from these foundations. These laws are realistic and are causal in nature: if A then B. The mainstream, neo-classical position, essentially attempt to model individual behaviour using unrealistic abstraction, such as perfect knowledge, to then predict future behaviour. Rather then attempting to find causal laws they find correlations and use these in policy. ie the phillips curve- high inflation is associated with low unemployment and vice versa. The main difference is though that Austrianism is based in the real world, with realistic assumptions, from which economics can be deduced whereas neo-classicism revolovs around unrealistic assumptions to model behaviiour and consequently does lots of number crunching.

Re: How Do YOU Define Austrian Economics?

CarlvH — Thu, 20 Dec 2007 12:46:13 GMT

wgeary:
I was recently discussing my reasons for opposing the minimum wage with someone not very well educated in economics (so naturally they were pro-minimum wage). I mentioned the school of Austrian Economic thought, and they asked what is that?

I said, "It's a school of economic thought based on the theory that all voluntary action is intended to increase one's satisfaction." This didn't really make sense to the person I was talking to. How do you explain what Austrian economics are to some one who is not a pro at economics?

The question was how to explain the nature of Austrian Economics to someone who knows very little about economics. If a novice reads any of the replies, he/she would still not know. I am sure wgeary did not go back to his friend with any of the replies that followed.

As my philosophy professor used to say: If you cannot explain it in plain English, you do not understand. While the responses were clearly from knowledgeable people, it did not answer the question usefully. So can this be a challange - a definition of Austrian economics for the novice? And how does it differ from other branches/ views of economics?

...in a common man's (or woman's) language.

Re: How Do YOU Define Austrian Economics?

Inquisitor — Wed, 19 Dec 2007 12:39:56 GMT

Hayek was good in his younger years, especially with works such as the Pure Theory of Capital and The Counterrevolution of Science. I suppose he drifted away in his older age. I'll give that article a read, thanks.

Re: How Do YOU Define Austrian Economics?

Physiocrat — Wed, 19 Dec 2007 10:03:44 GMT

Inquisitor:
Do their actual economics really differ all that much from those of other Austrians though? Especially Kirzner's, I'd be extremely reluctant to exclude him from the Austrian camp. I think confusion on methodology is insufficient to render one non-Austrian. Reisman is arguably an Austrian, even though his economics are largely a fusion of classical and Austrian economics. Perhaps on such a ground Hayek could also be seen as an Austrian, although not a full-blooded one?

Leaving Kirzner aside. Hayek to my understanding (though I have read little of his actual work) attempted to explain everything in terms of subjective value which lead to his rejection of Mises' calculation argument since it rested on prices rather than value. In doing so he followed Wieser rather than Bohm-Bawerk. Further his non-systematic style is contrary to the rationalist roots of Austrian economics; in doing so brought in much consequentialism. Further Hayek's move towards positivism later in life certainly shift him outside the Mengerian tradition. For an interesteing essay read Mises and Hayek Dehomogenised by Salerno.

http://www.mises.org/journals/rae/pdf/RAE6_2_5.pdf

On Reisman, I haven't read much either, he seems to be within the rationalist mode and so would consider him more Austrian than Hayek.