Philosophy and Methodology

One of the Austrian arguments against using mathematics to model economic phenomena is that there are no constants in economics, as things always are changing.

Ironically, an acatallactic pseudo-theory of money that emerged from a school of thought that rejected theory in favor of an empirico-realistic, historical theory of money now finds it intellectually acceptable, not only to reject catallactic economic theory, but also empirical history.

Austrian economists have long criticized using mathematics to undergird economic analysis. It is time to apply that same criticism to using math to undergird analysis of financial markets.

Historical data is not enough for economists to make sense of it. Instead, that data must be viewed through a theoretical framework that explains what has happened.

Menger said alternative monetary theories were “unhistorical,” but one could argue that Menger’s theory also lacks historical evidence necessary to verify his theory. Did Menger display a double standard or a nuanced view as to what we should expect from different monetary theories?

Economists consider probability to be central to economic analysis, but, as Ludwig von Mises wrote, economic action involves unique and purposeful events, not random ones.

A. Mitchell Innes—a chartalist pioneer—wrote a pamphlet “What Is Money?” (1913) which found a credulous and ideologically sympathetic audience in J. M. Keynes.

Most economists subscribe to a belief in “positive economics,” which means that economic theory flows from economic data. Thus, all theory can be tested for falsification at any time. Austrian economics, however, begins with economic theory, which is used to interpret the real world.

The Austrian School of economics isn’t a 20th century or even 19th century creation. Instead, Austrian economics is rooted in the logical thought, as developed by Aristotle and Thomas Aquinas.

The Austrian School of economics isn’t a 20th century or even 19th century creation. Instead, Austrian economics is rooted in the logical thought, as developed by Aristotle and Thomas Aquinas.