Philosophy and Methodology

Jonathan Newman joins Bob Murphy to explore what economics really is, why it matters, and how the revamped Mises Academy is helping teach it the right way.

Carl Menger wrote, “All things are subject to the law of cause and effect.” Unfortunately, modern academic economists all too often confuse correlation of economic phenomena with causality.

Part of bringing up young children is to tell them stories and accounts about people who did the right thing, and how they made life better for themselves and others. We can do the same with describing economic concepts, which don‘t have to be dry and boring.

By omitting mercantilism, Marx could attribute its exploitative practices—particularly colonialism—directly to capitalism, reinforcing his ideological critique.

The philosopher Karl Popper was a strong critic of Marx, his system, and especially his reliance on historicism. Unfortunately, as David Gordon points out, Popper supported economic interventionism as a viable “third way” for social organization.

Economic development cannot ever be seen as an end in itself. People are complex, social beings who may well forgo some of the advantages of economic growth for social stability, something Ludwig von Mises and Murray Rothbard understood.

Mainstream economists claim that in order to “do economics,” they must collect data and then see where it leads them. However, data by itself is economically useless without a guiding theory to explain what is happening.

J.B. Say deserves to be remembered, especially by Austrian economists, as a pivotal figure in the history of economic thought. Yet, one finds him discussed very briefly, if at all.

The Austrian school recognizes that economic analysis is timeless and the ancient story of “The Poor Man of Nippur” provides an excellent example. From time preference to the structure of production, many of the lessons are contained in this story.

Imagination is a key aspect of abstract thinking and economics. However, many fallaciously assume that one‘s failure to imagine how something would work on a free market necessitates state provision. This is an unjustified leap in logic.