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The professor of economics discusses the contributions made by the Austrian School. He introduces recent books by Austrians, explains what we can learn from Mises and Hayek, and argues that economics is the sexiest subject.
Peter Boettke on Austrian Economics
Interview
(h/t Zero Hedge)
Good read.
(h/t Zero Hedge)
Good read.
2 comments:
Lots of magical thinking and quiet market messages in his Austrian view that is not very compatible with the MMT world of managing aggregate demand. His description of Lerner as a market socialist that spills the bath water on the floor was good for a chuckle. I think people could view Austrians as the Yin to MMT's Yang because they each excel where the other fails. Not that we are admitting a weakness.
Bryan Caplan, who began in the Austrian School, but was "converted" to New Classicalism through his PHD work, during which is saw deficiencies in the Austrian School approach dominated by Mises and Rothbard, wrote an interesting article on why he is no longer an Austrian economist.
Why I Am Not An Austrian Economist
He provides an interesting critique of Mises and Rothbard, showing where the problems lie from the vantage of New Classicalism.
In the article he quotes Milton Friedman who dismissed the importance of schools (as did Schumpeter), saying that there is good economics and bad economics. That is to say, to the degree that economics is based on mathematical reasoning and scientific method, it is possible to determine what is correct based on agreed upon criteria.
Other disagreements are normative. Normative debate doesn't belong in theoretical work, although it enters the discussion when economics is applied as a policy instrument.
However, cognitive science and philosophy of logic and language show that subjective factors do influence "facts" in that for data to become information, cerebral processing that involves subliminal selection and structuring is deeply involved, so that subjectivity and objectivity are entangled. So the positive-normative distinction is not as black and white as it is often made out to be.
As Boettke observes, Austrian economics is not Libertarian, but rather it seeks to introduce more humility into the pursuit of economics by showing how information, hence, prediction is limited. This is the Hayekian faction of the Austrian School, however.
The Rothbardians are decidedly Libertarian, and that is a normative position, which influences methodology and assumptions. Caplan shows where that goes astray.
Caplan makes the point I have been making in criticism of "Austrianism" in general. As a philosopher, I have read widely in the history of thought and recognize that human knowledge is dialectical, proceeding in steps, learning from mistakes, tacking like a sailboat in the wind at times, and often standing on the shoulders of giants. No one is "right." Everyone makes a contribution, even if it is a negative one, by showing how some train of thought leads to a dead end.
I appreciate the Austrian economists in general as thinkers. As Caplan points out, sometimes they were ahead of their time, and some of their points are still well taken. But the world has passed most of them by, and now the ideologues remain dominant, saddling the more serious thinkers with an association they probably would prefer not to have.
Returning to John Carney's point about MMT advocates exploring common ground with Austrian schoolers, it depends on which faction among Austrian economists, and I emphasize economists, is involved. I really don't see much room for debate with the Rothbardian-Rockwell-Libertarian faction which is made up largely of political partisans instead of economists and which rejects all government out of hand. That is a shouting match that is going nowhere. I doubt that is what John is referring to, however.
There are aspects of Austrian economics in a broader sense that are applicable to the present debate. For example, Austrians take money to be non-neutral, and they also emphasize that modern economies are monetary economies.
Where I think that debate problem needs to begin is with public goods. Those who accept and those who reject public goods are probably never going to agree on macro issues. But if we can agree that there are public goods and a commons upon which humanity draws, then maybe there is path forward for discussion about a modern monetary economy wrt to these.
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