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Last year, I finished The Great Transformation by Karl Polyani, published in 1944 (the same year Hayek published The Road to Serfdom), Judea Pearl's The Book of

by f00_ 8y ago

Last year, I finished The Great Transformation by Karl Polyani, published in 1944 (the same year Hayek published The Road to Serfdom), Judea Pearl's The Book of Why and Mastering Metrics by Angrist and Pischke. The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence(?). Reminds me of something like Ayn Rand's egoism. It just seems to me you can't persuasively argue a philosophical theory without empirical justification I have a more favorable view towards Polyani's methodology, who largely draws on historical sources. The historical approach seems at least some what grounded compared to the pure theory used in much of economics Economic theory and statistics can't answer questions like "How much of an effect can we expect if we were to raise minimum wage by one dollar an hour". A randomized control trial is the gold standard, and the way forward seems to be more experiments like the RAND Health Insurance Experience and the Oregon Health Insurance Experiment. Even these results and their policy implications are subject to debate, so how could pure theory even get close? However, randomized experiments in the social sciences often aren't feasible for cost or ethical reasons. So econometrics has developed tools to work on natural experiments, or even observational data, like Differences-in-Differences, Instrumental Variables, Regression Discontinuity designs. Even a brief skim of methodological considerations in economics reveals how much uncertainty there is. I am only a fan of economics (only high school and college microeconomics) so I'm likely wrong

minikites 8y ago
>The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence. That's exactly it, it's more of a religion you have to accept on faith as opposed to a useful model for governing a society. https://en.wikipedia.org/wiki/Praxeology https://en.wikipedia.org/wiki/Praxeology >Austrians argue that that empirical data itself is insufficient to describe economics; that consequently empirical data cannot falsify economic theory; that logical positivism cannot predict or explain human action; and that the methodological requirements of logical positivism are impossible to obtain for economic questions. Ludwig von Mises in particular argued against empiricist approaches to the social sciences in general, because human events are unique and "unrepeatable".
- kriro 8y ago
  I'd call it an axiomatic system rather than a religion. Austrians distinguish between theory and history (pretty bad name). Theory is basically the action axiom and what you can derive from it and history is the application of this theory to the analysis of the empirical world. Explaining the great depression through the lense of the theoretical framework would be an example of history for example. As far as I know there's nothing wrong with trying to predict the future through this theoretical framework but you might be wrong. This is basically Austrian entrepreneurship (sort of forward oriented history). The way I see it from a science theoretical POV is that the action axiom and what you derive is basically the "hard core" of the research program (at least Lakatos makes the most sense for me with regards to science theory).
parasubvert 8y ago
Polanyi’s work is a masterpiece and a welcome antedote to those anarcho-capitalists that believe that all of life’s action IS embodied in the market. Or that the gold standard was/is a sustainable idea.
viburnum 8y ago
The Great Transformation totally reset the way I think about economics, wish I'd read it sooner.
2038AD 8y ago
>The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence(?). Praxeology is supposed to be an application of logic* where economic analysis is based purely on specific axioms and propositions. In other words, praxeology is supposed to be as empirical as mathematics and a decent amount of mainstream economics. IIRC, in Human Action, Mises argues Economics is like (Euclidean) geometry, echoing Kant's rationalism. I believe then in Man, Economy, and State, Rothbard argues for term logic in natural language as opposed to predicate logic represented symbolically. It's good for laymen and philosophy-fans but bad for introducing implicit assumptions (basically Krugman's criticism). * While I think logic isn't empirical some people disagree https://en.wikipedia.org/wiki/Is_Logic_Empirical%3F https://en.wikipedia.org/wiki/Is_Logic_Empirical%3F
- AnimalMuppet 8y ago
  You can have an axiomatic system, and use deduction to reach conclusions. Or you can have a system with real humans in it. But real humans are not axiom-following machines (for any set of axioms). The axioms therefore do not let you reason about the behavior of actual humans. That seems to mean that if the conclusions are correct, they are correct only by coincidence.

by f00_ 8y ago

minikites 8y ago

>The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence. That's exactly it, it's more of a religion you have to accept on faith as opposed to a useful model for governing a society. https://en.wikipedia.org/wiki/Praxeology https://en.wikipedia.org/wiki/Praxeology >Austrians argue that that empirical data itself is insufficient to describe economics; that consequently empirical data cannot falsify economic theory; that logical positivism cannot predict or explain human action; and that the methodological requirements of logical positivism are impossible to obtain for economic questions. Ludwig von Mises in particular argued against empiricist approaches to the social sciences in general, because human events are unique and "unrepeatable".

kriro 8y ago
I'd call it an axiomatic system rather than a religion. Austrians distinguish between theory and history (pretty bad name). Theory is basically the action axiom and what you can derive from it and history is the application of this theory to the analysis of the empirical world. Explaining the great depression through the lense of the theoretical framework would be an example of history for example. As far as I know there's nothing wrong with trying to predict the future through this theoretical framework but you might be wrong. This is basically Austrian entrepreneurship (sort of forward oriented history). The way I see it from a science theoretical POV is that the action axiom and what you derive is basically the "hard core" of the research program (at least Lakatos makes the most sense for me with regards to science theory).

parasubvert 8y ago

Polanyi’s work is a masterpiece and a welcome antedote to those anarcho-capitalists that believe that all of life’s action IS embodied in the market. Or that the gold standard was/is a sustainable idea.

viburnum 8y ago

The Great Transformation totally reset the way I think about economics, wish I'd read it sooner.

2038AD 8y ago

>The methodology of Austrian economics seems completely unscientific, I believe a part of praxeology is disregarding empirical evidence(?). Praxeology is supposed to be an application of logic* where economic analysis is based purely on specific axioms and propositions. In other words, praxeology is supposed to be as empirical as mathematics and a decent amount of mainstream economics. IIRC, in Human Action, Mises argues Economics is like (Euclidean) geometry, echoing Kant's rationalism. I believe then in Man, Economy, and State, Rothbard argues for term logic in natural language as opposed to predicate logic represented symbolically. It's good for laymen and philosophy-fans but bad for introducing implicit assumptions (basically Krugman's criticism). * While I think logic isn't empirical some people disagree https://en.wikipedia.org/wiki/Is_Logic_Empirical%3F https://en.wikipedia.org/wiki/Is_Logic_Empirical%3F

AnimalMuppet 8y ago
You can have an axiomatic system, and use deduction to reach conclusions. Or you can have a system with real humans in it. But real humans are not axiom-following machines (for any set of axioms). The axioms therefore do not let you reason about the behavior of actual humans. That seems to mean that if the conclusions are correct, they are correct only by coincidence.