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I'll be honest and say I only got through about half of this because of the Author's tone. I'm sorry but if you're going to start your piece claiming one of th

I'll be honest and say I only got through about half of this because of the Author's tone. I'm sorry but if you're going to start your piece claiming one of the most respected economists of the last century "didn't quite understand banking" you're already treading on thin ice with me. Also it's hard to argue how deep Hayek was and then call Mises a crank given the tremendous respect both men had for each other (http://mises.org/daily/3511 http://mises.org/daily/3511, http://mises.org/misestributes/misesonhayek.asp http://mises.org/misestributes/misesonhayek.asp) Beyond that I didn't see much insight in this piece. It's not that it's wrong it's just that it's essentially Keynesian talking points represented as facts. I don't mean that pejoratively I simply mean the reason the Austrian and Keynesian theories both exist to this day is because neither can be definitively proven or dis-proven. He presents some valid points against the other side but that's not exactly new insight

ebaysucks 16y ago
Austrian Economics uses praxeology, logically necessary insights in human action. Economics as a branch of logic. All other schools (including Chicago) see economics as a branch of statistics. This is a fundamental difference that almost nobody seems to realize.
- philwelch 16y ago
  Economics isn't a branch of logic (or, for that matter, statistics) any more than physics is a branch of mathematics. Rather, economists use logic, statistics, mathematics, observation, and in limited contexts experimentation as tools. It's a philosophical question of which tools to use that defines Austrian economics. Austrian economics is rationalist. Rationalism consists in choosing reasonable-sounding a priori assumptions and reasoning from them. Whether you're Descartes saying "I think, therefore I am" and deriving "God exists and is not an evil deceiver", or whether you're an Austrian economist saying "humans take conscious action toward chosen goals" and deriving "the gold standard is preferable to fiat currency", you're basically doing the same thing. The ideal economic theory would be empirical, observing economic behavior and attempting to build models that fit to it. Both in philosophy and in the hard sciences, empiricism has won out over rationalism for reasons any decent philosopher or scientist could enumerate for you at length. Behavioral economics is probably the best attempt at this ideal. You can view it either as a feature or as a bug that it doesn't tend to draw grand macroeconomic conclusions you can use to try and win political arguments.
philwelch 16y ago
Let's be a little more realistic about this: Austrian and Keynesian theories both exist to this day because they provide good enough rationalizations for the preconceived political agendas of different sets of people. The idea that economics breaks down into a neat little disagreement between Keynes and Hayek, however, is anachronistic.

ebaysucks 16y ago

Austrian Economics uses praxeology, logically necessary insights in human action. Economics as a branch of logic. All other schools (including Chicago) see economics as a branch of statistics. This is a fundamental difference that almost nobody seems to realize.

philwelch 16y ago
Economics isn't a branch of logic (or, for that matter, statistics) any more than physics is a branch of mathematics. Rather, economists use logic, statistics, mathematics, observation, and in limited contexts experimentation as tools. It's a philosophical question of which tools to use that defines Austrian economics. Austrian economics is rationalist. Rationalism consists in choosing reasonable-sounding a priori assumptions and reasoning from them. Whether you're Descartes saying "I think, therefore I am" and deriving "God exists and is not an evil deceiver", or whether you're an Austrian economist saying "humans take conscious action toward chosen goals" and deriving "the gold standard is preferable to fiat currency", you're basically doing the same thing. The ideal economic theory would be empirical, observing economic behavior and attempting to build models that fit to it. Both in philosophy and in the hard sciences, empiricism has won out over rationalism for reasons any decent philosopher or scientist could enumerate for you at length. Behavioral economics is probably the best attempt at this ideal. You can view it either as a feature or as a bug that it doesn't tend to draw grand macroeconomic conclusions you can use to try and win political arguments.

philwelch 16y ago

Let's be a little more realistic about this: Austrian and Keynesian theories both exist to this day because they provide good enough rationalizations for the preconceived political agendas of different sets of people. The idea that economics breaks down into a neat little disagreement between Keynes and Hayek, however, is anachronistic.