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>A healthy intellectual movement doesn't need to be convinced to pay attention to empirical evidence. You misunderstand the reasoning behind the "rejection" of
by Qasaur 7y ago
>A healthy intellectual movement doesn't need to be convinced to pay attention to empirical evidence.
You misunderstand the reasoning behind the "rejection" of empiricism by Mises and those that followed him.
Austrian theory as formulated by Mises is based on a priori truths about human nature and cannot be falsifiable by evidence. This may sound outlandish when you first hear it especially when one comes from an engineering or natural science background, but there is a very well developed epistemological reasoning for this position that is often overlooked by critics.
The economy is composed of humans who act towards their own personal goals, whether that is to provide for their family, or become a billionare tech founder. This is a highly complex system with an incredible amount of variables (in the case of individual humans, the ordinal scale of preferences is quite literally infinite!). As such, there are no constants that can be inferred with the same level of reliability that we may have in physics like the rate of gravity on planet Earth.
Thus, empirical economic models have a much, much greater margin of error than what we have in the natural sciences, and it is therefore untenable to formulate economic theory based on inherently unreliable foundations.
Instead, as the economy is composed of humans acting and not objects acting, the Austrians look inwards and through a Kantian-esque process of introspection formulate the a priori action axiom ("Human action is purposeful behaviour.") and build their theory using logic based on that axiom - thereby creating a system of knowledge that is unfalsifiable through evidence and is always true.
- duxut_staglatz 7y agoHow do we know whether this system of knowledge actually describe our world?
- tomrod 7y agoIf I understand the grandparent's point, we have to accept it as an axiom.
- duxut_staglatz 7y agoWhich leads to the question: if "because I assume so" is evidence enough for making statements, how do you sort of the conflicting predictions of one theory based on "I assume so" and another based on as much evidence? To give an example, let's assume that central bankers can make everyone better off by picking the right inflation rate. Therefore it is good to centrally plan the price and quantity of money. The grandparent's comment "let's assume"-based theory concluded that it is bad to centrally plan the price and quantity of money. Which advice should we follow?
- richk449 7y agoI suggest we try an experiment. Appoint an austrian (say, Alan Greenspan) to run the US federal reserve. See if we get improved stability, or the largest recession since the Great Depression.
- dragonwriter 7y agoCome on, no one in a position of government authority would do anything that stupid.
- duxut_staglatz 7y agoSorry, empirical evidence should not inform our thinking because it is too shaky. Please either assume one of those two outcomes is correct.
- QuesnayJr 7y agoIronically, mainstream economics has taken the "purposeful behavior" idea very seriously. Models almost entirely consist of agents acting purposefully. If agents are smart and prices are set by supply and demand, then money doesn't have real effects and a pure quantity theory of money holds. If agents are dumb, then you get mispricing but markets still clear and you don't get unemployment or factories closing. If prices are sticky, then it doesn't matter if agents are smart or dumb -- you get recessions that last unnaturally long unless either the government or the central bank steps in. So New Keynesianism is completely compatible with "human action is purposeful behavior". But still, the rest of us prefer to test our theories by looking at evidence.
- anigbrowl 7y agoInstead, as the economy is composed of humans acting and not objects acting, the Austrians look inwards and through a Kantian-esque process of introspection formulate the a priori action axiom ("Human action is purposeful behaviour.") and build their theory using logic based on that axiom - thereby creating a system of knowledge that is unfalsifiable through evidence and is always true. Weird, Marxist-Leninists say the same thing (which is why I'm not an ML).