Austrian Economics

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A pre-scientific, data-free, conservative and blinkered methodology for economics propaganda. Austrians tend to rely on handwaving, moral fairytales, and personal authority because they generally do not have mathematical models the way most other economics does. Pretty much every libertarian-leaning Nobel laureate in economics rejects Austrianism, starting with Milton Friedman.


Debunking Austrian Economics 101 [More...]
More than 370 posts with meticulous references arranged in 46 categories from the blog "Social Democracy For The 21st Century: A Post Keynesian Perspective". An enormous scholarly resource for refuting numerous Austrian Economics claims. Highly recommended.
Praxeology (11 links)
Ludwig von Mises' anti-scientific, axiomatic, a priori methodology for supporting his preferred conservative political economy. Also used by Murray Rothbard, Hans-Hermann Hoppe and some other libertarians. Ignored by academia, promoted by the crank vanity press Ludwig von Mises Institute.
Austrian Business Cycle Theory (4 links)
Also known as ABCT. A series of sham theories supporting conservative ideological positions.
A new powerhouse for ridiculous GOP economics [More...]
Move over, Milton Friedman: Make room for tiny Northwood University and the Austrian economist Ludwig von Mises.
A Review of Boettke’s Living Economics [More...]
To the average economist or economics student, Boettke seems to be sending mixed signals from the outset. Are we supposed to be “living economics” or policing ourselves for any traces of Keynesianism—or “mainstream economics”, or “market failure”, etc.? ... a window into the way economics is done at George Mason University....
Act (1 link)
A dog-whistle term that pretends to give a formal, axiomatic basis for Austrian Economics. This redefinition excludes much actual human economic behavior. Also "Action".
Austerity (3 links)
A harmful supposed antidote to recession that has failed miserably both in academia and the real world. Popular among politicians only for achieving right-wing goals. A shibboleth. Used to oppose Keynesian economics.
Austrian economics and Flat Earth geography [More...]
"... the point that Austrian economics is genuinely related to Flat Earth geography (as opposed to the use of this term as simple abuse) seems to be new."
Austrian Economists, 9/11 Truthers and Brain Worms [More...]
"The Austrian worldview is like a brain worm that has infected large swathes of our financial industry, commentariat and general public [...] The years 2011 and 2012 were to Austrians like sunrise is to a vampire. It was simply amazing to sit there and watch Austrians writhe and contort under the pure, burning light of extant reality."
Austrians Predicted the Housing Bubble? – But so did Post Keynesians and Marxists [More...]
Austrians claims to "predict" the housing bubble are given a thorough examination and a sound drubbing. Their claims just aren't credible.
BadEconomics, search for libertarian, Austrian Economics, and Bitcoin. [More...]
The BadEconomics reddit routinely scoffs at libertarian economic claims, Austrian Economics, and Bitcoin.
Critics of Austrian Economics [More...]
An index of books and articles criticizing Austrian Economics.
Deficit (3 links)
Libertarians get all hot and bothered about government deficits. They are really just a form of borrowing, just like homeowners and businesses borrow. Rants about balanced budget amendments are simply ways they want to hamstring governments and cut taxes.
Did Austrians Never Predict Hyperinflation?
Mark Faber, Peter Schiff, Doug French and Gary North have all predicted hyperinflation since the Great Recession. "The idea that Austrians never predicted hyperinflation in any sense is outrageous, mendacious and contemptible rewriting of history."
Economics in One Lesson (book, online) (3 links)
(1946) Henry Hazlitt's Austrian-style anti-progressivism reactionary rant. Peddled as an introduction to economics, because anyone with some knowledge of economics would laugh at it. 65 year old "the world is coming to an end tomorrow" doomsaying. And I'll never understand how he makes out 175+ pages in 24 chapters as "one lesson". Read the rebuttal, Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly.
Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (book, online) (1 link)
An excellent academic (but readable) rebuttal to the propaganda in Economics in One Lesson, the fallacies of Economics 101, some Chicago Economics and some Austrian Economics. Very simply, markets do not take into account ALL opportunity costs.
Entrepreneurs (3 links)
The importance of private entrepreneurs has long been widely appreciated, which is why the patent system exists. Libertarians ignore the historic importance of public entrepreneurship, product of government investment in research and development.
Fascism and Keynesianism? [More...]
"There is a tired and ignorant rhetorical trick of libertarians: to conflate Keynesianism with fascism, or the economics of fascism." Also points out Ludwig von Mises early work for a fascist and praise for Mussolini.
For years many of us suspected that Austrian economists were just peddling bullshit... now we have proof! [More...]
A picture is worth a thousand words: the best picture ever of Hayek.
Fractional Reserve Banking (3 links)
A huge bugaboo of Austrian economists such as Murray Rothbard. They claim it is essentially fraud and embezzlement, and that a 100 percent reserve gold standard is the necessary alternative.
Free Banking (1 link)
The idea of replacing central banks by allowing banks to issue their own currencies, with or without various backings. An idea revived by Friedrich von Hayek, with a literature of supposed historical examples. Free banking has many problems.
Friedrich von Hayek (47 links)
Nobel prizewinning (economics) student of Ludwig von Mises, and a major propagandist for libertarianism.
G.O.P. Monetary Madness [More...]
Paul Krugman points out how incredibly wrong the predictions of Ron Paul and Austrian Economics have been about the tripling of the monetary base.
Gold (5 links)
Austrians tend to spout weird theories about depressions being due to "fiat money", and how the one, true currency is gold which will solve all those problems. Ayn Rand fans mimic her fetish for gold in "Atlas Shrugged". Despite the fact that most of the world operated on the silver standard for centuries, and the gold standard was due to government fiats in the 19th century.
Hans-Hermann Hoppe (16 links)
One of the more bizarre Austrian philosophers. A hypocrite for working as a state professor and for accepting ACLU defense of his professional freedom of speech. "There can be no tolerance toward democrats and communists in a libertarian social order. They will have to be physically separated and removed from society."
Hayek Meets Information Theory. And Fails. [More...]
Modern economic theories of prices-as-information are seventy years out of date.
How Noah Smith Should Have Criticised Austrian Economics [More...]
Noah Smith and Robert Murphy had an argument. An expert critical of Austrian Economics identifies 6 major problems he thinks Noah should have attacked instead.
How the New Classicals drank the Austrians' milkshake [More...]
"It seems to me that the Austrian School's demise came not because its ideas were rejected and marginalized, but because most of them were co-opted by mainstream macroeconomics [...] I'm pretty confident in saying that the paradigm of von Mises and Hayek is dead."
How to Mangle Keynesian Theory [More...]
How the comical Robert Murphy has misrepresented and mangled Keynesian theory in a standard Austrian manner.
How to Refute the Core of Austrian/Neoclassical Economics in Four Easy Points [More...]
Maybe not so easy for laymen.  :-) Neoclassical economics is commonly known as Economics 101.
Human Sacrifice [More...]
Peter Leeson argues that "that human sacrifice is a technology for protecting property rights." A wild-ass theory that ignores other possible social explanations, relying on pre-anthropological stories. Amusingly, this article claims the voluntary acceptance of British dominance as a means of ending local wars in exchange for ending human sacrifice.
Libertarianism and the Leap of Faith: The Origins of a Political Cult [More...]
Philip Pilkington traces the evolution of the libertarian cult belief in the entrepreneur-hero from obscure 19th century debates over the source of value: very similar to the contemporaneous Communist cult beliefs.
Ludwig von Mises (27 links)
Austrian economist, mentor of Friedrich von Hayek, and a major right-wing economic crank. Father of Praxeology.
Methodological Individualism (propaganda) (12 links)
Individuals always exist within and are entwined with societies. Actually adhering to methodological individualism would mean ignoring families, households, corporations, governments and all other social groups in analysis. It is obviously stupid to ignore these sorts of emergent properties. Methodological individualism also blinkers us to social interactions. A greedy reductionist (in the words of Daniel Dennett) attempt to oppose "collectivist" theories with invalid models of atomistic individuals.
Mises and Hayek Dehomogenized?: A Note on a Schism in Modern Austrian Economics [More...]
Some fratricidal minutiae of Austrian economics. "Both Misesians and Hayekians live in a fantasy world, with respect to the price system." You can skip the technical parts to appreciate the fanaticism of both sides.
Mises on Mixed Economies and Socialism: He is Incoherent [More...]
"On this subject, Mises was an ignorant and muddle-headed idiot, and it is not surprising that after 1945 he was ignored by serious economists."
Murray Rothbard (41 links)
A leading Austrian economist, student of Ludwig von Mises. A very scholarly and prolific crank author who takes Austrianism to its logically absurd ends.
Must Macroeconomic Theories Have Microfoundations? [More...]
Cosma Shalizi explains at length why the answer is "not necessarily". Undermines arguments for methodological individualism of Austrian Economics.
Parable of the ship: why Austrian Economics fails.
The great fault of Austrianism is that it is not scientific. It is structured as a medieval philosophy based on authority, rather than systematic adherence to real-world data.
Peter Boettke (3 links)
A Koch-financed Austrian School propagandist at the George Mason University Economics Department and the Mercatus Center.
Philosophical Individualism (10 links)
Individualism is merely one viewpoint in an enormous hierarchy of viewpoints ranging from Planck length to the universe. Individualism as a tenet of a philosophy transforms that philosophy into a Procrustean bed that cannot model the real world well, because the real world is not based on individuals.
A long-supplanted philosophical methodology that is preoccupied with "true" definitions of words, a priori knowledge, logic, deduction, system, and its literary form of syllogistic argumentation. Apriorism and avoidance of empiricism are characteristic.
Socialist Calculation Debate (7 links)
A debate about how a socialist economy would be able to allocate resources between goals without resort to capitalism. The debate tends to ignore the fact that Communist and wartime command economies did very well with centralized planning. Not to mention Walmart. This is a zombie issue: it was decisively settled by the idea of market socialism (now instantiated as Social Wealth Funds) because markets are not exclusive to capitalism.
The "Depression" of 1920–1921: The Libertarian Myth that Won’t Die [More...]
"Yes, there was a recession from 1920–1921, but its history and significance are badly misrepresented by libertarians and Austrian economists"
The "Poisoned Spring" of Economic Libertarianism: Menger, Mises, Hayek, Rothbard: A Critique from Catholic Social Teaching of the 'Austrian School' of Economics (book) (1 link)
Angus Sibley criticizes Austrian economics and resulting libertarianism both from the viewpoint of practical economics and from Catholic teaching. "[...] what neoconservatives call ‘freedom’ has turned out to be the liberty of wealthy capitalists to subvert the political process, to dominate economic decision-making, and generally to take advantage of everyone else."
The Austrian Disease -- Poor Scholarship, a Priori Bias [More...]
Philip Pilkington says "Praxeology is to the libertarians as diamat was to the Marxist-Leninists; an a priori pseudo-philosophy that allows them to ignore unwelcome evidence and insulate themselves from criticism"
The Con Job of Libertarian "Economics" [More...]
A brief and clear presentation of the major failings of Austrian Economics.
The Hangover Theory: Are recessions the inevitable payback for good times? [More...]
Call it the overinvestment theory of recessions, or "liquidationism," or just call it the "hangover theory." It is the idea that slumps are the price we pay for booms, that the suffering the economy experiences during a recession is a necessary punishment for the excesses of the previous expansion... hangover theory is disastrously wrongheaded.
There's no such thing as society… only individuals and families. (5 links)
This famous Margaret Thatcher quote is philosophical twaddle. The same principle then applies to government, corporations, religions, etc. It is based on the unscientific and fallacious claim that individuals are the only valid level of analysis, common to the methodological individualism of Austrian Economics.
Thomas Woods (1 link)
A founding whackaloon of the secessionist League of the South and senior fellow of the Ludwig von Mises Institute. He specializes in revisionist history and popularizing Austrian Economics.
Varieties of Error [More...]
Paul Krugman points out that Austrian models incorrectly predicted hyperinflation, but that Austrian economists have not shown any evidence of admitting their errors or rethinking their models.
What Do Austrians Mean by "Rational"? [More...]
A bald-faced redefinition to mean non-reflexive behavior. Thus the most insane or random behavior is "rational" to Austrian economists.
What Do We Know About The Effects Of Fiscal Policy? Separating Evidence From Ideology [More...]
Christina Romer's empirical confirmation of Keynesian fiscal stimulus theory is a beautiful example of how econometric research can answer important questions with natural experiments. It shows clearly what's wrong with Austrian and most other conservative economic reasoning. She explains how to deal with omitted variable bias, and where that hasn't been done in opposing research.
Where I Learned All About Austrian Economics [More...]
"Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles. It's philosophy dressed up as economics."


[...] lacking the experimental method, economists are not strictly enough compelled to reduce metaphysical concepts to falsifiable terms and cannot compel each other to agree as to what has been falsified. So economics limps along with one foot in untested hypotheses and the other in untestable slogans.
Joan Robinson, "Economic Philosophy" , 1962, pp. 26-28.
[...] Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Commit it then to the flames: for it can contain nothing but sophistry and illusion.
David Hume, "Enquiry Concerning Human Understanding", 12, "Of the Academical or Sceptical Philosophy" p. 176.
There has been a good deal of confused controversy about the question of "value judgments" in the social sciences. Every human being has ideological, moral and political views. To pretend to have none and to be purely objective must necessarily be either self-deception or a device to deceive others. A candid writer will make his preconceptions clear and allow the reader to discount them if he does not accept them. This concerns the professional honour of the scientist.
Joan Robinson, "Freedom and Necessity" p.122.
The conditions under which equilibrium prices really are all a decision-maker needs to know, and really are sufficient for coordination, are so extreme as to be absurd... Even if they hold, the market only lets people "serve notice of their needs and of their relative strength" up to a limit set by how much money they have. This is why careful economists talk about balancing supply and "effective" demand, demand backed by money.
Cosma Shalizi, "In Soviet Union, Optimization Problem Solves You"
Both neo-classical and Austrian economists make a fetish (in several senses) of markets and market prices. That this is crazy is reflected in the fact that even under capitalism, immense areas of the economy are not coordinated through the market.
Cosma Shalizi, "In Soviet Union, Optimization Problem Solves You"
The evolution of government from its medieval, Mafia-like character to that embodying modern legal institutions and instruments is a major part of the history of freedom. It is a part that tends to be obscured or ignored because of the myopic vision of many economists, who persist in modeling government as nothing more than a gigantic form of theft and income redistribution.
Douglas North, "Institutions and economic growth: An historical introduction"
What became increasingly evident to me was that the Austrian equation of preference and action is crude behaviorism. I know by introspection that I have preferences that I fail to act upon. And while I do not have telepathy, it is overwhelmingly probable that the same holds for my fellow human beings. Once you grant this principle, the most distinctive Austrian doctrines crumble.
Bryan Caplan, "Intellectual Autobiography of Bryan Caplan"
… Economic doctrines always come to us as propaganda. This is bound up with the very nature of the subject and to pretend that it is not so in the name of ‘pure science’ is a very unscientific refusal to accept the facts.
Joan Robinson, in Marx, Marshall And Keynes
... I think the Austrian business-cycle theory has done the world a great deal of harm. If you go back to the 1930s, which is a key point, here you had the Austrians sitting in London, Hayek and Lionel Robbins, and saying you just have to let the bottom drop out of the world. You’ve just got to let it cure itself. You can’t do anything about it. You will only make it worse. You have Rothbard saying it was a great mistake not to let the whole banking system collapse. I think by encouraging that kind of do-nothing policy both in Britain and the United States, they did harm.
Milton Friedman, interviewed in Barron's (August 24, 1998)
Both Misesians and Hayekians live in a fantasy world, with respect to the price system. Both are dependent on the notion of universally flexible prices created by the dynamics of supply and demand curves, tending towards their market-clearing values. Both have failed to grasp the widespread reality and significance of fixprice markets and price administration.
Lord Keynes (pseudonym), "Mises and Hayek Dehomogenized?: A Note on a Schism in Modern Austrian Economics"
The market economy or capitalism, as it is usually called, and the socialist economy preclude one another. There is no mixture of the two systems possible or thinkable; there is no such thing as a mixed economy, a system that would be in part capitalistic and in part socialist.
Ludwig von Mises, "Human Action" p. 259
...every discipline, as long as it used the Aristotelian method of definition, has remained arrested in a state of empty verbiage and barren scholasticism....
Karl Popper, "The Open Society and Its Enemies", 1950, p. 206.
"Austrian theory" of the business cycle -- a theory that I regard as being about as worthy of serious study as the phlogiston theory of fire.
Paul Krugman, "The Hangover Theory: Are recessions the inevitable payback for good times?"
The key economic story of the last 70 years is the triumph of the mixed economy in growing both economic output and living standards. Only an anti-empirical approach to economics could lead to the conclusion that ideological libertarians want: that drastically small governments are better for the human condition than mid-size ones of the sort that exist throughout the advanced world.
Josh Barro, "Where I Learned All About Austrian Economics"