Austrian Economics

A pre-scientific, data-free, conservative and blinkered methodology for economics propaganda.

Links

Debunking Austrian Economics 101 [More...]

33 collections of posts 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.

Austrian Business Cycle Theory

Also known as ABCT. A series of sham theories supporting conservative ideological positions.

Act

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".

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.

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.

Free Banking

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.

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

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. 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.

Libertarianism and the Leap of Faith – The Origins of a Political Cult

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.

Methodological Individualism (propaganda)

A greedy reductionist (in the words of Daniel Dennett) attempt to oppose "collectivist" theories with theories of atomistic individuals. But individuals always exist and are entwined within societies.

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."

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.

Philosophical Individualism

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.

Praxeology

Ludwig von Mises' anti-scientific, axiomatic, a priori methodology for supporting his preferred conservative political economy. Also used by Murray Rothbard. Ignored by academia, promoted by the crank vanity press Ludwig von Mises Institute.

Socialist Calculation Debate

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.

NEW 5/12/2013: The "Poisoned Spring" of Economic Libertarianism: Menger, Mises, Hayek, Rothbard: A Critique from Catholic Social Teaching of the 'Austrian School' of Economics

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.

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 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.

Quotations

[...] 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.

... 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