Further Reflections on Austrian Economics
Oddly enough, the appearance of Major Freedom in the comments section of my last post has got me wondering if I have got Austrians all wrong. I used to see that guy comment on other blogs and always completely miss the point and go on and on about stuff that made no sense. Some people would always agree with him and they would go down some “Austrian” rabbit hole and everyone else, including me, learned to just skip those long blocks of text. But since I felt obliged to respond, at least initially, on my own blog I had to go through the ordeal of trying to make counter-arguments to arguments that barely grazed the issues I had tried to address in the first place and it was very frustrating. And then I started wondering: is this the type of person who has shaped my view of Austrian economics?
The short answer is no but the long answer, I think, is kind of nuanced. The short answer is that a lot of it comes from Mises.org and people talking on TV like Peter Schiff. And yes, I have read some Hayek and some Rothbard and some stuff like that. I though Hayek had some interesting ideas. I though Rothbard was mind-numbing. I don’t really know what Mises thought, I just know what they say about what he thought on the afore-mentioned Mises.org. So it’s not just Major Freedom and company. Although, I am sure that to a lot of people, that is they account for the vast majority of their run-ins with so-called “Austrians.” And I think, ironically, that this accounts for much of the severe disdain most “mainstream” economists have for all things “Austrian.”
So I think I have dug one layer deeper than most because I am a libertarian and so I have quite a bit of exposure to somewhat more serious, less troll-like “Austrians.” But commenter John S. points out (and I have heard from some others) that there are really two schools of Austrian. The Auburn/Mises.org school which is essentially what I am complaining about and the more reasonable GMU school, and apparently they don’t get along very well. So I can’t help but wonder if I am being unfair to the latter. I am trying to look into it a little.
I watched this debate between Caplan and Boettke which I remembered watching years ago and finding interesting. Essentially, Caplan represents my view perfectly in every respect. And the Boettke comes out and, as far as I can tell, doesn’t really disagree with anything Caplan says. I get the impression that they both agree on practically everything except what to call each other. Boettke thinks Caplan is an Austrian and Caplan thinks Boettke is neoclassical and while Caplan makes points about methodology, Boettke talks about the history of economics and who said what when and a bunch of stuff that I don’t really know about but to me is not that important. I care about the methodology. And that is what the people in the Mises.org camp are always griping about. However, from what I can discern, Boettke seems pretty reasonable to me (though I do think “radical uncertainty,” or whatever, is not a useful concept).
So my position is essentially this. Speaking solely in terms of micro, the basic, neoclassical, consumer choice model (and the model of markets which is built on it) is good and the arguments I have heard from so-called Austrians against it are all dumb. Now what I wonder is: Do Boettke and the GMU “Austrians” agree with me that this is a perfectly good model or do they agree with the Mises.org guys that it is all garbage, and on a side note, do they agree that diminishing marginal utility is a logical necessity or, for that matter, that it is important in any way?
I get the feeling that they aren’t completely comfortable with this model because Caplan also wrote this which makes many of the same points I tried to make, along with some others which are also excellent, and he knows the GMU guys pretty well I think. On a related note, maybe I should have been talking about “indifference” instead of continuous quantities. Indifference doesn’t drive people to action. Fine, but people act until they reach a state of marginal indifference. That’s actually pretty much the central tenet of neoclassical economics. But I digress. Also, I probably need to learn a bit from him about how to get along with Austrians better.
But if the answer is that they agree with me about this model, then I am left wondering what is the difference between us. If they say “nothing, you’re an Austrian” then I am unsatisfied and I would say “no you are mainstream” and we would be having what I consider a pointless argument (very similar to the debate above). There are still some issues regarding the degree to which our analysis should be driven by preexisting normative beliefs. Maybe I will say more on that later but for the most part, in my mind, if you drop all the criticisms of mainstream economics (at least the core of micro) and just say “we want to look into the role of the entrepreneur more” or whatever, then I have no problem but then why make a point of differentiating yourself from the mainstream so much?
At any rate, though I am genuinely interested in answering these questions, I think they are all dodging the real issue which is those blasted Mises.org people. It may be the case that the GMU Austrians are not that nuts but they aren’t the ones on TV or blowing up the comment sections of every econ blog. And if you go to any kind of libertarian gathering and try to talk to somebody who fancies themselves a part-time Austrian economist (which will be half the people there), chances are they will be suffering from a lot of confusion brought on by the popularity of Mises.org-type thinking in those circles. So to me that is the issue that must be dealt with. It would be nice if the GMU types could draw people away from that but they don’t seem to be very successful at this. I don’t know what the answer is. I just know that it’s a problem. And admitting you have a problem is the first step toward recovery.