For years I've heard the same argument against the Austrian school of thought, that not only are they shy of statistics, but that they don't quote enough outside sources. Ironically, these arguments are invariably used as an excuse for why someone of the mainstream refuses to crack a single Austrian book... something which deductive reasoning qualifies as an "outside source" itself. At any rate, I was reminded of this as I've been a little late to the party and just getting into Hayek's writing, I'm immediately impressed by his objectivity and energetic use of varying sources, including, or especially those coming from quite opposite ideological positions. I would also note that in stark contrast to the vicious and self-aggrandizing tone of today's mainstream economic pundits, Hayek's language is decidedly lacking in any form of antagonism, and in fact his arguments are carefully constructed to appeal to the reason and love of liberty that he believes remains at the heart of many in his target audience. As a great example I'd like to submit his small collection of observations concerning the nature of socialism, and specifically the belief that not only were Stalinism and Hitlerism closely related to one another, but that such authoriarian systems are the ultimate and inevitable conclusion of collectivist progress:"Even communists must have been somewhat shaken by such testimonies as that of Max Eastman, Lenin's old friend, who found himself compelled to admit that 'instead of being better, Stalinism is worse than fascism, more ruthless, barbarous, unjust, immoral, anti-democratic, unredeemed by any hope or scruple,' and that it is 'better described as superfascist'... W. H. Chamberlin, who in twelve years in Russia as an American correspondent had seen all his ideals shattered, summed up the conclusions of his studies there and in Germany and Italy in the statement that 'socialism is certain to prove, in the beginning at least, the road NOT to freedom, but to dictatorship and counter-dictatorships, to civil war of the fiercest kind. Socialism achieved and maintained by democratic means seems definitely to belong to the world of utopias.' Similarly a British writer, F. A. Voigt, after many years of close observation of developments in Europe as a foreign correspondent, concludes that 'Marxism has led to Fascism and National Socialism, because, in all essentials, it is Fascism and National Socialism.' And Walter Lippmann has arrived at the conclusion that 'the generation to which we belong is now learning from experience what happens when men retreat from freedom to a coercive organization of their affairs. Though they promise themselves a more abundant life, they must in practice renounce it; as the organized direction increases, the variety of ends must give way to uniformity.' 'The complete collapse of the belief in the attainability of freedom and equality through Marxism,' writes Peter Drucker, 'has forced Russia to travel the same road toward a totalitarian, purely negative, non-economic society of unfreedom and inequality which Germany has been following. Not that communism and fascism are essentially the same. Fascism is the stage reached after communism has proved an illusion, and it has proved as much an illusion in Stalinist Russia as in pre-Hitler Germany.'" The Road to Serfdom, Ch. 2
Nice post, but don't expect much response here on the forum where people prefer one-liners, partisan bickering, and racial topics. This forum is an excellent example of the failures of democracy. People are generally ignorant, but think they know everything. I especially like this quote:
Austrian economics has one quality that everyone should appreciate. It is one of the only schools of economics that still recognizes the subject as a social science rather than a natural science. Since 1947, economics has increasingly become more linked to physics and the hard sciences. This is why the Nobel Foundation created a Nobel Prize in Economics Science in 1969. I find it great that economics has evolved to the point that it can be quantified to such an extent. However, we must always acknowledge that economics is based upon human decision, and that oversimplified models are flawed to an extent because they require too many assumptions. One cannot assume about human nature. This is why I find behavioral economics to be a new age of economic thought. It is seeking to take the concepts of deductive reasoning, and praxeology, and apply them in a more modern sense, with graphs and quantifiable factors when applicable.
Excellent point. I'm drawn to the social and political analyses of the Austrians more so than the actual economics. Economics is really such voodoo. Nice read here that blurs the lines between what we consider left/right. What if left is liberty and right is authority?
Murray Rothbard was an interesting character. I have read a couple books of his on the Mises Institute website. His social and philosophical theories are better than his economic theories. However, a lot of his ideas are just too radical for my tastes, though I love his analysis. Economics is not really voodoo. To understand the current way the economic system is perceived to work, you have to be well grounded in Keynesianism, Monetarism, and Financial Economics. Neoclassical economics is the foundation of all schools of economic thought, including the Austrian School. This is what is taught in introductory economics classes, as well as advanced placement economics classes like the one I am in, although you do learn a couple concepts that are Keynesian-based. Lastly, the works of Adam Smith, Thomas Malthus, David Ricardo, etc. are the foundations for neoclassical economics.
Ironically, they are not the radicals. James Rickards', a former investment banker for Long Term Capital Management, a former lawyer, an advisor to the Department of Defense in their recent financial war games, a policy consultant, a frequent guest for the MSM, and author of the book Currency Wars showed me how there will likely be a government debt, a monetary, or financial crisis within the next five to ten years. This guy is not an Austrian, and I do not believe he is a Ron Paul supporter, although I am not entirely sure. However, he favors a return to the gold standard.
I believe you misunderstood me there. I'm saying that the radicals are the ones who dug this hole, not that the radicals made you consider the size of the hole.
Alright, I get you. I agree. Although I would not characterize the likes of Bernanke and Co. as radicals. They are the establishment and the societal created moderates. They represent the mainstream ideas of Monetarism, Keynesianism, and Financial Economics. It is Austrian economics that is radical, and rightly so. It is the old way of economic thought, one that was blended with the fields of psychology and political science rather than physics.
HaHa---if there's one thing that I learned very thoroughly in university it's the futility of statistics... it was In fact my stats prof himself who most eloquently demonstrated the ease with which statistics are twisted to arrive at a desirable conclusion. All jesting aside, the truth is it is merely impossible to reduce human behavior to a mathematical equation. I could liken it to the task of simulating an element of physics, such as the flow of water, but even monumental complexity such as fluid motion pales in comparison to human interaction. In addition to the seemingly infinitesimal number of variables required, the simple fact remains that we simply don't know everything... we don't and cannot discover everything that goes into a single human decision. But of course to those whose crusade is to plan the future for every person, this is a non-issue---they are the "elite". For this reason, at least primarily, I am attracted to the Austrian way of thinking. While there are some issues I still contend with, such as environmental protection and "the commons"... ironically these are areas which Hayek (at least in 1944) was less "radical" than much of the Mises community appears to be. Whether we emphasize sources, statistics, studies, or theories, it is imperative that we think rationally. I am most frustrated not by the ridicule of the mainstream, but the insistence of "empirical proof" as a substitute for reason. The state sponsored pundits will forever rattle off citations and study results, provided they happen to support their claims, this will never change. But refusal to hear out a rational argument based on your opinion of the theorist is intolerable. It is most important that we practice rational thinking, to educate subsequent generations in how to think, not who to quote.
