A good criticism of the Austrian school of non-econ

[Schrödinger's Cat]

It's written by a social liberal with sympathies for socialism, but there are very good points raised that throw down Von Mises and Rockwell:

http://www.huppi.com/kangaroo/L-ausmain.htm

[Incendiarism]

That was a very good article. Do you have any more pertaining to austrian/chicago economics?

[leftist manson]

It's written by a social liberal with sympathies for socialism, but there are very good points raised that throw down Von Mises and Rockwell:

http://www.huppi.com/kangaroo/L-ausmain.htm


Wow wow wow:thumbup::) , can’t thankyou enough comrade. I love it when a libertarian (anarcho-capitalist) falls from his ivory horse. Whether it be a degree-holding professor blogging like tyler cowen or a random Ron paul rEVolutionary frat boy , I just can’t digest their psycho-babble. Completely ahistorical , self-obsessed and conceited

[Revolution 9]

As a mutualist, I find I have much in common with Austro-libertarians. I have personally read Mises's Human Action and Socialism, Rothbard's Man, Economy, and the State, as well as Huerta de Soto's Money, Bank Credit, and Economic Cycles.

I don't find much objectionable to the ideas presented in those works and I believe that every serious leftist ought to read Austrian works and make the most of them. I personally believe that I have benefitted from combining Austrian ideas with mutualist ones. For example, I reject the labor theory of value because it is quite clear that the value of goods is subjective, though I still believe in worker and consumer co-ops.

The article linked to in the thread does not make much sense. It starts off by criticizing the methodological basis of Austrian economics. Of course, if you wish to criticize that, then you by default have to accept that the science of economics cannot even exist, as empirical studies have very well known pitfalls - they are one giant experiment in the false cause fallacy.

Also, the author criticized the Austrian school for assuming conditions of perfect competition and whatnot. It is clear from this that the author has never even read Mises, Hayek, or Rothbard. Perfect competition is a theoretical model of neoclassical economists, not Austrian ones. As for the author's criticism of "no violence," no shit. In a normal economy, crime is not able to damage the economy significantly, so one cannot say that this is a major flaw of Austrian analysis.

Another flaw in the criticism was the part about economic planning. Austrians do not criticize economic planning as such, because market prices (that is, information) lead you to plan your economic activities in such a way to maximize profit. In the absence of prices, economic planning is impossible. This is part of the reason why state socialism is impossible - incorrectly set prices would lead to havoc as there would be shortages of some goods and surpluses of others. In essence, a state socialist economy would always be inefficient due to resources not going where they're supposed to go.

As for the critique of the Austrian view of monopolies, the author again errs. Historically, we see government intervention creating monopolies: everything from African governments colluding with De Beers, the American government creating the ICC to protect railroad industries, regulations and taxation creating barriers to entry, tariffs preventing competition, etc. The very reason we have an economy like we have is due to government barriers preventing workers from organizing and creating an economy made of co-ops, creating their own credit, etc.

When it comes to the author's critique of the Austrian theory of the business cycle, he fails completely. Austrians do not call for full reserve banking and a gold standard, they call for free banking. The author clearly has never read anything by an Austrian, but is just being confused by the fact that Rothbard believed that free banking would naturally lead to full reserve banking.

Furthermore, the author is clearly completely confused about inflation and deflation and the Austrian POV. Austrians agree that monetary contraction is a bad thing. However, secular price deflation in itself is not a bad thing, and many mainstream economists agree (i.e. all monetarists agree). The thing that makes secular price deflation bad is the government creating business-union cartels that make wages inflexible, thus creating unemployment.

The author also falls short in critiquing the Austrian business cycle theory. ABCT clearly explains how credit creation creates an artificial boom in capital goods, which then resonates within the rest of the economy. However, Austrians contend that the real rate of interest is bound to rise due to inflation and other factors, which in turn means less investment, which means falling demand, which means a recession. Austrians have empirically proven to be correct in this regard, as we have seen easy credit lead to booms, like we just had in the housing market, and then those booms turning into busts regardless of what the central banks of the world try to do.

The author's critique of the Austrian school's history is also puzzling. It is well known that there were several recessions during the so-called "Keynesian years," the great irony being that a gold exchange standard was the only thing stopping serious inflation. After we removed this "barbaric relic," as Keynes called it, we immediately lapsed into stagflation - so much for Keynes!

Although I myself disagree with Austrian politics, the author's critique of it is completely warrantless. Many Austrians critique civil rights legislation, for example, because it forces employers to pay more, for say, women. This of course creates a disincentive for employers to hire women. As for the environmental argument, the author completely ignores that the lack of property rights is what creates pollution in the first place and that government intervention often leads to even worse conditions (i.e. the EPA starting forest fires during windy dry seasons that spread to cities). A proper critique of Austrian politics would instead focus on their "vulgar libertarianism" and why on earth someone who believes in free markets would support decidedly unfree corporations propped up by fascistic-like governments.

So there are a few things to criticize about Austrians, but the author clearly doesn't even know what he is refuting.

[Schrödinger's Cat]

Revolution, I'm interested in discussing your positions later on in the day once I have time. But I think you would be an excellent addition to the anarchist forum; check it out on the main page. There's a discussion underway where anarchists are disputing the claim that mutualism is a proper anarchist model. You can find the particular thread here (http://www.revleft.com/vb/anarchist-f105/index.html). :)

I promise to respond to your post in full, though.

[Revolution 9]

Yup, no prob. Maybe we should start a separate debate thread or something? Just post it when you have time and I'll join in later as well.

[Schrödinger's Cat]

Austrians do not call for full reserve banking and a gold standard, they call for free banking. The author clearly has never read anything by an Austrian, but is just being confused by the fact that Rothbard believed that free banking would naturally lead to full reserve banking.This is actually only partially true. Those who adhere to Rothbard believe a market will create such conditions, although it's never been demonstrated. Those who adhere to Hayek and Von Mises believe - sometimes - that we should ban or severely restrict such banking.

If Rothbard is wrong, of course, we have a major problem where government efficiency would actually - theoretically - be better than market competition.


After we removed this "barbaric relic," as Keynes called it, we immediately lapsed into stagflation - so much for Keynes!This is scrupulous comment. Stagflation was not caused from going off the gold standard; it developed from the inane policies enacted by Nixon. Let's remember Nixon issued a wage/price freeze. Even Keynes called such moves stupid when he addressed the German economy.


Many Austrians critique civil rights legislation, for example, because it forces employers to pay more, for say, women.You're using Austrian binary thought. Let's just use some good ol' fashion Misonian logic: why wouldn't employers hire women at equal wages? Because it costs more due to their fertility and relationship with natural reproduction. The alternative would be having larger wealth disparity. Women have made gigantic gains in wage differences.


As for the environmental argument, the author completely ignores that the lack of property rights is what creates pollution in the first place and that government intervention often leads to even worse conditionsAlternatively, the banning of CFCs is a proven success. The hole in the ozone is expected to close entirely by 2050.


A proper critique of Austrian politics would instead focus on their "vulgar libertarianism" and why on earth someone who believes in free markets would support decidedly unfree corporations propped up by fascistic-like governments.I realize you're influenced greatly by Kevin Carson, as am I, but the Austrian school isn't nearly as sound as you're trying to make it.