OK I keep hearng this narrative about how Austiren Economics rejects empiricism and supposedly von Mises even admitted such. can anybody help clerify this for me?
If you're not trying to argue from an Austrian standpoint, then it's simply poisoning the well.
http://tomwoods.com/blog/austrian-economics-is-unscientific/
QuoteCan you explain to me Mises' arguments regarding where empirical data is useful and where it is not, or regarding the epistemological status of economic propositions? I know you have thought about this deeply, so surely you can at least explain the Austrian position even if you don't agree with it. Don't worry, I'll wait.
QuotePlenty of Austrian works contain quite a bit of empirical data, which is why I am sure no one making these claims has read the Austrians. Murray Rothbard's important book America's Great Depression is a good example. The relevant question is, what is the role of empirical data in economics? Does it establish a theory or merely lend support to a theory already established on other grounds? Merely calling the Austrians "unscientific" is laziness of a truly striking kind and begs every pertinent question.
I think what they're doing is taking the point of the Austrians that you can't do experiments in economics like you can in physics or whatever, and either misunderstanding it completely or seizing on it as a reason to dismiss Austrian economics entirely.
Quote from: MrBogosity on March 02, 2014, 08:56:43 AM
http://tomwoods.com/blog/austrian-economics-is-unscientific/
I think what they're doing is taking the point of the Austrians that you can't do experiments in economics like you can in physics or whatever, and either misunderstanding it completely or seizing on it as a reason to dismiss Austrian economics entirely.
Wile completely ignoring the fact that any such criticisms are exactly as valid against their preferred school as they are against the Austrian school.
OK I told the person ma,king this argument as much and he came back with this. What I saidi n blue and what he said in red.
I think what you're doing is taking the point of the Austrians that you can't do experiments in economics in the same way you can in physics or whatever, and either misunderstanding it completely or seizing on it as a reason to dismiss Austrian economics entirely.
Yeah, and that stance is fucking stupid. Mainstream economists have been making empirical, testable models for YEARS, that WORK.
You absolutely CAN apply the scientific method to econ. especially now that Behavioral Economics has risen out of the neoclassical school to deal with the (Somewhat true) criticism of traditional neo-classical economists rigidity and emphasis on perfect rationality.
Austrian Economics is at BEST outdated and unscientific and at worst outright cultish psuedo-science.
Any Takers?
Quote from: tnu on March 02, 2014, 01:26:38 PM
Yeah, and that stance is fucking stupid. Mainstream economists have been making empirical, testable models for YEARS, that WORK.
And yet it was the Austrians, and not them, who predicted the Great Depression, the post-war prosperity, the '70s crunch, the S&L crisis, the tech bubble, the housing bubble, and the 2007 financial crisis.
QuoteYou absolutely CAN apply the scientific method to econ.
No one's saying you can't. You just can't do direct experimentation, and the historical data you look at has to be examined carefully. Also, while those algebraic equations and models are good guidelines, there's absolutely no evidence that anyone can work out what the values of all the variables are at any given time and use that to manipulate the economy from the top down. Every single attempt to do so has failed miserably. And you'd know all of this if you'd actually READ Mises and Hayek.
Quote from: MrBogosity on March 02, 2014, 01:56:18 PM
And yet it was the Austrians, and not them, who predicted the Great Depression, the post-war prosperity, the '70s crunch, the S&L crisis, the tech bubble, the housing bubble, and the 2007 financial crisis.
No one's saying you can't. You just can't do direct experimentation, and the historical data you look at has to be examined carefully. Also, while those algebraic equations and models are good guidelines, there's absolutely no evidence that anyone can work out what the values of all the variables are at any given time and use that to manipulate the economy from the top down. Every single attempt to do so has failed miserably. And you'd know all of this if you'd actually READ Mises and Hayek.
I'm a bit confused. I was under the impression Austrian Economics was mainstream economics, at least in western democracies. I understand some argue our economic system is based on Smith, but the way I read it, he says essentially the same things as Mises.
Quote from: dallen68 on March 02, 2014, 05:21:56 PM
I'm a bit confused. I was under the impression Austrian Economics was mainstream economics, at least in western democracies. I understand some argue our economic system is based on Smith, but the way I read it, he says essentially the same things as Mises.
No, sadly it's still mostly Keynes, even though Keynes's theories were pretty much all falsified by the 1970s. We still have economists who think the Phillips Curve works!
Quote from: MrBogosity on March 02, 2014, 06:08:03 PM
We still have economists who think the Phillips Curve works!
Like the one at my 2-year college I made that thread about. His response; or at least my textbook's response? "It works in the short term, just not in the long term!" And shows us the Long Run Phillips Curve compared to the Short Run Phillips Curve which (according to my textbook) works. I suspect my book is full of shit.
Yes, both short run and long run Phillips curves have been debunked.
Ask him to demonstrate on a plot that shows inflation and unemployment. I think you'll find it amusing.
I should clarify something the person i'm dealingw ith is an "anarcho"-communist not a Keynesian he would likely say these thigns are a product of capitalism.
Quote from: MrBogosity on March 02, 2014, 06:08:03 PM
No, sadly it's still mostly Keynes, even though Keynes's theories were pretty much all falsified by the 1970s. We still have economists who think the Phillips Curve works!
Not to mention that Keynes himself rejected what's being called Keynesian economics these days. He eventually understood that things like price drops to promote market clearing have to occur in a recession.
Quote from: evensgrey on March 03, 2014, 08:56:09 AM
Not to mention that Keynes himself rejected what's being called Keynesian economics these days. He eventually understood that things like price drops to promote market clearing have to occur in a recession.
Actually, he kinda-sorta understood that at the time of writing the General Theory. The problem, he said, was that prices get "sticky" and you need government spending to get things moving again.
Quote from: MrBogosity on March 03, 2014, 10:24:41 AM
Actually, he kinda-sorta understood that at the time of writing the General Theory. The problem, he said, was that prices get "sticky" and you need government spending to get things moving again.
Which is still the opposite of what's called Keynesian economics today, which blathers on about 'deflationary spirals' happening because prices will fall without government inflating the money supply, and then people won't spend because they're waiting for prices to bottom out. (In reality, of course, people have to spend for certain things, namely whatever they use that they don't produce themselves, which means that you cannot get an unconstrained deflationary spiral affecting the whole economy, no matter what happens. Prices will fall most sharply on whatever was overvalued, until the oversupply that the overvaluing caused is cleared, and then the affected sectors will return to a healthy state. Why is it that this is so difficult for most people to understand?)
Quote from: evensgrey on March 03, 2014, 12:22:08 PM
Which is still the opposite of what's called Keynesian economics today, which blathers on about 'deflationary spirals' happening because prices will fall without government inflating the money supply, and then people won't spend because they're waiting for prices to bottom out. (In reality, of course, people have to spend for certain things, namely whatever they use that they don't produce themselves, which means that you cannot get an unconstrained deflationary spiral affecting the whole economy, no matter what happens. Prices will fall most sharply on whatever was overvalued, until the oversupply that the overvaluing caused is cleared, and then the affected sectors will return to a healthy state. Why is it that this is so difficult for most people to understand?)
It's pretty much the consensus in every school of economics:
The Austrians say that interest rates should (naturally) rise, allowing prices to fall to purge the malinvested assets.
Monetarists say you need market clearing to get out of the recession, and falling prices are the mechanism behind that (Similar to Austrian without the link to interest rates).
RBC theorists say you need falling prices to spur the productivity shift needed to get the economy back on track.
Basically there is NO theory that says you should try and keep prices in the failing industry up, and NO theory that says you should raise taxes during a recession. That's why government apologists like Krugman have to go batshit crazy to support it.