Austrian Economics

[Socrates92]

This post is a little broad.

Is there anyone here that is (preferably professionally, although amateurs/students feel free to chime in as well) familiar with the study of Austrian Economics, as opposed to the Chicago, or (mainstream) Keynesian school? I am currently taking a bit of a break in studying Economics (the program being biased in the Keynesian direction of course) as an undergrad. I’ve currently completed 2 yrs, and am planning to transfer schools to start my third year this coming Sept. I’ve recently stumbled into the videos and writings of contemporaries such as Tom Woods, Robert Murphy, Walter Block, etc. and through them started reading the likes of Rothbard and Mises.

I’m slowly learning just how much the practise of economics, like other social studies, is beholden to political ideology and control. This is especially true when one considers how many economists work for the government and/or publicly funded “private” universities or research institutions. The “average Joe” also tends to hold Economists in awe - People will respect anyone who has a bunch of letters added to their name and speaks authoritatively about essential matters that they do not understand - similar to how he typically grants uncritical respect to medical professionals. Looking at the economic landscape with an economist’s mindset (ha!), I observe that the incentives are in place for professional economists to obscure and corrupt the honest pursuit of economic truth, and instead simply serve as sophisticated, highly paid yes-men to whatever views the government wants to forward.

That being said… I’m interested in truth - specifically the truth about how economic principles actually function in the real world, as well as studying practical (and moral) applications that improve peoples’ actual circumstances. In my view, this is part of our Christian vocation to be stewards of creation. In my present, partially formed, opinion, Austrian economics does this better than the other schools, especially better than the Keynesian. I am definitely open to debate on this - feel free to attack it from any angle you wish.

I’m also curious what people would recommend for potential career goals for someone like myself. Is it worth it trying to get a career in research/academia, or perhaps even government, knowing that I might have an uphill battle? Should I skip over to insurance instead? I realize that this will depend heavily on certain personality traits, but I’m interested in what other people of similar interests have done.

 

[Entwhistler]

Now I am no economist by any stretch of the imagination. I’m a history person myself. But I have listened a bit to Tom Woods and the like. What I find appealing about Austrian Economics is it’s focus on human beings rather than on numbers. Everything starts with a single exchange is built from that. From what I understand about Keynesianism (which is very little to be honest), numbers and formulas take over in importance. And when numbers outweigh human beings, you got problems.

 

[Socrates92]

Yes, that was something I also found interesting. Austrian Economics is unique in that actually eschews mathematics. The idea is that economics is the study of praxeology (the study of human action), and humans actions do not follow scientific exactitude such that they can be predicted (unless you subscribe to some wacky deterministic philosophy, of course). By contrast, a lot of Keynesian economists treat people almost as pawns, to be manipulated with monetary policies and stimuli, to conform to the central ideas of the economic masterminds. This is one of the reasons I think Keynesian thinking and socialistic-leaning governments are so compatible.

Austrian economics is also a somewhat more metaphysical study. It looks at economics in the light of a-priori principles. For example, the idea that demand decreases when prices go (all else remaining the same) up is an apriori principle of human action. It is knowable in and of itself. Keynesian, o.t.o.h., bases all its certitude, or lack thereof, solely on physical evidence. It is ok to question the validity of the demand principle as long as one can produce given studies that shed doubt on whether it happens in practise. It treats economic theory like scientific theory - it’s only valid in so far as it is predictive. The particular type of prediction typically being quantitative prediction. In a way, it is a very skeptical school of thought, and isn’t really grounded in anything.

I’m not sure I completely buy the Austrian approach to mathematics, as I think it might be a little extreme and models may have serious practical applications. After all, principles are nice, but in the actual world, quantities are important as well as qualities. However, I also believe that knowledge in any discipline has to be grounded on firm principles, which Keynesian seems to lack to an extent.

I wish I had a better grasp of history. Maybe I’ll gain this over time while listening to Woods.