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Austrian School Methodology

rarugged
Posts: 172
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10/22/2011 8:22:17 PM
Posted: 5 years ago
Is the Austrian's methodology of logical deductions derived from a set of axioms the proper way of going about economics?

Is their critique on mathematical models and controlled experiments (empirical & experimental economics) legitimate?

I, for one, find their ways increasingly distressing. Aristotle had used logic and reason in formulating his physical view of the universe, which turned out to be wrong.
If Jesus came back tomorrow, a cross would be the last thing he would want to see.
darkkermit
Posts: 11,204
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10/22/2011 9:04:11 PM
Posted: 5 years ago
At 10/22/2011 8:22:17 PM, rarugged wrote:
Is the Austrian's methodology of logical deductions derived from a set of axioms the proper way of going about economics?

Nope. However, the Austrian methodology doesn't even use logical deductions. Try to make logical syllogisms using their "axioms". You can't really. Also their "axioms" are not necessarily correct. For example, the theory goes that our purchases are base on ordeal preferences. However, we don't view our money in terms of what it can buy, but as just a number. This is known as the "money illusion" which is ignored in Austrian economics.

http://www.pnas.org...

Is their critique on mathematical models and controlled experiments (empirical & experimental economics) legitimate?

It's true that controlled experiments are difficult in economics, however the Austrian method just lets them be right when they are wrong, and lets the back into a corner when the empirical evidence is against them.

I, for one, find their ways increasingly distressing. Aristotle had used logic and reason in formulating his physical view of the universe, which turned out to be wrong.

Yes, agreed.
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Ragnar_Rahl
Posts: 19,297
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10/22/2011 9:14:16 PM
Posted: 5 years ago
What empirical evidence?
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
darkkermit
Posts: 11,204
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10/22/2011 9:20:15 PM
Posted: 5 years ago
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory, less fluctuation in deflation/inflation patterns. Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.
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Ragnar_Rahl
Posts: 19,297
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10/22/2011 9:24:50 PM
Posted: 5 years ago
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory
Wait, 1929 had less of an impact than 1921? Those are the two temporally closest ones pre and post Keynes. Regardless, that's historical, not empirical (i.e. other-things-equal).

Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.
Was he aware that what such a change would entail was money backed by the IRS' (or British equivalents') guns, or was he comparing it to money backed by nothing?
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
darkkermit
Posts: 11,204
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10/22/2011 9:32:52 PM
Posted: 5 years ago
At 10/22/2011 9:24:50 PM, Ragnar_Rahl wrote:
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory
Wait, 1929 had less of an impact than 1921? Those are the two temporally closest ones pre and post Keynes. Regardless, that's historical, not empirical (i.e. other-things-equal).

Wasn't aware that Keynesian theory was around or even fully developed in 1929.

Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.
Was he aware that what such a change would entail was money backed by the IRS' (or British equivalents') guns, or was he comparing it to money backed by nothing?

Don't know, but it shouldn't matter, since there is nothing special about gold. Money is just a medium of exchange. If it works, it works.
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mongeese
Posts: 5,387
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10/22/2011 10:41:41 PM
Posted: 5 years ago
At 10/22/2011 9:32:52 PM, darkkermit wrote:
At 10/22/2011 9:24:50 PM, Ragnar_Rahl wrote:
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory
Wait, 1929 had less of an impact than 1921? Those are the two temporally closest ones pre and post Keynes. Regardless, that's historical, not empirical (i.e. other-things-equal).

Wasn't aware that Keynesian theory was around or even fully developed in 1929.

Keynes was founding his theory around that time, and many of Hoover's and almost all of FDR's policies assumed Keynesian prinicples as well.

Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.
Was he aware that what such a change would entail was money backed by the IRS' (or British equivalents') guns, or was he comparing it to money backed by nothing?

Don't know, but it shouldn't matter, since there is nothing special about gold. Money is just a medium of exchange. If it works, it works.

If a government is about to break down, its money becomes worthless, but its gold does not. Proper gold standards also fight inflation, although a mixed metal would work best to not tie everyone's wealth so closely to the price fluctuation of gold.
Ragnar_Rahl
Posts: 19,297
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10/22/2011 10:47:19 PM
Posted: 5 years ago
I have no idea when Keynesian theory got developed, but Mong hit the policy shift on the button.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.
jimtimmy
Posts: 3,953
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10/23/2011 2:53:42 PM
Posted: 5 years ago
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory, less fluctuation in deflation/inflation patterns. Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.

Mises also predicted the Great Depression, as did Hayek... Keynes lost a lot of money due to his failure to predict...
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darkkermit
Posts: 11,204
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10/23/2011 2:57:03 PM
Posted: 5 years ago
At 10/23/2011 2:53:42 PM, jimtimmy wrote:
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory, less fluctuation in deflation/inflation patterns. Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.

Mises also predicted the Great Depression, as did Hayek... Keynes lost a lot of money due to his failure to predict...

I already stated that Mises and Hayek can claim victory when they are right. This is an example. However, they go into a corner If they are wrong.
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mongeese
Posts: 5,387
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10/23/2011 3:25:10 PM
Posted: 5 years ago
At 10/23/2011 2:57:03 PM, darkkermit wrote:
At 10/23/2011 2:53:42 PM, jimtimmy wrote:
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory, less fluctuation in deflation/inflation patterns. Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.

Mises also predicted the Great Depression, as did Hayek... Keynes lost a lot of money due to his failure to predict...

I already stated that Mises and Hayek can claim victory when they are right. This is an example. However, they go into a corner If they are wrong.

And when are they wrong?
darkkermit
Posts: 11,204
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10/23/2011 3:47:45 PM
Posted: 5 years ago
At 10/23/2011 3:25:10 PM, mongeese wrote:
At 10/23/2011 2:57:03 PM, darkkermit wrote:
At 10/23/2011 2:53:42 PM, jimtimmy wrote:
At 10/22/2011 9:20:15 PM, darkkermit wrote:
At 10/22/2011 9:14:16 PM, Ragnar_Rahl wrote:
What empirical evidence?

Recessions have had less of an impact using Keynesian theory, less fluctuation in deflation/inflation patterns. Mises predicted If great britian went off the gold standard, then it would become worthless. It did not.


Mises also predicted the Great Depression, as did Hayek... Keynes lost a lot of money due to his failure to predict...

I already stated that Mises and Hayek can claim victory when they are right. This is an example. However, they go into a corner If they are wrong.

And when are they wrong?

They said Keynesian economics wouldn't work, those nations that developed keynesian economics during the great depression got out quicker. Keynesian policies have fought recessions and depressions. The removal of the gold standard would cause the money to become worthless, it didn't. The creation of the FED should have made problems worse, but recessions have dampened with the creation of the FED. Inflation and deflation periods are way less severe then before:

http://en.wikipedia.org...
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