Nostalgic photos of Austrians

Among a lot of lesser lights, some golden oldies.

For beginners, the Austrian school of economics started in the 1880s with Carl Menger, key figures in the 20th century were Ludwig von Mises, Fritz Hayek, Murray Rothbard, Israel Kirzner and Ludwig Lachmann. There was a revival of the movement in the 1970s with a series of conferences in strange places.

The Austrians adopt an evolutionary or ecological approach to social and economic systems to emphasise the role of individual initiative and planning in a framework of traditions, organizations and institutions (especially markets). They were virtually buried in professional circles by the rise of Keynes and mathematical economics. The Austrians are skeptical of mathematics and they tend to be robust free traders and so they were dismissed for many years as unscientific and reactionary. A head count in the professional association in the US indicated that they are out-numbered by other schools by 50 to 1, despite robust growth since the revival of the 1970s.

For aficionados, on line PDF of a biography of von Mises. A review of the book.

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12 Responses to Nostalgic photos of Austrians

  1. Ned

    The twentieth century has witnessed the beginning,
    development, and end of the most tragic experiment
    in human history: socialism. The experiment resulted
    in tremendous human losses, destruction of potentially
    rich economies, and colossal ecological disasters. The
    experiment has ended, but the devastation will affect the
    lives and health of generations to come.

    The real tragedy of this experiment is that Ludwig von
    Mises and his followers — among the best economic minds
    of this century — had exposed the truth about socialism in
    1920, yet their warnings went unheeded. — Yuri Maltsev (1990).

    http://teapartyeconomist.com/2015/12/05/socialism-is-dead-mises-was-right/

    Robert Heilbroner fessed up to the failure of socialism
    “It turns out, of course, that Mises was right” about the impossibility of socialism.
    http://reason.com/archives/2005/01/21/the-man-who-told-the-truth

  2. Ray

    By scepticism of mathematics you mean that Austrians don’t like empirical studies because these do not support their rather blinkered ideological view of the world. For example, this heterogeneous school of thought still clings to the notion of the Austrian business cycle despite the fact that no empirical evidence has ever emerged to support the theory.

    Austrians are, and will remain, a sideshow because ideology is more important than a robust and rational view of the world. Yes even economists are victims of chronic stupidity.

  3. .

    For example, this heterogeneous school of thought still clings to the notion of the Austrian business cycle despite the fact that no empirical evidence has ever emerged to support the theory.

    That’s absolutely wrong. Do you even understand Kydland and Prescott?

  4. John Bayley

    The twentieth century has witnessed the beginning, development, and end of the most tragic experiment in human history: socialism.

    If only this was indeed the case…

    Alas, socialism lives on, and perhaps stronger than ever. All you need to do is look at Obama, Bernie Sanders, Malcolm Turnbull, ALP, LNP, Greens … the list goes on.

    The “free shit for everyone, at someone else’s expense” meme will not go away, until and unless a mega-crisis forces a return to reality.

    And even then, short memories that most people have will ensure that while history may not repeat, it will certainly rhyme.

  5. John Bayley

    By scepticism of mathematics you mean that Austrians don’t like empirical studies because these do not support their rather blinkered ideological view of the world.

    No, it means simply that mathematical formulas, while being great for describing the behaviour of non-living objects, are not all that useful for predicting human behaviour.

    In other words, an accurate prediction can be made of where a rock falling down a slope will come to rest. The same cannot be said of a human being falling down that same slope.

    This is so obvious only a moron would deny it.

  6. Tel

    The Austrians are skeptical of mathematics and they tend to be robust free traders and so they were dismissed for many years as unscientific and reactionary.

    I disagree, Mises used logic and argued that the best way to approach economic problems is by logical deduction. Mathematics is essentially a systematic extension of logic, therefore Austrian economics is not in the least bit skeptical of mathematics.

    That said, Austrians are skeptical of the idea that merely applying a mathematical formula automatically makes what you are saying more authoritative. Using the tool appropriately shows suitable respect for the tool, not disdain.

    Now, empirical science is quite another thing from mathematics. Empiricism depends on repeatable real world experiments and a well chosen experimental control. For practical reasons these are difficult to achieve in economics, especially on a world scale. Of course, pure mathematics is not in any way constrained by such practicalities, but experimental science sure is.

  7. Ned

    Furthermore, the most vociferous critics of math in economics, Murray N. Rothbard and Ludwig von Mises, were both well versed in mathematics, Rothbard entering Columbia University at age 16 as a statistics major. Rothbard and Mises did not build mathematical theoretical models because they believed it was inappropriate for economic analysis, not because they lacked mathematical competence.

    What is the problem, then, of using math for economics, and why are Austrians opposed to such a methodology? In a word, math is not an appropriate tool to describe human action. As Mises and Rothbard often pointed out, one cannot quantify human action. This does not mean that people do not engage in activity in which mathematics is not important, but rather that we cannot accurately use math to describe how humans behave.

    https://mises.org/library/mathematics-and-economic-analysis

    The use of mathematics necessarily leads the economist to distort reality by making the theory convenient for mathematical symbolism and manipulation. Mathematics takes over, and the reality of human action loses out.
    https://mises.org/library/daniel-bernoulli-and-founding-mathematical-economics

    The mathematical economists are therefore framing assumptions which are admittedly false or partly false, but which they hope can serve as useful approximations, as they would in physics. The important thing is not to be intimidated by the mathematical trappings.

    https://mises.org/library/note-mathematical-economics

    he mathematical method must be rejected not only on account of its barrenness. It is an entirely vicious method, starting from false assumptions and leading to fallacious inferences.”…

    https://mises.org/library/mathematics-versus-economic-logic

  8. Ray

    That’s absolutely wrong. Do you even understand Kydland and Prescott?

    Dot, yes I do understand Kydland and Prescott. I also understand the differences between Real Business Cycle theories and Austrian Business Cycle theories. I certainly understand well enough to know that Kydland and Prescott won their Nobel Prize for the former and had nothing to do with the latter.

    The Austrian Business Cycle theory was developed by Mises and Hayek and postulated that business cycles evolved from the creation of excessive bank credit. The theory is supported by very few heterodox economists, and rightly so for it has no support from any empirical study.

    Then again, those few heterodox economists who cling to the notion are clearly still steps ahead of Dot, who cannot tell the difference between Real Business Cycles and Austrian Business Cycles. A little knowledge is dangerous.

  9. Ray

    John Bayley, a moron is a person with a mild intellectual disability which clearly excludes yourself, for your problems are far from mild.

    Empirical studies in the social sciences are not designed to predict human behaviour. Instead they are used to make inferences as to how systems may change given changes in some parameters. In other words, how growth may be influenced by interest rate trends and/ or monetary expansion. Empirical studies are, by nature, based upon observations of real people making real decisions in the real world.

    Of course, we may make inferences on how people will react in the future based upon observation of how they reacted in the past. However, these are not predictions, only inferences based upon those observations. No economist will base his view of the world upon empirical observations alone, although they will use such empirical studies to validate and test theories. This is how professional operate, they use all the tools available to attempt to gain insight into what is a very complex world.

    The problem is that Austrian School economists are less interested in employing empirical tools and, as such, their findings are clearly less robust. Much like your own infantile attempts to ridicule what you don’t understand.

  10. ned

    “The problem is that Austrian School economists are less interested in employing empirical tools and, as such, their findings are clearly less robust.”

    Socialism: An Economic and Sociological Analysis — German original 1922.

    Mises not only shows the impossibility of socialism: he defends capitalism against the main arguments socialists and other critics have raised against it. A centrally planned system cannot substitute some other form of economic calculation for market prices, because no such alternative exists. Capitalism is true economic democracy.

    In The Failure of the New Economics, Henry Hazlitt declares
    . . . if a mathematical equation is not precise, it is worse than worthless; it is a fraud. It gives our results a merely spurious precision. It gives an illusion of knowledge in place of the candid confession of ignorance, vagueness, or uncertainty which is the beginning of wisdom. (p. 99)

  11. John Bayley

    Ray, I apologise for my choice of words; the ‘moron’ comment was not aimed at you specifically, but was intended as a generalisation.

    Nevertheless, if you don’t think that the current ‘mainstream’ economists have come to rely, and put emphasis on mathematical tools to the exclusion of pretty much anything else, then perhaps you happen to work in academia.

    Empirical studies are useful, but then again statistics can be used to ‘prove’ pretty much anything, including the likes of the ‘hockey stick’ from tree rings.

    The woeful record of mainstream economists in accurately predicting just about anything is, after all, plain to see for anyone who cares to look.

    Personally I would say the Austrians have a lot better long-term record than just about anyone else.

  12. .

    Dot, yes I do understand Kydland and Prescott. I also understand the differences between Real Business Cycle theories and Austrian Business Cycle theories. I certainly understand well enough to know that Kydland and Prescott won their Nobel Prize for the former and had nothing to do with the latter.

    The fact that you can’t see any similarity at all means you don’t know anything about either.

    Shut up Ray. You’re a bad parody of an Austrian school economist. You’re probably actually Fisky being facetious.

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