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In Search of the Real Austrian School

Time magazine’s economics columnist Justin Fox goes in search of the real Austrian School:

People in the U.S. who self-identify as believers in Austrian economics, though, tend to follow a much narrower path, that of Mises and his American disciple Murray Rothbard. They are extremely libertarian (at the first meeting of the Mont Pelerin Society, a libertarian group organized by Hayek in 1947, Mises stormed out saying “You’re a bunch of socialists”). They yearn for a return to the gold standard. Many possess a near-religious conviction that their beliefs are correct and that all other economic theories are pure folly. Some of them—I’m thinking here mainly of the crowd around Lew Rockwell—combine these beliefs with far loopier stuff. Others—such as financial pundits Peter Schiff and Michael Shedlock—often let their rabid Austrian leanings overpower (and, to my taste, ruin) otherwise trenchant economic analyses. Am I going to go to these people for perspective on the business cycle or Austrian economics? No, I don’t think so.

On the other hand, I’m not going to do like Krugman and dismiss Austrian economics as “about as worthy of serious study as the phlogiston theory of fire.” Just because something is outside the mainstream doesn’t mean it’s wrong. I guess the best thing for me to do would be for me to read more of the source material myself. I’ve dabbled in Hayek and Schumpeter and even Rothbard. If I devoured all of Menger’s Grundsätze der Volkswirtschaftslehre, in German, that ought to give me a certain authority, right?

That’s not going to happen anytime soon, so I’ll keep relying on Tyler Cowen. I will also try to follow Ransom’s advice, though. Roger Garrison of Auburn and Steve Horwitz of St. Lawrence University, the two modern Austrian-school economists he recommends, seem on first examination to be more interesting than loopy or strident, so I’ll start looking out for their writings. First step, adding the Austrian Economists blog, to which Horwitz contributes, to my feed reader.

posted on 01 January 2009 by skirchner in Austrian School, Economics

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I’m not denying that there are a lot of loopy types who identify as being Austrian. I reckon they’re more (extreme) libertarian than Austrian school. These individuals also tend to be very doctrinaire. But I am uncomfortable with dismissing von Mises. Yes he approved of the gold standard but so what? People who lived a long time ago tend to have lots of now unfashionable ideas. Mises has written a lot of very good stuff that provides a good grounding for understanding economic activity and behaviour. While I don’t subscribe to his views on method, I have benefited from his insights.

Posted by .(JavaScript must be enabled to view this email address)  on  01/02  at  01:28 AM


Fox has gone to great lengths to show he knows almost nothing about Austrian economics. I really question the purpose of the column except as an ad-hominem attack on some libertarians.

Contra Mr. Fox, Austrians “yearn” for a return to the gold standard not because of some fetish for gold but because it is consistent with their theory of money as a “creature of the market” described in Menger’s classic “the origin of money”.  Fox doen’t even know his Menger, what a jokester.  This is the equivalent of a Keynesian who has never read Keynes (oops, never mind, most haven’t, too busy doing calculus)

Yes, Austrians have near-religious convictions,  but so do New Classicals, New Keynesians, Krugman, etc..Just another pointless ad hominem comment by Fox.

He’s “dabbled in Schumpter”. That good, he’s worth reading but he’s no “Austrian” economist. If he had done more than dabble in Rothbard, he’d know that Austrians considered Schumpeter a Walrasian.  More Jokesterism.

Ah, but he will “keep relying on Tyler Cowan”.  Stephen, did you include this post just to prove what I said in an earlier comment about bloggers getting all of their Austrian economics from reading Tyler Cowan’s blog.  If so, thanks.

Fox is contemplating devouring Menger and adding the Austrian Economists blog (good choice) to his feed reader.  Like most critics of Austrian economics, I guarantee he will skip the former, otherwise he might learn something… like Real Austrian economics. (hint: not Tyler Cowan’s version)

Posted by .(JavaScript must be enabled to view this email address)  on  01/02  at  01:34 AM


Sinc, for the record, I think Mises is one of the all time greats, but his axiomatic approach lends itself to dogmatism by his lesser followers.  In this respect, he is similar to Rand and Objectivism (which is why Mises and Rand were such great mates).

Knapp, I think Fox should be commended for his open mindedness when he says “I guess the best thing for me to do would be for me to read more of the source material myself.”  How many journalists bother to do that?

Posted by skirchner  on  01/02  at  02:12 AM


No journalists bother to read source material. He won’t either. But that won’t stop him from bashing Libertarians - the true purpose of his column.

Posted by .(JavaScript must be enabled to view this email address)  on  01/02  at  02:19 AM


I hear what your saying about Mises praxeology.

I blame Rothbard, but not for reason you might suspect:

Rothbard’s love for Mises as his mentor led him to the unfortunate decision to continue working and to train new scholars within the praxeology tradition, despite the fact that Rothbard’s own “empirically-grounded” apriorism was no apriorism at all, certainly not praxeology and closer to the inductive-deductive method of the Aristotelian Austrian, Carl Menger.

Austrian economics will be better off when it gets back to its more scientifically-grounded Mengerian roots.

Posted by .(JavaScript must be enabled to view this email address)  on  01/02  at  03:12 AM


The empirical/causal is at the core of Mises—as it is explicitly in Hayek.

The core explanatory element is entrepreneurial learning in the context of changing relative prices and local conditions.  If learning isn’t empirical/ causal then nothing is. 

And the explanatory problems of economics begin with empirical phenomena—problem raising patterns of order and disorder suggested in the phenomena of the market.

The exercise of “pure reason” may facilitate our perception of these phenomena, but this exercise of reason doesn’t eliminate the empirical/causal processes and knowledge involved in the problems raised and the explanations offered.

Mises simply wasn’t that good as an epistemologist or philosopher—and his self-understanding of economics as a science was deeply distorted by his prior philosophical commitments to the Kantian tradition.

Posted by Greg Ransom  on  01/02  at  08:35 AM



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