Austrian Exceptionalism

I’m delighted by Steve Horwitz’s latest reply, but also confused. Steve initially dismissed doubts about Austrians’ interest in empirics as an unfair stereotype. Now he seems to admit that the stereotype is well-grounded in fact:

Too many Austrians argue as if we must figure out the right methodology (and method) for economics first, then go out and “do” economics. I think that’s the wrong way to conceive of the issue. One reason it’s so wrong is that, as George Selgin points out in his entry, there are multiple Ludwig von Miseses when it comes to pronouncements about these issues. I very much intentionally presented a view that emphasized one of those Miseses, but George is quite right to point to the others. The result is that these debates get bogged down in “what did Mises really mean?” squabbles. I have been guilty of playing this game myself in the past, which distracts us from actually doing good (Austrian) economics. If nothing else, I hope that my original entry can persuade some critics that the anti-empirical reading George identifies as being more the rule than the exception among self-described Austrians is not the only possible Mises.

Perhaps I’m misreading Steve, but this seems like a near-180. Instead of claiming that non-Austrians are woefully ignorant about Austrian economics, he’s now trying to convince non-Austrians that the Austrian economics they typically encounter isn’t the only possible version. I consider this a major advance over Steve’s original position.

At the same time, though, I’m confused. Steve’s original post heavily criticized the Josh Barros of the world for their incomprehension of Austrian economics. Steve’s latest post covertly retracts that criticism. Why didn’t Steve tell Josh, “You’re complaints about Austrians are entirely understandable. You’re right about most of us. But you’ve overlooked a growing number of exceptions”?

The people Steve should be criticizing aren’t mainstream economists who accurately criticize what the typical Austrian says. The people Steve should be criticizing are typical Austrians who make empirically minded Austrians like himself look bad.

Also from this issue

Lead Essay

  • Professor Horwitz makes the case that the Austrian school of economics isn’t just a bunch of armchair theorists. Ludwig von Mises’s “praxeology” should not prevent and has not prevented economists from doing vital, real-world, empirical work on subjects including monetary policy, disaster recovery, communist political economy, and even piracy. Horwitz takes us on a tour of some of this work and suggests that the Austrian school can offer mainstream economics a number of vital insights.

Response Essays

  • Bryan Caplan argues that the Austrian school remains in general much more hostile to empiricism than mainstream economics. Austrian subjectivism is well and good, but its neglect of behavioral economics then constitutes a puzzling shortcoming. And even in the work Horwitz praises, there is little that is distinctively “Austrian”—little that necessarily relies on the distinctive methodological or conceptual apparatus of the Austrian school.

  • George Selgin argues that part of the disagreement at hand is semantic: Where von Mises and other Austrians used the word “economics” to denote what we now call “theoretical economics,” we need not be bound by this convention, particularly not if it tends to obscure. That said, a real disagreement remains, because many in the Austrian school have failed to grasp that a deduced theorem of economics can still be “in the (common) sense”—that is, it may still have no explanatory power over events in the real world. When such cases arrive, Selgin finds that Austrians are all too often flummoxed.

  • Antony Davies expresses admiration for Austrian-school economics as a “complementary approach” to the problems he tries to solve using modeling and mathematics. He finds Austrians at their most incisive in their critique of modern macroeconomics, which is based not on individual behavior, but on an “accounting identity.” He argues that both quantitative and non-quantitative methods can reveal important truths, and he suggests that Austrians should deploy the former in refuting their opponents’ theories.