Rhetoric Poisoned the Austrian School of Economics

mises-hayek

Lately I have been reading about Nominal GDP targeting on Scott Sumner’s blog The Money Illusion. I highly recommend reading his work, as it is extremely creative and reasonable. While I support free banking versus any standard enforced by government, I believe that NGDP targeting is best way to manage a fiat system. Much better than using a system involving unemployment, interest rates, or inflation. This NGDP topic elicited reading about economics, especially concerning Milton Friedman and F. A. Hayek’s view on monetary policy. I found it interesting that both economists espoused similar views on NGDP targeting, especially Hayek who in 1975 noted his love for the program based on empirical evidence. Slowly but surely I dived into gold bug blogs and strict Austrian publications. While I feel that the Austrian school has produced some of the best if not the best arguments for capitalism some members today lack the deductive reasoning that made the school so enlightening. Many forget any of the consequentialist arguments needed to accompany the natural law cause. Instead many libertarian Austrians just use “look he is a statist” rhetoric.

Just browsing through the Mises Institute website and searching for Milton Friedman information will make many confused. Milton Friedman was by far the best at embodying the argument for laissez faire capitalism. He argued both that philosophical and consequentialist argument. It was Friedman and Hayek that made socialism look bad today. You will be hard pressed to find anyone who thinks communism or socialism is any good. However, many Mises Institute readers and writers disagree, some dislike Hayek and many hate Friedman. I would point however that their founder Rothbard never had as much effect on the political atmosphere besides possibly through Ron Paul. While this doesn’t mean his ideas were wrong it does mean that painting a picture of Hayek and Friedman as Keynesian apologetics is hardly fair. As well, the idea that they stepped away from Anarcho-capitalism to get Nobel prizes and medals from presidents is, and excuse my colloquial language, baloney.

The Rothbardian and Internet Austrian argument for freedom is based on the Non-Aggression Principle (NAP). Aggression should be avoided as it undermines rights of individuals. This is a basic tenet of justice. However, when one delves into economics this argument cannot be the only tool to deductively determine if government intervention is warranted or not. I don’t agree with fiat monetary policy but just noting that its supporters don’t believe in NAP doesn’t justify vilifying them as statists. Instead one needs to prove that free markets better mankind rather than worsen the condition. Don’t call Friedman a statist or a Keynesian just because he supported a constant monetary base. This view is hardly Keynesian. If anything Friedman was the first to discover that the use of inflation to deter recessions and unemployment is ineffective. He changed minds and did so by arguing the intrinsic value of liberty but also the utility of liberty.

It seems the Austrian school has transformed into an Anarcho-Capitalist school, one that hasn’t added more strong foundational arguments, instead it repeats Rothbard and Mises’ ideas poorly. It is filled with politically incorrect academics (Hoppe and company) that only make the quest for liberty look bad. Hardly do any of them challenge the Keynesians on their own perspectives and some just avoid talking to “statists” because they do not believe in NAP.

Hayek, Friedman, Mises, Rothbard, Nozick, Hazlitt and others furthered liberty. Some of their followers today are in some way responsible for the decline in popularity of free markets. Instead of nurturing every little step towards liberty (which even Rothbard supported) Anarcho-capitalist and Internet Austrians just won’t move forward unless their rhetoric is met with action. To further liberty you need to convince people that free markets work on a moral and consequential point. Refusing to argue or move towards certain policy because it is still statist is not a good trade off. After all any good economists should recognize the opportunity cost of his political ambitions. I am not saying that libertarians should back any slightly free market policy. Instead I am asking that Anarcho-capitalists and some Austrians actually engage in the debate rather than just sit in a corner calling everyone the economic boogieman because they haven’t read Rothbard.

Even though I am not an Anarcho-capitalist I don’t understand how it can be achieve without government decreasing dramatically first. Anarcho-capitalists might as well give up or espouse individual agorism, as their movement will not grow without the help of Friedman and Hayek, and most importantly other free market economists, even if they support the existence of a state.

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P.S. Like I said I am not an Anarcho-Capitalist. I find too many faults with the argument. I am also not a monetarist, market monetarist, or an Austrian. I lack the fundamentalist approach to tagging onto a school of though even though I once did. Hayek, Mises and Friedman have mostly influenced me. Please feel free comment on your opinion of the Austrian school.

I however would like to note that there are still many highly respectable “Internet Austrians” and Austrian academics so please know that I am only shinning light on what I see is a small percentage spoiling the pot not just for all Austrians but all free market supporters.

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3 thoughts on “Rhetoric Poisoned the Austrian School of Economics

  1. Why would anyone care about the ideas of someone who believes initiating violence against innocent people’s persons or property is justified?

    It’s not like you’re actually in favor of rationalist solutions to disagreements. Stop pretending you’re interested in intellectual affairs. You’re only interested in how to advance your own cause, at the expense of other people if need be.

    Market monetarism has poisoned your mind.

    • I am not advancing Market Monetarism but at the same point I will not fully back any other school. Instead where I see the ability to avoid violence I support it. I see that Friedman supported free immigration and free trade thus I use his knowledge in it as a tool. I disagree with his conclusions on the American depression but Rothbards conclusions feel short as well. I don’t disregard Friedman or Hayek because they felt that the state had to have the ability to control the courts instead the argument is warranted.

      This idea in Libertarians of wanting to stay true is false. Many just end up voting fr the lesser of two evils or non at all. It’s no surprise that no free market economist gets his name in the acknowledgements of any passed bill. I don’t think it’s right to use a dichotomy of he is for state or not, if anything the debate needs to surround the marketability of force. You can’t jump to a stateless society without the state decreasing dramatically . Even people like Friedman and Hayek developed thoughts in their mind concerning monetary policy much later on in their lives that where substantial . A year or so before his death Friedman noted that he believed that no government monopoly on currency is necessary thus taking the most libertarian position. Sure he still thought that the gold standard was not a good enough idea, which at this point it is, but he later saw that any control if the monetary base will end up corrupted either by a fed official or market forces.

      Btw I wrote this on a cellphone so sorry if there are any mistakes

  2. “While I feel that the Austrian school has produced some of the best if not the best arguments for capitalism some members today lack the deductive reasoning that made the school so enlightening.”

    The world today seems to me full of people who don’t really know much, but have latched on to one or another school of economic thought, and are happy to defend it and tear down other views on the internet. The result is more words than meaning, and much activity but not much progress.

    (I don’t know much, either, but at least I draw few conclusions.)

    You seem to be someone who is more interest in learning and understanding than in adopting a position and bludgeoning others with the thoughts of others:

    “I am not an Anarcho-Capitalist… I am also not a monetarist, market monetarist, or an Austrian. I lack the fundamentalist approach to tagging onto a school of though…”

    Good for you!

    One of mine, perhaps relevant:

    http://newarthurianeconomics.blogspot.com/2010/07/self-slotting-economists.html

    PS, I came here from a recent link at Reddit.

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