Austrian school

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[[File:Carl Menger.jpg|thumb|right|165px|Carl Menger, founder of the Austrian school.]]
{{economics}}{{cquote|Austrian economics very much has the psychology of a [[cult]]. Its devotees believe that they have access to a truth that generations of mainstream economists have somehow failed to discern; they go wild at any suggestion that maybe they're the ones who have an intellectual blind spot. And as with all cults, the [[Irony|failure of prophecy]] — in this case, the prophecy of [[Banking crisis|soaring inflation from deficits and monetary expansion]] — only strengthens the determination of the faithful to uphold the faith.|||[[Paul Krugman]], "Fine Austrian Whines"<ref>Paul Krugman, [http://krugman.blogs.nytimes.com/2013/02/20/fine-austrian-whines/ Fine Austrian Whines]. ''The New York Times'', 20 February 2013.</ref>}}

'''Austrian economics''' (or the '''Austrian school''' of economics) is [[libertarian]] [[philosophy]] masquerading as a school of [[economics|economic thought]]. This school is notable for its lack of formal [[mathematics|mathematical]] modeling and [[science|empirical testing]].<ref>[http://mises.org/journals/rae/pdf/RAE10_2_4.pdf "Statistical Malfeasance and Interpreting Economic Phenomena"], Mises Institute</ref> Among its more unusual traits, the Austrian school draws its conclusions based on [[deduction]] and [[thought experiment]]s, rather than data.{{efn|Much like [[Descartes]]' ''cogito ergo sum'' and [[Schrodinger's cat]], these methods are legitimate parts of science, but only a part in the whole sequence of science. Otherwise, one is left with philosophy.}}<ref>[https://web.archive.org/web/20040710185136/http://www.mises.org/etexts/austrian.asp "What is Austrian Economics?"], Mises Institute</ref> In place of the conventional tools of [[science]], the Austrian School favors a narrative approach called "praxeology". Despite its shortcomings, some less nutty features of the Austrian School have leaked into mainstream economics while the more nutty have found a home at libertarian [[think tank]]s ([[Cato Institute]] and [[Ludwig von Mises Institute]]).

As the claims of [[Austria]]n economists are difficult to verify through empirical testing (and the same economists ''openly'' admit to it), it is generally regarded as a [[heterodox]] approach.<ref>Caplan, Bryan. [http://econfaculty.gmu.edu/bcaplan/whyaust.htm "Why I Am Not an Austrian Economist"], [[George Mason University]]</ref> Austrian arguments as to why [[statistics| statistical methods]] cannot adequately describe [[Sociology|human behavior]] can seem [[Intuition|intuitively]] compelling, but, when they even eschew models for [[Game theory|individual-level decisions]], how can they make a persuasive case for applying their ideas to the [[real world]]? In this sense, the Austrian school is to economics as [[Psychoanalysis|a certain ''other'' Austrian school]] was to [[psychology]]. Perhaps one reason that "Austrian" advocates are so uncomfortable with [[empiricism]] is that Austrian economists are more interested in defending the political ideology of libertarianism than they are in advancing economic understanding,<ref>[https://web.archive.org/web/20100306092815/http://mises.org/daily/4113 "Austrian Economics and Classical Liberalism"], Mises Institute</ref> and [[science|rigorous testing]] can sometimes undermine deeply-held [[politics|political]] beliefs.

Can we take anything positive from it? Sure, but the actual use of some of its [[Anarcho-capitalism|foremost ideas]] can be found in ''no economy in the world''… except [[Somalia]].{{efn|Which is probably why the Mises Institute seems so supportive. See "Stateless in Somalia and Loving It."<ref>[https://web.archive.org/web/20100326145743/http://mises.org/daily/2066 Stateless in Somalia, and Loving It] by Yumi Kim (February 21, 2006) ''Ludwig von Mises Institute'' (archived from March 26, 2010).</ref> (Spoiler alert: This sunny depiction of Somalia's economy depends on [[quote mining]] the 2005 edition] of the [[CIA]] ''World Factbook'',<ref name=factbook>[https://www.cia.gov/the-world-factbook/about/archives/ The CIA World Factbook Archives] ''CIA''.</ref> of agricultural products, has largely been looted and sold as scrap metal."'' And that ''"Livestock, hides, fish, charcoal, and bananas are Somalia's principal exports, while sugar, sorghum, corn, qat, and machined goods are the principal imports."'' Not to mention that ''"The ongoing [[civil war]] and clan rivalries, however, have interfered with any broad-based economic development and international aid arrangements."'' This makes the [[Selection bias|hoopla]] [[Spotlight fallacy|about]] mobile communications the proverbial [[Exception that proves the rule|silver lining]]. Interestingly, the current edition of ''The World Factbook'' provides less scope for quote mining, as the positive stuff has been parsed out in the economics section, rather than presented as a single upbeat section.<ref name=factbook/> However, many Austrian economists ([[Ludwig von Mises]] and [[Friedrich Hayek]] included) disagree with [[anarcho-capitalism]], which only gained form in the 1960s, when [[Murray Rothbard]] became more active, almost a hundred years after the school was founded.}}

==Praxeology==
{{cquote|I tremble for the reputation of my subject…|||Paul Samuelson on the Austrians<ref>[http://www.jstor.org/pss/1818572 Theory and Realism: A Reply.] by Paul Samuelson (1964) ''The American Economic Review'' 54(5).</ref>}}
[[Murray Rothbard]]'s 1976 ''Praxeology: The Methodology of Austrian Economics''<ref name=praxeology>[https://mises.org/mises-daily/praxeology-methodology-austrian-economics Praxeology: The Methodology of Austrian Economics] by Murray N. Rothbard (07/11/2019) ''Mises Institute''.</ref> described praxeology as an application of deductive reasoning, applied to a set of [[Blind faith|"unquestionable"]] [[axiom]]s. Of course, any implications derived from these axioms are only as good as the analysis that derived them, and as good as the axioms that they were derived from. This is where praxeologists get into trouble, as they reject less mushy [[Logic|formal analysis]] in favor of more [[weasel word|weasely]] verbal analysis. Let's look at the axiom that Rothbard refers to as the foundation of praxeological deduction as an example, the "fundamental axiom of action". Almost immediately, the axiom wades into trouble. It states that:<ref name=praxeology/>
{{Cquote|…individual human beings act.}}

The first part of that assertion is simple enough to grasp, but what does it mean to ''act''? One possible definition of act says it is to "perform an action." This seems to be as far as most Austrian school thinkers take this. However, as an air conditioner, vacuum cleaner and TV all perform actions, it would seem this axiom places ''[[human]]'' beings in the rather large set of things that act. It would be pretty embarrassing then, to derive any economic conclusions from the fact that people are part of the set of things that act, as the conclusions deriving from being a member of the set of things that act would apply to other members of that set as well. Fortunately, Rothbard is kind enough to clarify his definition:<ref name=praxeology/>
{{Cquote|…[human beings] take conscious action towards chosen goals.}}

Note that one under-defined concept has now been replaced with two: "conscious action" and "chosen goals". Let us ignore the [[Determinism|validity of this assertion]], and try to figure out just what chosen goals are. The word ''choice'' would seem to imply some form of conscious action was taken in forming these goals, so is the real statement of this axiom "human beings take conscious action towards a consciously acted upon set of goals"? Perhaps Rothbard meant to differentiate between "choosing" and "acting", but that is never clearly expressed. In either case, it would seem that the definition of goal needs some work to be truly useful. [[Soundness|Sound]] [[logic]] relies on the clarity of definition, as many arguments are sensitive to subtle changes in meaning, and [[vague]] statements hide contradictions.

This approach of verbal deduction also leads to a rather noticeable (ab)use of [[false analogy|false analogies]] and [[intuition pump]]s. The Austrians advocate logic and reason the same way that [[Scientology|Scientologists]] advocate the pursuit of Science: it's a buzzword, totally divorced from what buzz phrase actually means, which is why Austrians tend to be treated as jokes by the very academic circles they claim to represent. ("Prax it out, brah!")

This statement is actually totally meaningless. It doesn't even come close to proving that ''[[laissez-faire]]'' [[capitalism]] is best. Human beings can take "conscious action" towards [[socialism]] just as easily.

==Austrian Business Cycle Theory==
[[File:Marriner S. Eccles Federal Reserve Board Building.jpg|thumb|right|300px|The Federal Reserve: responsible for all of America's money problems?]]
Austrian Business Cycle Theory (ABCT) is an attempt to explain the [[boom and bust|business cycle]] in [[capitalist]] economies through the lens of Austrian theory (obviously). ABCT is probably one of the elements of the Austrian school that helps it spread its ''laissez-faire'' [[meme]]-plex due to its appealing simplicity.{{efn|We dare you to [[YouTube]] search it or otherwise to read The Pure Theory of Capital by Friedrich A. Hayek.}}

The Austrian theory of the business cycle has two pillars. One of them is the differentiation between the natural interest rate, based on savings and consumption preferences, and the market interest rate, which can be affected by monetary issues. This idea was put forward by the Swedish economist Knut Wicksell. The other pillar is the theory of capital elaborated by Eugen von Böhm-Bawerk.

In short, the business cycle is due to the creation of the [[central bank]] (e.g. the [[Federal Reserve]] in the US)&nbsp;— when it sets interest rates too low, this makes credit much easier to get. This easy credit is confused for "real loanable funds" (i.e., hard cash money). In other words, the easy credit sends out "false signals" to banks and other creditors to go into a feeding frenzy and make loans to anyone and his [[dog]]. This causes a bubble driven by [[inflation]], not true economic growth, which is destined to burst. [[Recession]]s and [[Great Depression|depression]]s, then, are simply payback for getting drunk on easy credit. They are in fact ''desirable'' because they represent a market correction where "misallocated resources" are liquidated and thus free to be "reallocated" to more useful ends.

This has led [[John Maynard Keynes#Neo-Keynesianism|Neo-Keynesian]] economist [[Paul Krugman]] {{lived|1953}} to dub it the "Hangover Theory," calling it "about as worthy of serious study as the phlogiston theory of fire."<ref name="Hangover Theory">[http://www.pkarchive.org/cranks/hangover.html Hangover Theory], from Paul Krugman's Crank Economics Page ([http://www.slate.com/id/9593/ Alternate link])</ref> [[Right-wing]] [[libertarian]] [[Milton Friedman]] {{lived|1912|2006}} remarked: "The Austrian business-cycle theory has done the world a great deal of harm."<ref>[http://www.economist.com/node/17522368 Taking von Mises to Pieces], ''The Economist''</ref> Even the noted right-wing [[welfare]]-hating sociopath {{wpl|Gordon Tullock}} {{lived|1922|2014}} claimed that with the reallocation of capital the model predicts, "Laborers would be exploiting the capitalists."<ref>Gordon Tullock. [http://mises.org/journals/rae/pdf/RAE2_1_4.pdf Why the Austrians are Wrong About Depressions.] ''Review of Austrian Economics''</ref>

Of course, there is some grain of truth in it as low-interest rates can induce risky lending and will be inflationary, but there are some glaring flaws in ABCT that any Joe should have spotted by this point, such as the fact that business cycles existed ''before'' the Fed (some try to [[Moving the goalposts|skirt this issue]] by [[Newspeak|redefining]] "central bank" as any bank with a state or national charter<ref name="quiggin">[http://johnquiggin.com/2009/05/03/austrian-business-cycle-theory/ Austrian Business Cycle Theory], John Quiggin</ref>). It also relies on two misdefined terms:

*The Austrians define inflation as an expansion of the base money supply, a consequence of which is rising prices, whereas for everyone else, monetary inflation is defined as simply a rise in prices by mainstream economic theory. While the expansion of the money supply can lead to inflation, it does not necessarily do so. Prices do not always track the expansion of the underlying monetary base.<ref>[https://web.archive.org/web/20101224135054/http://www.econbrowser.com/archives/2010/12/velocity_of_mon.html Velocity of Money], Econbrowser</ref> 
*The ABCT also relies on a single "natural rate" of interest, but there is no ''single'' natural rate of interest.<ref>[http://socialdemocracy21stcentury.blogspot.com/2011/06/austrian-business-cycle-theory-and.html Austrian Business Cycle Theory (ABCT) and the Natural Rate of Interest]</ref>

In addition, the proposal to revert to a [[Gold standard (economics)|gold standard]] implied by ABCT utterly fails to explain how to deal with the effects of a fixed money supply when population and economic output have been increasing throughout American history. ABCT ultimately is better at explaining why the Austrians and libertarians are such hardcore goldbugs, and why they rail against the Fed so much than explaining actual business cycles.

===Peter Schiff===
[[File:Peter Schiff by Gage Skidmore 3.jpg|thumb|right|175px|[[Bullshit|BullSchiff]].]]
It's impossible to make a post on the [[Internet]] about the [[Great Recession|financial crisis]], or even anything economic in general, without being bombarded by "{{wpl|Peter Schiff|Peter Schiff}} was right[[Law of exclamation|!!11!!]]" videos.<ref>[https://web.archive.org/web/20140731155958/https://twitter.com/ObsoleteDogma/status/455796495485521920 Useful list of people you should ignore] by Matt O'Brien (12:55 PM - 14 Apr 2014) ''Twitter (archived from July 31, 2014). With a photo of the back jacket of one of Shiff's books, with praise from Ron Paul, Mike Huckabee, Andrew P. Napolitano, Ben Stein and David Stockman.</ref> For the new Austrians (i.e., those who read a few newsletters over at the [[Ludwig von Mises Institute|von Mises Institute]] and think they have achieved enlightenment), the Austrian-influenced investor Peter Schiff's prediction of the housing bubble was a vindication of all things Austrian. They believed they had finally shown all other economic theories to be utterly bankrupt and discredited. This is massively [[ironic]] for a number of reasons:

*First, Peter Schiff is still horrifically wrong about many things.<ref name="Pete Was Wrong"> [http://noahpinionblog.blogspot.ca/2014/08/schiff-vs-shedlock-great-austrian-macro.html The Great Austrian Macro-Tainer Smackdown], Noahpinion</ref><ref>[https://www.reddit.com/r/isitbullshit/comments/512juh/trackreddit/d79jcd4/ Is It Bullshit: The collapse of the American Dollar.] Reddit thread, 2016.</ref>
*Second, Austrians have continuously predicted the economic end times and [[Weimar]]-style [[hyperinflation]] as they will never be satisfied with the American economy until all regulation is lifted, the Fed is abolished, and we return to a gold standard. Only then will doom be averted. Of course, it's easy to be a [[Cassandra]] when all you predict is doom (in short, even a [[stopped clock]] can be right twice a day).
*Third, Austrians overlook the metric buttload of economists and financial guys who also saw it coming.<ref>Here's a list of a few of them: [http://rwer.wordpress.com/2010/05/13/keen-roubini-and-baker-win-revere-award-for-economics-2/ Keen, Roubini, and Baker Win Revere Award for Economics] ([http://www.voxeu.org/article/no-one-saw-coming-or-did-they Further analysis]) We're also neglecting those who, while not blowing the whistle yet, clearly identified issues with the ''status quo'', e.g. [http://economistsview.typepad.com/economics470/2006/01/financial_marke.html Mark Thoma and friends.]</ref> Those guys just weren't put on CNBC alongside the Wall Street cheerleaders. Even one of [[Dubya]]'s own economic advisers, Greg Mankiw, warned of problems at [[Fannie Mae]] and Freddie Mac back in 2003.<ref>[http://www.marketwatch.com/story/bush-adviser-warns-of-fannie-mae-freddie-mac-risks Bush Adviser Warns of Fannie Mae, Freddie Mac Risks], MarketWatch</ref> Hell, firms like [[Goldman Sachs]] were shorting their own securities<ref>[http://www.huffingtonpost.com/2010/04/24/goldman-sachs-emails-big-short_n_550547.html Goldman Sachs E-Mails: Firm Had the "Big Short" as Economy Fell], [[Huffington Post]]</ref> — the bubble was apparently not a big mystery to insiders.
*Fourth, the Austrians claim that their immutable laws of economics are not "scientific" in the sense that they are not empirically derived like the laws of physics, and thus are not subject to [[falsification]] and do not make predictions, but "illustrate [[history]]" (whatever that means). Yet they are now claiming victory over finally making a correct and falsifiable prediction! That sound you hear is the sound of every sane economist's head exploding.

(Peter Schiff is the son of the late {{wpl|Irwin Schiff|Irwin Schiff}}, patriarch of American [[tax protester]]s, so is at least more right about money in practice than his father.) His rugged good looks are reminiscent of the young [[Murray Rothbard]].

==Paging Dr. Pangloss==
{{cquote|Despite its death as a credible theory of economics and politics, [[neoliberalism]] has stumbled on in zombie form for nearly a decade, maintaining its hold over major political parties and over organizations like the OECD, IMF and European Commission… the economics profession as a whole has learned almost nothing from the Global Financial Crisis. Ideas such as [[austerity]] that should have been decently buried long ago continue to wreak havoc throughout the world, and [[Brexit|most notably in Europe.]]|||{{wpl|John Quiggin}}, economist<ref>[http://crookedtimber.org/2016/06/26/tribalism-trumps-neoliberalism/ "Reaping the Whirlind: Tribalism Trumps Neoliberalism"], ''Crooked Timber'' 6.26.16.</ref>}}

The issue with Austrian economists, and libertarianism in general, has always been their sense of 'outcome ambivalence'. They don't believe in "public goods." They don't believe in [[nation]]s (even [[Libertarian paradise|their own]]). What they do believe in is a set of rules. Whatever happens to us because of those rules is irrelevant to them and is seen as part of 'le grand experiment'.

The Austrians get around the problems of [[Externality|market failures]], natural [[Monopoly|monopolies]], [[morality]], and [[rationality]] through the use of [[Phantom distinction|pseudo-clever wordplay]]. They rely on an extreme form of methodological individualism based on the "action axiom" as described above. To wit: Because only individuals exist, only individuals can act. [[Society|Societies]] cannot act because, to quote Hayek-admirer [[Margaret Thatcher]], "[[Newspeak|There is no such thing as society]]."<ref>[https://iea.org.uk/blog/there-is-no-such-thing-as-society There is no such thing as society] by  G. R. Steele (30 September 2009) ''The Institute of Economic Affairs''.</ref> Therefore, all action can be described at the individual level. If an action is good or moral for one individual, then it must be good or moral in the aggregate because good + good = good. In reality, only basic [[game theory]] is needed in order to refute this.{{efn|For a game theoretical critique of the Austrian school, see Nicolai Foss<ref>[http://www.gmu.edu/depts/rae/archives/VOL13_1_2000/foss.pdf Austrian Economics and Game Theory: A Stocktacking and an Evaluation.] by Nicolai Foss (2000) ''Review of Austrian Economics'' 13:41-58.</ref>}} Austrians claim, for example, that savings represent money that will be invested in the future, and so money can never be "hoarded." They entirely reject the [[paradox]] of thrift.<ref>{{wpa|Paradox of thrift}}</ref> A society is simply a group of individuals. What "society acts" really means is that the individuals composing that group act. Individuals can act to cooperate with other individuals. If the Austrian argument were true, it would be impossible for an individual to perform transactions with other individuals; it would be impossible for an individual to cooperate with other individuals to form a business. It would even be impossible for an individual to spread the ideas of Austrian economics to other individuals! You can't tell anybody else about Austrian economics, because in doing so you have created a "society". Clearly, society exists. Austrians think they can get out of this by changing definitions when it suits them.

Some Austrians also use this idea as the basis for an [[ethical]] philosophy. This is where they start mixing methodological individualism with methodological subjectivism. As above, if all individual actions are moral, then their aggregate must be moral. In other words, it's a logical derivation of [[ethical egoism]].{{efn|The Austrian brand of methodological individualism is their own take on it and not the same as used by sociologists such as, for example, [[Max Weber]].<ref>[http://plato.stanford.edu/entries/methodological-individualism/ Methodological Individualism] by Joseph Heath (2024) ''Stanford Encyclopedia of Philosophy''.</ref> See also [[Robert Nozick]] regarding Austrian methodology<ref>[https://cooperative-individualism.org/nozick-robert_on-austrian-methodology-1977-nov.pdf On Austrian Methodology] by Robert Nozick (1977) ''Mathematical Methods of the Social Sciences, Part II''. 36(2):353-392.</ref>}} However, Austrians tend to disagree with each other on what is ethical. Views range from Mises' radical [[utilitarianism]]<ref name=humanaction>[https://cdn.mises.org/Human%20Action_3.pdf ''Human Action''] by Ludwig von Mises (2016) Ludwig von Mises Institute. ISBN 0945466242.</ref>{{rp|716}} to Rothbard's inexorable [[deontology]].<ref>[https://cdn.mises.org/The%20Ethics%20of%20Liberty%2020191108.pdf ''The Ethics of Liberty''] by Murray Rothbard (1998) New York University Press. ISBN 081477503.</ref>{{rp|202}}

This can be used to justify a number of absurdities. Interestingly, the Austrians do not grant the assumption of [[Homo economicus|''homo economicus'']] (i.e., that all investors and consumers are endowed with perfect or near-perfect information and rational decision-making skills). However, they redefine "rationality" in subjective terms to mean acting in a way that will fulfill whatever the individual desires. Thus, any action, whether [[common sense]] would define it as "rational" or "irrational," is actually "rational" as long as it has utility in meeting a person's needs. This bit of [[handwave|handwaving]] is often used to deny the importance of self-destructive behavior. That's why economists have no problem talking about "organ donor markets" and never actually question the ethics or implications, since that's for irrational socialist monsters. That's how we end up with the [[Silk Road]] drug bazaar,<ref>Maza, Christina, [http://www.csmonitor.com/USA/2015/0529/Silk-Road-mastermind-drug-kingpin-or-libertarian-ideologue-gone-astray "Silk Road mastermind: drug kingpin or libertarian ideologue gone astray?"], ''Christian Science Monitor'' 5.29.15.</ref> or the "[[Internet assassination|crypto-assassination markets]]" nobody's supposed to ever talk about.<ref>[https://www.forbes.com/sites/andygreenberg/2013/11/18/meet-the-assassination-market-creator-whos-crowdfunding-murder-with-bitcoins/ Meet The 'Assassination Market' Creator Who's Crowdfunding Murder With Bitcoins] by Andy Greenberg (Feb 03, 2014 at 02:38pm EST) ''Forbes''.</ref>

This also allows them to skirt around the creation of monopolies. The Austrians believe that monopolies can only be sustained through [[government]] intervention as monopolistic profits and practices will always lead people to create a viable enterprise that will undercut the prices of the company with the monopoly. If this does not happen, it's not because there are barriers to entry or insider deals, it's because [[Lulz|people must be happy enough with the monopoly at that time to continue paying its prices]]! Moreover, they oftentimes ignore the fact that there is a massive incentive for monopolistic businesses to collude with a [[liberal]]-[[democratic]] government to create monopolies. Monopolistic practices are ''not'' immoral, either, because business practices aren't "enforced at gunpoint" (i.e., the gubmint isn't forcing people to buy their stuff). Why, if there's only one telephone provider in the world, no one's forcing you to use the phone. You are "voluntarily" exchanging your money for their goods. Don't like it? Simple, string up duplicate wires across the entire globe and start your own phone company! Or move to another world that is big enough to support more than one phone company.

Probably the most glaring (and quite frankly, the most dangerous) flaw within Austrian school economics is its complete and utter denial of institutional [[racism]] and [[sexism]]. Austrians oftentimes ''religiously'' believe in perfect market efficiency and, while many of them are not explicitly [[racist]] or [[sexist]], are therefore incapable of analyzing market inefficiencies and structural problems within capitalism. One example is that of systemic sexual harassment and the ensuing [[discrimination]]. Their denial of any problems related to structural power differences between an employer and their employee mixed with their utter denial of things like [[Gender pay gap|gender pay inequity]] or [[rape culture]], makes them utterly unable to understand the difficulties women go through in the workplace. Another example is that of the [[Privilege|advantages white people]] have gained through racist policies that lead to inter-generational wealth being distributed to white people at the expense of people of color. Austrians completely deny that rich people (and rich white people especially) have had any kind of privilege or advantage and this makes them oftentimes completely oblivious and unsympathetic to the plight of minorities. In its most extreme form, you get comically racist and sexist comments from Austrians like [[Walter Block]], who has said, among other things, that property rights didn't exist in [[Native American]] societies and that sexual harassment is just voluntary action.

===Views on welfare state===
{{main|Welfare state}}
{{cquote|No ordered community has callously allowed the [[poor]] and incapacitated to starve. There has always been some sort of institution designed to save from destitution people unable to sustain themselves.|||Mises, on how charity can substitute a welfare state.<ref>[http://files.libertyfund.org/files/1060/Mises_0069_EBk_v6.0.pdf ''Socialism: An Economic and Sociological Analysis''] by Ludwig von Mises, translated by J. Kahane (1981) Liberty Fund,.</ref>{{rp|374}}}}
{{cquote|Far from advocating such a 'minimal state', we find it unquestionable that in an advanced society government ought to use its power of raising funds by [[taxation]] to provide a number of services which for various reasons cannot be provided, or cannot be provided adequately, by the market.<ref>Hayek, F. A., 1979. "Law, Legislation and Liberty, Volume 3, page 41" University of Chicago Press Economics Books</ref>|||Friedrich Hayek}}
{{cquote|You're all a bunch of socialists!||Mises on Friedman<ref name=socialists>[https://www.youtube.com/watch?v=tkQfK8hn0ds You're all a bunch of socialists" Mises on Friedman] ''YouTube''.</ref>{{efn|Also in the video Mises, [[irony|unmasking]] Hayek and Friedman among others [[Red baiting|reds]] for supporting [[Basic income]].<ref name=socialists/>}}}}

Views on welfare state tend to vary in the Austrian School. Hayek extensively wrote about it, criticizing most of the modern welfare states in the world, but nonetheless argued that the government should indeed provide many services that cannot be provided by the market, also giving alternatives.<ref>''The Constitution of Liberty'' Part III: Freedom in the Welfare State.'' by Friedrich A. Hayek (1960) University of Chicago Press.</ref> As a result, he was called a “moderate [[social democrat]]” by [[Hans-Hermann Hoppe]].<ref>[https://mises.org/library/why-mises-and-not-hayek Why Mises (and not Hayek)?] by Hans-Hermann Hoppe (10/04/2011) ''Mises Institute''.</ref>
Mises, as we saw, was pretty much against that, believing that the welfare state was “against the human nature”, saying that bureaucrats cannot help the poor because they would never know what people actually needed, advocating for [[charity]] instead.<ref name=humanaction/>{{rp|836-837}}

Even though Mises is probably wrong on his assumptions over the welfare state, he was at least well-inclined to helping the poor, whereas Rothbard just said “who cares?” about them when discussing strategies at how to abolish the welfare state.<ref>[https://www.rothbard.it/articles/right-wing-populism.pdf Right-Wing Populism: A Strategy for the Paleo Movement] by Murray N. Rothbard (January 1992) ''Rothbard-Rockwell Report''. pp. 5-14.</ref>

==Even they admit they just pulled this stuff out of their asses==
{{main|PIDOOMA}}
Austrians seem to follow the maxim "If you can't dazzle them with brilliance, baffle them with [[bullshit]]." If you couldn't wade through all their econo-speak and [[Argumentum ad dictionarium|arbitrary redefinitions of commonly used terms]], however, they literally ''do the work for you'' and come straight out and say they just made everything up. Mises himself wrote of his theory: 
{{cquote|The subject matter of all historical sciences is the past. They cannot teach us anything which would be valid for all human actions, that is, for the future too … No laboratory experiments can be performed with regard to human action … Its statements and propositions are not derived from experience. They are, like those of logic and [[mathematics]], ''[[a priori]]''. '''They are not subject to verification or falsification on the ground of [[reality|experience and facts]]'''.<ref name=humanaction/>{{rp|30-32}}}}

In 1942, [[Friedrich Hayek|F.A. Hayek]] wrote that any theories in the [[social science]]s can "never be verified or falsified by reference to [[fact]]s".<ref>''Individualism and Economic Order'' by F. A. Hayek (1984) University of Chicago Press. ISBN 0226320936. Also not a quote mine. </ref>{{rp|73}}{{efn|The "Hayek tradition", however, is not considered to be as strictly ''a priori'' as the "Mises tradition" of strict praxeology.<ref>[https://web.archive.org/web/20040930223305/http://www.radnitzky.de/pub/1995d.pdf Reply to Hoppe — on apriorism
in Austrian Economics] by Gerard Radnitzky (1995) In: ''Values and the Social Order. Volume 1: Values and Society'', edited by Gerard Radnitzky & Hardy Bouillon. Avebury. ISBN 1856288994.  pp. 189-194.</ref>}}

In other words, it's economic [[theology]]. An entire (albeit [[fringe]]) school of economics has published book after book and paper upon paper just to say that all problems can be boiled down to "gubmint [[Didit fallacy|did it]]" and all solutions can be described as "[[free market]] always wins." Despite this, their influence (on the [[internet]], at least) seems to be growing, at least since 2008 and the proliferation of "Peter Schiff was right!!11!!" videos.<ref>Then again, so are the [[Ron Paul]] fanboys, and we know how brilliant his tactics worked politically.</ref> Hayek's book ''The Road to Serfdom'' also got the [[Glenn Beck|Glenn Beck]] bump when it was mentioned on his show.<ref>[http://www.economist.com/node/16438630 Essential reading: What would Hayek have made of his new cheerleader?] (June 26<sup>th</sup> 2010) ''The Economist''.</ref>

It should be clear to anybody who studies Austrians and their antics that this "school" of economic thought is nothing but a thinly-veiled justification for horrifyingly pro-upper-class politics. There's nothing novel or progressive about this kind of politics. It's pure, unashamed, [[elitism]].

Austrian economics can basically be summed up as follows: [[Circular reasoning|It is in people's best interest to be in a free market because a free market allows people to act in their best interest.]] Then Austrians define a "free market" to be a system such that people can act in their best interest in it.

==Prominent Austrian authors, professors, and activists==
The academic hubs of Austrian economics include [[George Mason University]] in Northern Virginia, Grove City college in Pennsylvania, Baylor University, Auburn University in Alabama, New York University, and Lubin School of Business of Pace University in New York City.

[[File:Public figure austrian economists.png|thumb|right|<center>Public figure Austrian economists]]
* {{wpl|Carl Menger}} — The man that started everything, an important economist who contributed to the development of the {{wpl|Marginal utility}} theory.
* {{wpl|Eugen von Böhm-Bawerk}} Menger's student. Famous for his critiques of [[Karl Marx]]. If (and how much) he was successful is still up to debate.
* [[Ludwig von Mises]] — Böhm-Bawerk student. Despite many interesting insights he was more of a lawyer of laissez-faire capitalism than an economist.<ref>''Main Currents in Modern Economics'' by Ben B. Seligman (1990) Transaction Publishers. ISBN 0887388116.</ref> His main contribution was on the {{wpl|Socialist calculation debate|socialist calculation debate|,}} but Austrians are still paying the price of his mistakes on [[epistemology]]. His praxeology is a [[Kantianism|Kantian]] ''a priori'': data cannot falsify it.
* [[Friedrich Hayek]] — A polymath [[Nobel Prize]] winner. Hayek is by far the most influential and relevant Austrian economist, even if his legacy as an economist is mixed. His {{wpl|The Use of Knowledge in Society}} was one of the most important articles on economics of the 20<sup>th</sup> century,<ref>[https://web.archive.org/web/20111018060545/http://economics.mit.edu/files/6349 100 Years of the American Economic Review: The Top 20 Articles] by Kenneth J. Arrow et al. (2011) ''American Economics Review'' 101:1-10.</ref> but his beloved theory on business "has done the world a great deal of harm" not according to any [[Keynesianism|Keynesian]], but according to Milton Friedman.<ref>[https://www.barrons.com/articles/SB903738915698011000 Mr. Market: A Nobelist views today's Fed, currencies, Social Security, regulation] by Gene Epstein (Aug 24, 1998, 12:01 am EDT) ''Barrons''.</ref> His works in other areas of knowledge (the man wrote about everything) are also a hit or miss. Perhaps one of the best authors to learn about [[classical liberalism]] and the history of ideas, but not very good when it comes to psychology and epistemology. Still better than Mises on the latter subject though. Hayek emphasized that "social order is the result of spontaneous evolution", which is close to [[David Hume]]'s empiricism. In contrast to Mises' transcendentalism, this is an internal struggle over rational [[constructivism]] or not.
* {{wpl|Ludwig Lachmann}} — Made Mises epistemology worse.
* [[Murray Rothbard]] — The father of anarcho-capitalism. Also a polymath, but just awful in every subject.
* Rothbard's minions (somehow even worse):
** [[Walter Block]] — Emphasize the moral high ground and then use it to talk about disgusting topics such as "the boss has the right to sexually assault female employees" and "volunteer [[slavery]]".{{fact}}
** [[Hans-Hermann Hoppe]] — Derided democracy as [[communism]], theft, and anti-freedom. Derided [[egalitarianism]] as incompatible with private property. Wanted to replace democracy with a "natural order" of universal [[privatization]] with disputes handled by insurance companies
** [[Lew Rockwell]] — His website is closer to [[far-right]] [[conspiracy theorists]] than the Mises Institute
* {{wpl|Israel Kirzner}}
* {{wpl|George Reisman}} — A Mises clone, but worse (he is a devoted fanboy of [[Ayn Rand]]).
* {{wpl|Peter Boettke}} — Trying to build a bridge with the mainstream while most of the others Austrians are trying to burn it.
* [[Javier Milei]] — Anarcho-capitalist and far-right president of [[Argentina|Argentinian]] since 2023.<ref>Nicolás Misculin, [https://www.reuters.com/world/americas/milei-leads-polls-argentina-election-after-primary-shock-2023-09-08/ Milei leads polls in Argentina election after primary shock]. ''Reuters'', 8 September 2023.</ref> Unfortunately, fringe ideas hold great traction during times of economic crisis.
* 
{{wpl|Joseph Schumpeter}}
 - Not an Austrian, despite what some people might say.
* 
{{wpl|James M. Buchanan}}
 - Not an Austrian, despite what he might say. This Nobel prize laureate should not be mistaken with the [[James Buchanan|American president]] too.
* Bob Murphy, arguably the most publicly vocal Austrian as of 2025.
* Joe Salerno - Vice President of the Mises Institute, editor of ''Quarterly Journal of Austrian Economics'' — believes gold could out-compete the US dollar if taxes were removed from it

===Mainline economics ===
{{cquote|Academic life is too short and your professional colleagues are too interesting to emphasize differences, rather than commonalities. Constantly seek to find common ground from which to work with the purpose of tackling relevant problems. … Our task is one of engagement with our colleagues and our students, not isolation and insulation.|||Peter Boettke<ref>"Teaching Austrian Economics to Graduate Students"] by Peter J. Boettke (201) ''Journal of Economics and Finance Education'' 10(2):19-30.</ref>}}

Some professors at George Mason University, such as {{wpl|Peter Leeson}} and Peter Boettke have decided to create a new stream of the Austrian School called the "Mainline Economics". According to  Boettke, the Austrian School might have more in common with mainstream economics than most people think.<ref>[https://fivebooks.com/best-books/peter-boetkke-on-austrian-economics/ The best books on Austrian Economics recommended by Peter Boettke] ''Five Books''.</ref>

Understanding that most people don’t disagree with the Austrian School because they are stupid and/or are acting in [[bad faith]] is a major step forward for an Economy School that has turned into a [[cult]] over the last few decades, but Boettke’s views are still considered overall fringe as his methodologies, despite being more advanced than most of the other Austrians, still differs a lot from the one used by more prominent economists.<ref>[https://periodicos.sbu.unicamp.br/ojs/index.php/ecos/article/view/8642132/9623 A agenda de pesquisa heterodoxa da ''mainline economics''] by Eduardo Angeli (2014) ''Economia e Sociedade'' 23(3):731-756.</ref> Even if Boettke doesn’t hold the strange political views of Rothbard and Hoppe (being, at this point, closer to Hayek and Mises than to most of the Austrians of the last few decades), he’s still an utilitarian anarcho-capitalist, and his theories still have a hard time explaining how the market can provide public goods and externalities.<ref>[https://web.archive.org/web/20210123053047/https://austrian.economicblogs.org/mercatus/2020/j-boettke-rosolino-a-candela-political-economy-analytical-anarchism/ The Positive Political Economy of Analytical Anarchism] by Peter J. Boettke & Rosolino A. Candela (2020) ''Austrian Economic Blogs''.</ref> Therefore, the "mainline" economists still have a lot to do if they want to make the Austrian School relevant again.

It goes without saying that people on Ludwig von Mises Institute are pissed with these “Mainline Economists”.<ref>"Rejoinder to David Prychitko on Austrian Dogmatism" by Walter Block (2012) ''Reason Papers'' 34(2):151-166.</ref>

==In fairness==
The founder of the Austrian school, Carl Menger, along with William Stanley Jevons and Leon Walras, were responsible for starting the Marginal Revolution in the 19<sup>th</sup> century, an important step forward in economic thinking.<ref>[http://faculty.fortlewis.edu/walker_d/econ_307_-_outline_nineteen_-_marginal_revolution_-_menger.htm  ECON 307 — Outline Seventeen: The Subjectivist&nbsp;— Marginal Revolution in Economics] by Deborah Walker, ''Fort Lewis College''.</ref> Mises is credited with introducing the economic calculation problem in the 1920s, which argued that a [[command economy|state-run economy]] could not be efficient because prices could not be "known," only decided by the state.<ref>[https://web.archive.org/web/20061116030003/http://the-idea-shop.com/article/97/the-socialist-economic-calculation-debate-and-the-austrian-critique-of-central-planning The Socialist Economic Calculation Debate and the Austrian Critique of Central Planning] by Andrew Chamberlain (May 20, 1998) ''The Idea Shop'' (archived from November 16, 2006).</ref> Austrians also argued for the non-neutrality of money.<ref name="quiggin"/> In 1974, Hayek shared the [[Nobel Prize|Nobel Memorial Prize]] in Economic Sciences (with Gunnar Myrdal) for his "pioneering work in the theory of money and economic fluctuations and… penetrating analysis of the interdependence of economic, social and institutional phenomena."<ref>[http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/index.html The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974] ''Nobel Foundation''.</ref> His works on political theory, that in fact comprised most of his academic career can be read separately from his economic writings.<ref>[https://econfaculty.gmu.edu/bcaplan/whyaust.htm Why I Am Not an Austrian Economist] by Bryan Caplan (2010) ''Department of Economics, George Mason University''.</ref> Israel Kirzner research on entrepreneurship economics is also widely recognized.<ref>[http://swopec.hhs.se/iuiwop/abs/iuiwop0678.htm Israel M. Kirzner: An Outstanding Austrian Contributor to the Economics of Entrepreneurship]</ref>

The school hasn't produced anything of much value since then. Block, Rockwell, and Hoppe were talking about libertarian ethics and history, not economics. Now they are primarily a small group of [[crank]]s funded by even richer cranks through the von Mises Institute and on the George Mason University looking for self-serving [[rationalization]]s couched in the form of economic theory. If you're not interested in the history of the economic thought nor in libertarian theory, you're not missing very much.

==See also==
{{fun}}
{{collist|2|
*[[Chicago school]]
*[[Thomas DiLorenzo]]
*"[[Fiscal responsibility]]"
*[[Foundation for Economic Education]]
*[[Gary North]]
*[[Neoliberalism]]
*[[Objectivism]]
*[[Panglossian]]ism
*[[Ron Paul]]
*[[Silver bullet]]
*[[Zero Hedge]]
}}

==External links==
*[https://web.archive.org/web/20030525162825/http://www.theworld.com/~mhuben/austrian.html A collection of critiques of the Austrian school]
*[http://socialdemocracy21stcentury.blogspot.com/2012/06/debunking-austrian-economics-101.html Debunking Austrian Economics 101]
*[https://web.archive.org/web/20140703193311/http://www.bloombergview.com/articles/2014-07-02/austrian-economists-9-11-truthers-and-brain-worms Austrian Economists, 9/11 Truthers and Brain Worms] (Includes a link to "Recovering Austrians")
*[http://www.scoop.co.nz/stories/HL0812/S00378.htm Mr. Anonymous and the Libertarian Movement]
*[http://www.salon.com/technology/how_the_world_works/2011/05/11/republicans_and_ludwig_von_mises Republicans and Ludwig von Mises]
*[https://web.archive.org/web/20121030163755/http://seekingalpha.com/article/185086-u-s-conservatives-too-influenced-by-mistakes-of-the-austrian-school US conservatives too influenced by mistakes of the Austrian School]

==Notes==
{{reflist|2|group=note}}

==References==
{{reflist|2|80%}}

[[Category:Austria]]
[[Category:Austrian school|*]]
[[Category:Capitalism]]
[[Category:Classical liberalism]]
[[Category:Economics]]
[[Category:Economic philosophies]]
[[Category:Libertarianism]]

Categories: Austria, Austrian school, Capitalism, Classical liberalism, Economics, Economic philosophies, Libertarianism