Category: Economics, Finance, and Political Economy

YES, REFORMING AUSTRIAN ECONOMICS IS NECESSARY

—“Calling Mises pseudoscientific is the typical positivistic criticism to Austrian Economics. It adds nothing. The young Austrian economists who are pupils of Don Lavoie had been working on Popper, Lakatos, Machlup and Hayek for a long time.”—Gabriel Zanotti, Philosophy Professor at Austral University

Gabriel

Let me see if I can summarize the argument and put an end to rationalist obfuscation of economics:

1) Calling science positivistic (justificationary) is a typical Rothbardian/Misesian misrepresentation of the scientific method, which is critical not justificationary.

2) Calling a logic (axiomatic, prescriptive, complete) a science (theoretical, descriptive, incomplete) is simply false. (And adds nothing, other than casting Austrian economics as a source of ridicule). Models can be built out of axioms or laws, but all axiomatic deductions are tautologies, producing proofs of operational possibility, while all laws remain incomplete and therefore non-tautological, producing additional hypotheses, which are candidates for theories and laws. But all theoretical statements remain theoretical. The reason being that all non-tautological premises remain forever theoretical.

3) The ‘axiom’ of purposeful human action tells us precisely nothing since it may constitute a test, but not an axiom since it tells us nothing of the scope of possible purposeful human action. We can instead say that any economic hypothesis, theory, or law, must be reducible to a sequence of rational human actions, (operations) in order to be existentially possible.

4) This difference is why we rely upon ratio-empiricism, not rationalism, and not positivism for scientific (truthful) investigation. Logical arguments test internal consistency but not external correspndence, and external correspondence does not tell us about the internal consistency of our arguments, and without operational-intuitionistic testing (operational definitions) we cannot know if what we imagine is existentially possible. And without falsification, assuming we are both internally consistent, externally correspondent, and existentially possible, we have not tested our internal, external, and operational theory for parsimony – leaving open the possibility of error, bias and deception in all three.

5) The differences between mainstream (orthodox) economics, and Austrian (heterodox) economics, are (a)that manipulation of credit is disinformation (lying) which produces cumulative effects of disinformation (lying), and (b) that as an act of disinformation (fraud), manipulation of credit produces involuntary transfers (immorality), because it lacks fully informed, productive, warrantied, voluntary exchange, free of externality (moral constraint).

6) Rationalists tend to be, and by definition, must be, justificationists – they are not critical. Justification in rationalism, is indifferent from positivism in science. They are identical propositions. No matter how much justification we do, we are merely engaging in confirmation bias. Instead, it is irrelevant which method we use to construct a theory. The means of constructing a theory are irrelevant. Justification is irrelevant. Truth candidates (internally consistent, externally correspondent, operationally possible, and ultimately parsimonious, yet incomplete statements) are produced by criticism: whether they survive scrutiny: testing.

7) One *CAN* however, work through purely rational, non-positivistic processes, however, this is not to to say they are not working empirically (through observation). As far as I know this is impossible. But that does not mean they are not working ratio-empirically. It merely means that they are engaging in tests of internal consistency given current knowledge, and working using operational possibility (existential possibility), but that they are not criticizing their work through tests of external correspondence – although as far as we know, no one makes theories without tests of external correspondence, because that would mean we were not explaining economic phenomenon – which would be somewhat fruitless.

8) This ‘Austrian’ (heterodox) investigation remains ratio-empirical, and consistent with all other scientific investigation. However, so does mainstream economics (orthodoxy). And the ONLY DIFFERENCE between mainstream and Austrian economics then, is that the mainstream seeks to lie to us, and Austrians seek to speak the truth. So the difference is not methodological – it is whether we attempt to find improvements to institutions of cooperation that retain the western principle of truth telling, or we engage in lying. Keynesian economics is dishonest, not necessarily unscientific. Austrian economics suggests only that economics must be practiced scientifically (ratio-empirically), not axiomatically or statistically: that sequences of operational possibility actions, informed by incentives, each of which is subjectively testable, is necessary to make a truth statement, while statistical correlation ignores these choices. Ergo, economics is indifferent from all other sciences: ratio-empirical discipline. The question is only whether we seek to tell the truth (Austrian) or to lie (Keynesian).

9) And it is equally dishonest and pseudoscientific to state that an axiomatic system is identical to a theoretical system, and equally dishonest to cast mainstream economics as methodologically flawed. Particularly when Austrians have contributed nothing to the study of economics in nearly a century, while in the past twenty years alone, the orthodox community has expanded our knowledge of general rules and insight into our existing economies with regularity.

10) The Cosmopolitan thinkers, like the german rationalists, are exceptional at this kind of deceptive conflation. A few of us think that it is a natural consequence of talumudic authoritarian dual ethics in the jewish community, and kantian authoritarian conflation of truth and duty in german philosophy. However, Mises and ROthbard and to some lesser degree Hoppe, have all tried to assert fallacies that cast the difference as possible, logical and methodological rather than as moral. Meanwhile the social democrats continue to justify the morality of takings (involuntary transfers) rather than treating every ‘taking’ as a lost opportunity for productive voluntary exchange – and therefore returning us to manorial era constraints upon the behavior of the unproductive classes that contributed to the rise of the west.

CLOSING

I hope this helped you understand my position. In my view I am attempting to restore Morality and truth telling to economics. But that will not be done using fallacious arguments in the rationalist tradition. It will be by demonstrating that moral action using institutions that do not engage in lying, produce superior economic conditions: greater prosperity without the fragility caused by decade after decade of institutional lying.

Curt Doolittle

The Propertarian Institute

L’viv Ukraine