Why I Am Not an Austrian Economist

My post on Bob Murphy’s critique of Market Monetarism has triggered a slight discussion about Austrian economics.

I do not consider myself as an Austrian economist, but I certainly have been inspired by reading the Austrian classics over the years – particularly Ludwig von Mises’s “Human Action”. That said, in terms of the development of monetary theory I do not believe that the Austrians have much to offer.

When I talk about “Austrians” that do not include Free Banking theorists like George Selgin or Larry White. In fact I think that Market Monetarism and the Free Banking schools theoretically is very close. George do not consider himself to be Austrian, while I think Larry still says that he is Austrian inspired.

Some years ago Bryan Caplan wrote an excellent piece on why he is not an Austrian. While I do not agree with everything Bryan says about the Austrians (and Children!) I nonetheless think his paper is pretty much spot on in the critique of Austrian thinking. (I stole the headline for this post from Bryan…)

It should also be acknowledged that there is not one Austrian school, but a number of Austrian school – more or less dogmatic.

Enough discussion of Austrian dogma – back to Market Monetarism…

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4 Comments

  1. Alex Salter

     /  October 8, 2011

    Re the discussion on the Bob Murphy post:

    Rothbard is a decidedly mixed bag. He’s great at debunking particular neoclassical theories which just don’t make sense, but, as Selgin noted, he’s rubbish at money and banking.

    That said, I don’t think it’s true that Austrian economics doesn’t offer much in the way of monetary theory. Menger’s “On the Origins of Money” and Mises’s regression theorem in “The Theory of Money and Credit” are indispensable. Mises in particular is the link between Wicksellian loanable funds theory and modern understandings of monetary equilibrium. Also, let’s not forget Hayek’s “Denationalization of Money”, which was the spark that ignited all the modern research on free banking. These aren’t just exercises in history of thought; the ideas in these works are directly relevant to current issues.

    Reply
  2. Alex, I would agree that one should study both Mises and Menger to understand monetary theory.

    In terms of Hayek’s “Denationalization of Money” I am more spilt. Yes, it is correct that it probably was the spark that ignited the modern research on Free Banking. On the other hand Hayek’s results in DoM I generally think are wrong. Therefore, I would not use it for my starting point when studying Free Banking…George Selgin is the man! And I think Market Monetarists can learn a great deal by studying George’s papers and books. But again George does not consider himself an Austrian. I think he in general dislikes these labels.

    Reply
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