austrian-school-economists

"Milton] felt you could influence the political sphere. So he wrote a lot about politics--of course--and public policy. Not politics--public policy. But at the same time, I think he believed, or at least it was his public persona, that he was also a scientist. That his scientific work was different. That he could, as one EconTalk guest said: He could put on his science hat, and then take it off and put on his ideology hat. And my claim is that that's a delusion--I don't mean to be critical about Milton, who I'm a big fan of, and incredibly important person in my education and in my life. But I think it is--so I don't know how aware or unaware he was about it. I don't want to say he was deluded. But I think many economists are deluded into thinking, and want to believe that they can wear those two hats separately. And it's very self-serving. We need to confront the fact that it's very much in our interest to pretend to the world that we have a scientific aspect to our work that is free of values. And I think that's--I think it's fundamentally deceptive, and dishonest."

"“Speech of Argentina’s President Javier Milei at Davos – Transcript” Eurasiareview"

"Unfortunately, these harmful ideas have taken a stronghold in our society. Neo-Marxists have managed to co-opt the common sense of the Western world, and this they have achieved by appropriating the media, culture, universities and also international organisations."

"Libertarianism already provides for equality of the sexes. The cornerstone of our creed is that all humans are created equal and that we all have the same inalienable rights granted by the Creator, including life, freedom and ownership."

"The market is not a mere graph describing a curve of supply and demand. The market is a mechanism for social cooperation, where you voluntarily exchange ownership rights. Therefore based on this definition, talking about a market failure is an oxymoron. There are no market failures."

"My contempt for the state is infinite."

"If the goods or services offered by a business are not wanted, the business will fail unless it adapts to what the market is demanding. They will do well and produce more if they make a good quality product at an attractive price. So the market is a discovery process in which the capitalists will find the right path as they move forward."

"Thirty five years after we adopted the model of freedom, back in 1860, we became a leading world power. And when we embraced collectivism over the course of the last 100 years, we saw how our citizens started to become systematically impoverished, and we dropped to spot number 140 globally."

"Countries that have more freedom are 12 times richer than those that are repressed. The lowest percentile in free countries is better off than 90% of the population in repressed countries. Poverty is 25 times lower and extreme poverty is 50 times lower. And citizens in free countries live 25% longer than citizens in repressed countries."

"However, faced with the theoretical demonstration that state intervention is harmful – and the empirical evidence that it has failed couldn’t have been otherwise – the solution proposed by collectivists is not greater freedom but rather greater regulation, which creates a downward spiral of regulations until we are all poorer and our lives depend on a bureaucrat sitting in a luxury office."

"It should never be forgotten that socialism is always and everywhere an impoverishing phenomenon that has failed in all countries where it’s been tried out. It’s been a failure economically, socially, culturally and it also murdered over 100 million human beings."

"Fortunately there’s more and more of us who are daring to make our voices heard, because we see that if we don’t truly and decisively fight against these ideas, the only possible fate is for us to have increasing levels of state regulation, socialism, poverty and less freedom, and therefore, worse standards of living."

"Far from being the cause of our problems, free trade capitalism as an economic system is the only instrument we have to end hunger, poverty and extreme poverty across our planet. The empirical evidence is unquestionable."

"Today I'm here to tell you that the Western world is in danger. And it is in danger because those who are supposed to have to defend the values of the West are co-opted by a vision of the world that inexorably leads to socialism and thereby to poverty"

"But if the state punishes capitalists when they’re successful and gets in the way of the discovery process, they will destroy their incentives, and the consequence is that they will produce less."

"The state does not create wealth; the state destroys it. The state can give you nothing because it produces nothing, and when it attempts it, it does so poorly."

"Now what is it that we mean when we talk about libertarianism? And let me quote the words of the greatest authority on freedom in Argentina, Professor Alberto Benegas Lynch Jr, who says that libertarianism is the unrestricted respect for the life project of others based on the principle of non-aggression, in defence of the right to life, liberty and property."

"If printing money would end poverty, printing diplomas would end stupidity."

"We should remember that by the year 1800, about 95% of the world’s population lived in extreme poverty. And that figure dropped to 5% by the year 2020, prior to the pandemic. The conclusion is obvious."

"If we look at the history of economic progress, we can see how between the year zero and the year 1800 approximately, world per capita GDP practically remained constant throughout the whole reference period."

"The pie will be smaller, and this will harm society as a whole. Collectivism, by inhibiting these discovery processes and hindering the appropriation of discoveries, ends up binding the hands of entrepreneurs and prevents them from offering better goods and services at a better price."

"If transactions are voluntary, the only context in which there can be market failure is if there is coercion and the only one that is able to coerce generally is the state, which holds a monopoly on violence."

"The case of Argentina is an empirical demonstration that no matter how rich you may be, how much you may have in terms of natural resources, how skilled your population may be, how educated, or how many bars of gold you may have in the central bank – if measures are adopted that hinder the free functioning of gdps, competition, price systems, trade and ownership of private property, the only possible fate is poverty."

"We have come here today to invite the Western world to get back on the path to prosperity. Economic freedom, limited government and unlimited respect for private property are essential elements for economic growth. The impoverishment produced by collectivism is not a fantasy, nor is it an inescapable fate. It’s a reality that we Argentines know very well."

"You are wrong, Milei [...] you who were put in Argentina to destroy the rule of law, to destroy the State, to destroy all social and labour rights, to destroy the national economy and to colonise Argentina and deliver it to the knees of North American imperialism."

"In other words, capitalist successful business people are social benefactors who, far from appropriating the wealth of others, contribute to the general well-being. Ultimately, a successful entrepreneur is a hero."

"Wieser is usually credited with the idea that the cost of any economic decision is the next best alternative foregone in making that decision. In addition, Wieser – following Menger – saw the production process as unfolding through time where value flows up from lower-order goods to the higher-order goods used in producing them, and a stream of goods and services flows down from high-order goods to the lower-order goods we consume. The process of deriving the value of producer goods from the value of the resulting consumer goods is referred to as imputation. Hayek’s early work in technical economics was precisely on this issue and it is through studying this process of imputation that he became sensitised to the misleading influence of equilibrium theorising with regard to the complexity of this economic adjustment process through time."

"The all-inclusiveness of the equilibrium concept in New Classicism warns against comparisons of EBCT and ABCT that ignore the radically different methodological contexts. For instance, the inevitable bust that figures importantly in ABCT cannot easily be translated into the language of EBCT. For the Austrians, "equilibrium bust" is a term at war with itself; for the New Classicists, "disequilibrium bust" can only mean an unexplainable downturn (cf. Lucas 1981, pp. 225 and 231)."

"While many of the conflicting claims can be reconciled in terms of the short-run and long-run orientation of Keynesians and monetarists, respectively, and in terms of their contrasting philosophical orientations, neither vision takes into account the workings or failings of the market mechanisms within the investment aggregate.Austrian macroeconomics is set apart from both Keynesianism and monetarism by its attention to the differential effects of interest rate changes within the investment sector, or—using the Austrian terminology—within the economy's structure of production."

"The recent flourishing of New Classical economics, and especially its Equilibrium Business Cycle Theory (EBCT), has given a fresh hearing to the Old—but still developing—Austrian Business Cycle Theory (ABCT). While the New and the Old differ radically in both substance and methods, they exhibit a certain formal congruency that has captured the attention of both schools. The formal similarities between EBCT and ABCT invites a point-by-point comparison, but the comparison itself dramatizes differences between the two views in a way that adds to the integrity and plausibility of the Austrian theory."

"Except for Marxian theories, nearly all modern theories of the business cycle have essential elements that trace back to Knut Wicksell's turn-of-the-century writings on interest and prices. Austrians, New Classicists, Monetarists, and even Keynesians can legitimately claim a kinship on this basis. Accordingly, the recognition, that both the Austrians and the New Classicists have a Swedish ancestry does not translate into a meaningful claim that the two schools are essentially similar. To the contrary, identifying their particular relationships to Wicksellian ideas, like comparing the two formally similar business-cycle theories themselves, reveals more differences than similarities. … [T]o establish the essential difference between the Austrians and the New Classicists, it needs to be added that the focus of the Austrian theory is on the actual market process that translates the monetary cause into the real phenomena and hence on the institutional setting in which this process plays itself out.The New Classicists deliberately abstract from institutional considerations and specifically deny, on the basis of empirical evidence, that the interest rate plays a significant role in cyclical fluctuations (Lucas 1981, p. 237 151–1). Thus, Wicksell's Interest and Prices is at best only half relevant to EBCT. … Taking the Wicksellian metaphor as their cue, the New Classicists are led away from the pre-eminent Austrian concern about the actual market process that transforms cause into effect and towards the belief that a full specification of the economy's structure, which is possible only in the context of an artificial economy, can shed light on an effect whose nature is fundamentally independent of the cause."

"Accounting for the artificial boom and the consequent bust is not part of Keynesian income-expenditure analysis, nor is it an integral part of monetarist analysis. The absence of any significant relationship between boom and bust is an inevitable result of dealing with the investment sector in aggregate terms. The analytical oversight derives from theoretical formulation in Keynesian analysis and from empirical observation in monetarist analysis. But from an Austrian perspective, the differences in method and substance are outweighed by the common implication of Keynesianism and monetarism, namely, that there is no boom-bust cycle of any macroeconomic significance."

"It is indeed true that the reduction of inflation came at a big price—that Volcker's tightening, for instance, succeeded in lowering inflation only in the wake of a severe recession. But this possibility was, first of all, one concerning which monetarists were perfectly aware: they understood the danger that, once inflation, and accelerating inflation especially, came to be anticipated by the public, putting the breaks on money growth would result in prices and wages continuing for some time to rise beyond their new, less-rapidly rising equilibrium values, with a consequent rise in unemployment."

"In one respect, however, I agree that monetarism was wrong, namely, to the extent that it failed to recognize the need to allow inflation to occur to the extent that it was solely due to falling output or productivity—a case I have argued, along with the symmetrical one for letting prices fall as productivity improves, in my IEA pamphlet Less Than Zero."

"No monetarist, certainly not Friedman, welcomed this side-effect of monetary restraint. But then again, had Friedman been listened to earlier (and had the likes of Paul Samuelson been ignored), things would never have come to this tragic stage. By way of analogy, should we blame those who would end the war in Iraq, and who opposed it all along, for the tragic consequences that are likely to follow any rapid U.S withdrawal?"

"Although I realize that Austrian-school economists have themselves been highly critical of monetarism, many of its most fundamental claims are in fact fully consistent with their own understanding of monetary theory. Indeed, back in the 1970s the difference between Austrian and monetarists writings about money seemed trivial compared to the difference between them and the writings of other (broadly "Keynesian") economists. I recall very well how I myself got "deprogrammed" from mainstream thinking about money and inflation by reading Henry Hazlitt's wonderful book, The Inflation Problem, and How to Resolve It . Hazlitt was, of course, a thoroughgoing Misesian. Yet no one who reads his book can fail to note the many crucial similarities between his arguments and those of Milton Friedman concerning the same subject."

"Your friend, rather perversely I think, refers to the "disastrous results" that followed the monetary tightening of Volcker and other more monetarist-minded central bankers without even hinting at the facts that that the tightening was aimed at bringing down inflation rates, and that it succeeded remarkably well in doing precisely that. In other words, the tightening did precisely what monetarism said it would do, and what monetarists' critics at the time, wedded to the view that monetary policy was ineffective, and that inflation was entirely caused by OPEC (or by unions, or by anything except monetary policy) insisted it could not do. And yet your friend imagines that the experience proved the monetarists wrong!"

"The world probably would have been much better off had macroeconomics never been devised. Although I have in mind Keynesian macroeconomics above all, I include other types of macro models as well. I even include, somewhat reluctantly, the whole quantity theory approach descended from David Hume to the Friedmanites, now known as monetarism. … In short, among its many other deficiencies, as spelled out by Mises and his followers, monetarism’s most fundamental flaw is identical to the most fundamental flaw of Keynesian, Post-Keynesian, New Classical, and other theories advanced by macroeconomists during the past seventy or eighty years: not only does the theory leave out critical variables, but it is too simple, being expressed in huge, all-encompassing aggregates that conceal the real economic action taking place within the economic order."

"In his discussions of spontaneous orders, sometimes Hayek was simply trying to make the point that they exist; that is, he was trying to counter the claim that any beneficent social order needed to be constructed. This view was widespread when he first was writing; the mania for planning was then ubiquitous, so it was a point worth making. In later writings, Hayek sometimes did say, let’s trust to evolved orders rather than constructed ones, but then allowed that sometimes we needed to make piece-meal changes, and he gave no criteria for deciding."

"It seems evident from his unpublished piece that his reading of the Mill-Taylor letters gave Hayek a bit of a shock. He knew, of course, from the Autobiography that Mill had an elevated opinion of Mrs. Taylor. The letters seem to have convinced Hayek that she dominated him. Hayek would doubtless have seen this as a weakness, and he might well have lost some respect for Mill as a result. It may also have provided a convenient explanation for Hayek for why a great mind like Mill might nonetheless “desert” the liberal camp. (Hayek’s hope to lead others to the same conclusion might have helped motivate him to write the book on the correspondence between Mill and Taylor.) Given what has sometimes been said about the dominating personality of Hayek’s second wife, one wonders whether Hayek would later in his life have felt even more commonalities with Mill."

"Hayek is a puzzle. Certainly he started out as one for me, now some twenty-odd years ago."

"Some may wish to argue that Hayek was simply born with a sort of natural pessimism or cynicism, and that this generated his long standing belief in the inherent limitations that humans face when they try to intervene in social phenomena. Perhaps. But it is also possible that this view was the product of his having come of age during the final collapse of an already broken-down empire, of having experienced the multiple forms of disaster that surrounded postwar Vienna and enveloped interwar central Europe, and of having witnessed the failures of various high-minded social experiments to achieve anything like what their exponents had promised. In bearing witness to so much tragedy Hayek was again very much a part of the larger Austrian tradition. His famed ‘‘epistemic pessimism’’ may well have been another result of that larger experience."

"It is probably best to start off by noting that Hayek knew a lot about Mill, probably for a time more than any other contemporary scholar. So we should not underestimate him. Next, what he had to say about Mill, what portion of Mill’s work he drew upon, was very much dictated by the sort of project he was working on. When he was making an argument about how the British liberal tradition lost its bearings, or about how Comtean positivism came to be known and gained influence across Europe, Mill was classed among the perpetrators. When he was writing about what made the British liberal tradition great, Mill could be one of the heroes. There is, I think, no inconsistency in the fact that Hayek could hold both views simultaneously."

"He linked the notion of a spontaneous order that forms when agents follow (often simple) rules with the idea of complex systems in the 1950s. This was a critical breakthrough, for it allowed him to drop the old natural science-social science dichotomy ..."

"Critics argue that Hayek mixed a number of ethical and political philosophies in constructing his system, positions that do not necessarily cohere one with another and all of which have been independently criticized. … There are evident tensions as well between his earlier advocacy of planning a framework of law and his later enthusiasm for the gradual evolution of judge-made common law. Finally, Hayek's opinion that judges operating under the common law tradition are bound to draw "conclusions that follow from the existing body of rules and the particular facts of the case" has struck more than one observer as naive. If one is judging his work against the standard of whether he provided a finished political philosophy, Hayek clearly did not succeed."

"There are two elements of Hayek’s background that justify our considering him an Austrian economist: first, that he was raised and went to university in Vienna in the first three decades of the twentieth century, and second, that when he finally decided on economics as his field of study, he was trained within the Austrian tradition in economics."

"From a historical point of view, the injustice against blacks was perpetrated mostly by governments. Private business does not go in for race-based policies, because it means excluding paying customers. And this is precisely why racialists, nationalists, and hard-core bigots have always opposed liberal capitalism: it includes and excludes based on the cash nexus and without regard to features that collectivists of all sorts regard as important. In the imagined utopias of the national socialists, the champions of commerce are hanged from lampposts as race traitors and enemies of the nation."

"We live in anti-liberal times, when individual choice is highly suspect. The driving legislative ethos is toward making all actions required or forbidden, with less and less room for human volition. Simply put, we no longer trust the idea of freedom. We can't even imagine how it would work. What a distance we have traveled from the Age of Reason to our own times."

"In the end, what is really needed is a fundamental rethinking of the notion that the state rather than private markets must monopolize the provision of justice and security. This is the fatal conceit. No power granted to the state goes unabused. This power, among all possible powers, might be the most important one to take away from the state."

"Stock markets are never better performing than during a hyperinflation. Interest rates are rock bottom, but only through artificial means. Gross Private Domestic Investment is still falling off a cliff, having already completely erased ten years of investment from the record of history. Here is a fundamental factor that suggests that terrible things are still to come our way. And I guess I'll have to put this in italics because the point seems to be lost in the shuffle: unemployment is still rising, even soaring straight to double digits! The sociology of this intrigues me to no end. Unemployment is one of the human elements that journalists are supposed to glom onto. Oh, look at poor Bob and Jane and how they lost their jobs and have nowhere to go, etc., etc. Talk about human interest! Where are the weepy stories about the plight of people wandering around with no work? Instead, we get happy clappy stories about how things are not nearly as bad as they might be had the great and powerful Obama of Oz not appeared to save the day. There is also the remarkable spin that things are getting worse, yes, but at a slower pace than before – an observation that might be most commonly heard in Hell."