Forum Post: If you want to learn about the market so you are informed when you speak about its ills:
Posted 12 years ago on Nov. 23, 2011, 1:38 p.m. EST by Febs
(824)
from Plymouth Meeting, PA
This content is user submitted and not an official statement
http://www.tomwoods.com/learn-austrian-economics/
The economic school that predicted the collapse and blamed the collusion of the state and corporations.
Learn it. Live it. Fix it.
You know who used Austrian economics?
Reagan did
Pinochet did
Dolfuss did.
Monetarism destroyed Chile so bad that the chicago boys had to reintroduce social programs. Mises ran Austria to the fucking ground. Austrian economics are the fist of the free market, without the gloves.
This whole system that's crashing down right now is based on Austrian economics: when the rich have finally taken the economic power they take the political power. Austrian economics creates rampant cronyism. Austrian economics are only taken seriously by ignorant kooks who masturbate to Ayn Rand.
It's no mistake that both Hayek and Mises both praised authoritarian capitalist systems.
Trudat.
No actually they used the Chicago school made famous by Milton Friedman.
Austrian theory of capital formation, interest, and the business cycle is wholly different from those of the Chicago school.
So different that Hayek and Friedman were both Pinochet's supporters and advisors? So different that Friedman was a member of Hayek's Mont Pelerin Society? Two schools of conservative, laissez-faire, neoclassical econonomics, with relatively minor differences. Free market fundamentalism either way.
"The school of neoclassical economists that advocates extreme laissez-faire Capitalism represents the contemporary counterparts of Senior and Bastiat. In a sense this group really represents two separate but similar schools - the Austrian School and the Chicago School. The Austrian School traces its lineage directly back to Carl Menger (Chapter Eleven), Menger's extreme methodological individualism is the basis of the social philosophy of the Austrian School.
While Menger's first generation of disciples included both social reformers and conservatives, the ultraconservative nature of the Austrian School is more properly thought of as the product of two of Menger's second-generation disciples, Ludwig von Mises and Friedrich A. Hayek. Both von Mises and Hayek taught at various times at the University of Chicago. Together with Frank H. Knight, who taught for many years at the University of Chicago, they were the most important influences in the formation of the Chicago School. For the past generation, Milton Friedman has been the most influential member of the Chicago School. In 1976, Friedman was awarded the Nobel Prize in economics.
The problem with classifying the Austrian and Chicago schools together is that although they both emphasize the universal beneficence of exchange, extreme individualism, and a doctrinaire advocacy of laissez-faire, they have methodological differences. The Austrians generally advocate a rationalist approach to economic theory, while Milton Friedman and his followers generally advocate an empiricist approach. Although it is currently very common in the academic economics profession to hear all extremely individualistic advocates of laissez-faire referred to as the "Chicago School," it is probably more accurate to say that the more conservative wing of contemporary neoclassicism is about evenly divided between those who on methodological grounds follow the Austrian School and those who follow Friedman's Chicago School. We do not believe these methodological differences to be terribly significant,17 so we shall consider these contemporary advocates of extreme laissez-faire together."
http://economistsview.typepad.com/economistsview/2009/01/the-austrian-an.html
Btw Friedman was to Reagan as Hayek was to Thatcher. They are eminently compatible, and equally terrible.
The data that would just as easily have predicted the collapse if anyone was paying attention:
http://www.brianrogel.com/the-100-percent-solution-for-the-99-percent
More detail by Dean Baker:
http://openeconomicsnd.wordpress.com/2010/07/05/dean-baker-inequality-at-root-of-crisis/
"This brings us to the question of why we got the housing bubble in the first place, which goes directly to the issue of inequality. In the three decades after World War II, there were no notable bubbles in the economy. Productivity growth translated into wage growth, which in turn led to more consumption. The increased demand led to more investment, productivity growth and wage growth.
This virtuous circle was broken by Reagan-era policies intended to weaken the power of ordinary workers. Wages no longer kept pace with productivity growth, eliminating the automatic link between productivity growth and demand growth. This led to excess capacity in the economy, which was filled in the 1990s with demand generated by the stock bubble and in the 2000s with demand generated by the housing bubble.
If the institutional changes of the Reagan era had not weakened workers’ bargaining power, these bubbles would not have been possible. Demand would have kept pace with output capacity. The Fed would not have felt the need to lower interest rates to sustain demand."
And what philosophy was behind the Reagan policies? Chicago/Austrian free market worship.
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness" -JK Galbraith
Economists who shared a generally more free market than currently existed approach new each other and were in some of the same organizations. That shouldn't surprise anyone but it no more means the schools can be thought of as identical than the fact that Hayek and Keynes frequently exchanged writings and were friends.
The fact that some authors don't make much of a distinction does not negate the existence of one - especially when said author is an opponent of the ideas of those schools. The monetarists with the Chicago school (Greenspan) admitted they willingly caused bubble formation in the housing sector. Neither the Chicago nor the neo-Keynesian economists foresaw the crash while the Austrian school saw it in 99-01.
Even if you wish to critique the school the videos would at least give someone an understanding of those whom they view as their opponents though I would think that by viewing people will come to understand the market better and thus be more open to Austrian ideas.
Don't take my word for it though watch them and apply the ideas to history and the present. Let the reality of the world inform you if the Austrian school is more correct than the others.