Methodological Individualism and the Austrian School: A Note on its Critics (original) (raw)

Philosophy, Politics, and Austrian Economics

2020

Featuring contributions by economists, philosophers, political scientists, and political theorists both friendly to and critical of Austrian ideas, this collection explores what, if anything, Austrian assumptions about human nature and the function of social institutions have to offer the broader field of PPE. The authors explore the relationship of F.A. Hayek’s thought to contemporary analysis of democracy, the importance of entrepreneurship for institutional analysis, the possibility and perils of self-governance, and whether Austrian ideas can better explain real-world institutional developments.

The study of individual action and the pillars of the Austrian School of Economics

2011

Despite its longevity, numerous fundamental contributions to the economic science and its genuine originality, the Austrian School of Economics is to a great extent still unknown and ignored, if not despised. The Austrian economic tradition is however vivid and active, and moreover still consistent with its intellectual roots. The main reason for this is to be found in its solid and strongly performing methodology used in its inquiry of human action. This paper aims at presenting concisely the methodological foundations on which builds the Austrian analysis. It is more of an attempt to popularise rather than critically discuss those methodological pillars.

Mises and Hayek on Methodological Individualism .

2009 marks the centenary of methodological individualism (MI). The phrase was first used in English in a 1909 paper by Joseph Schumpeter in the Quarterly Journal of Economics. Yet after 100 years there is considerable confusion as to what the phrase means. MI is often invoked as a fundamental description of the methodology both of neoclassical and Austrian economics, as well as of other approaches, from New Keynesianism to analytical Marxism. However, the methodologies of those to whom the theoretical practice of MI is ascribed differ profoundly on the status of the individual economic agent, some adopting a holistic and some a reductionist standpoint. My purpose is to uncover and evaluate some of the meanings of the phrase 'methodological individualism'. The paper considers the contributions of Mises and Hayek, concluding that they based their methodological stance on fundamentally different ontologies, with Mises building on the reductionism of previous writers such as Schumpeter and Menger, and Hayek, on the contrary, adopting a holistic ontology more in line with Adam Smith, Marx and Keynes. From an ontological perspective this seems to leave Hayek as something of an outlier in the Austrian tradition.

The Methodology of the Austrian School of Economics: The Present State of Knowledge

Ekonomia - Wroclaw Economic Review, 2014

This paper is an attempt to systematize the methodological insights and contributions of the Austrian School of Economics and present them in their most up-to-date elaboration, thereby building on the earlier literature on the subject. It aims to improve on the publications listed above in two aspects. First, it takes into account the most recent conceptual developments that address some of the common misunderstandings of the Austrian methodological position, as well as some of its more insightful contemporary criticisms. Second, it organizes the presentation of the relevant material around several clearly specified methodological dimensions, while, in contrast to most of the abovementioned literature, keeping the description of the historical background behind the development of the Austrian method to an absolute minimum, as well as leaving out the non-methodological differences between the ASE and its intellectual rivals, thus aiming to make the presentation in question maximally focused and thematically unified.

The Mundane Economics of the Austrian School

The Quarterly Journal of Austrian Economics, 2008

The Austrian School of economics-the causal-realist, marginalist, subjectivist tradition established by Carl Menger in l87l-has experienced a remarkable renaissance over the last five decades. It is not always clear, however, exactly what distinguishes the Austrian School from other traditions, schools of thought, approaches, or movements within economics and its sister disciplines. This paper argues that Austrian economics, while part of a broader tradition emphasizing the coordination of the market order, is nonetheless a distinct kind ofeconomic analysis, and that its essence is not subjectivism, the market process, or spontaneous order, but what I call "mundane economics"-price theory, capital theory, monetary theory, business-cycle theory, and the theory of interventionism. Call this the "hard core" of Austrian economics. I argue that this hard core is (1) distinct, and not merely a verbal rendition of mid-twentiethcentury neoclassical economics; (2) the unique foundation for applied Austrian analysis (political economy, social theory, business administration, and the like); and (3) a living, evolving body ofknowledge, rooted in classic contributions ofthe past but not bound by them. Most Austrian economists from Menger to Rothbard devoted their energies to developing and communicating the principles of mundane economics, not because they failed to grasp the importance of time, uncertainty, knowledge, expectations, institutions, and market processes, but because they regarded these issues as subordinate to the main task of economic science, namely the construction of a more satisfactory theory of value, production, exchange, price, money, capital, and intervention.

Austrian Theorizing, Recalling the Foundations: Reply to Caplan

It is a pleasure to reply to Caplan’s (1999) critique of Austrian economics. Unlike other such recent reactions this one shows evidence of great familiarity with the Austrian (praxeological) literature, and a deep interest in its analytical foundations. Thus, Caplan correctly identifies the works of Ludwig von Mises and Murray N. Rothbard as the core of what sets Austrian economics apart from the neoclassical mainstream. And he insightfully relegates the writings of F.A. Hayek and Israel M. Kirzner to an intermediate position between the praxeological and neoclassical approaches.

Critique of Austrian Economics From 1930 To 1990

The Quarterly Journal of Austrian Economics mission statement (Block, Hoppe & Salerno 1998) claims that “This forum is open... to articles expressing cogent criticisms of Austrian economics that are useful in provoking a rethinking and clarification of critical points of its theory, policy, or method. As was the case during our tenure with the Review of Austrian Economics, we will not shy away from controversy, regardless of whose oxen are gored.” The purpose of this paper is to provoke a rethinking of Austrian economics and perhaps to gore a few oxen. I have tried to be cogent.

Hayek and Economic Policy (The Austrian Road to the Third Way)

Democracy, Freedom and Coercion

By examining Hayek's approach to economic policy, this paper tries to show that his understanding of a free-market society was ambiguous, if not contradictory. Hayek was indeed following the Austrian tradition by rejecting technocratic views of policymaking. Nevertheless, he advocated a constitutional approach ultimately based on the rule of law created behind a veil of ignorance. Regulation and a fairly extensive welfare state are not ruled out either, and are subject to evaluation through a mix of rule of law (what that means), public opinion, common sense. After close inspection of the Road to Serfdom, the Constitution of Liberty, Law, Legislation and Liberty this contribution concludes that not only does Hayek fail to provide clear answers to the fundamental questions of economic policy. He also advocates a Third Way characterised by enlightened social engineering. In particular, the state has the duty to provide a suitable framework for the individual to develop his action, and to meet those social needs that the market fails to satisfy.