View Full Version : Vienna vs. Chicago
Slutter McGee
12-10-2009, 07:47 PM
Alright. So help me out here. Been reading plenty of Hayak, and plenty of Friedman. Which means fuck Keynes and yay for the free-market, but screw you on how that free market functions.
I know that most people here are of the Austrian pursuasion. I am leaning slightly towards the Chicago school, but there is no chance in hell I have the knowledge to debate anything, and that is not my intent. So lets hear it. Why is the Austrian school better than the Chicago school.
Sincerely,
Slutter McGee
mtj458
12-10-2009, 10:13 PM
I think the main difference is in monetary policy. Chicago school advocates inflation as a way of increasing aggregate demand whereas Austrians want a gold standard or free banking. I'm not convinced that a 2% inflation rate is bad for the economy but I definitely don't think that the Fed has enough knowledge to know where to set the interest rates. It's obvious to me that the Fed policy has been too easy over the last decade which caused the bubbles, but I'm not ready to go as extreme as the Austrians are on the issue yet, and say that monetary policy cannot be helpful in the long run.
Mini-Me
12-10-2009, 10:48 PM
Although the Austrians and Chicagoans come to many of the free market conclusions, the main difference is in their methodology, i.e. how those conclusions are reached. The different conclusions about monetary policy also stem from this.
Rather than try to pimp the Austrians, I'll just provide a few links.
Here's an obvious one, Wikipedia's discussion of their analytical framework: http://en.wikipedia.org/wiki/Austrian_School#Analytical_framework
Here is a random reddit debate about their methodology. A lot of random posters make inane straw men arguments just to take shallow pot shots, and a few posters like seeya are hopelessly anti-liberty and deluded about the nature of socialism (and somehow think libertarians are shills for the privileged class...pff)...but a lot of the more serious discussion is pretty good: http://www.reddit.com/r/Economics/comments/a6lvw/i_just_learned_that_austrian_economics_is_not/
Also, here is an article that bashes the hell out of the Keynesians and reveals a lot about how Austrians think in the process. It doesn't mention the Chicagoans or anything, but I think it still should be helpful. It took me a while to find it, but it's very enjoyable. ;)
http://www.lewrockwell.com/orig10/richards-b1.html
krazy kaju
12-10-2009, 11:27 PM
I like economics in general. I like both schools. I like anything that could be considered good economics. I'm an economics major and my favorite professor loves Friedman (he literally loves Friedman).
That said, the Austrian school is superior in some ways because:
1. Austrians emphasize a theoretical and/or praxeological approach over a positivist approach. This is simply a stronger approach, no ifs or buts about it. By starting at the root level with methodological individualism, Austrians build very strong economic theories with very few weakpoints in them.
2. Austrians do not throw in random calculus equations into their economic models. Most economists agree that mathematical economics is practically useless in the real world - though it sure as hell is fun if you like math.
That said, I find that the main weakness with the Austrian school does not have to do with the Austrian school itself, but with its adherents. Many Austrians are very, very ideological. Tyler Cowen makes a good point about how many Austrians, even academics, seem to be following a religion. It would be nice to see more open, friendly debate among Austrians who disagree with each other (e.g. Lawrence White and Roger Garrison vs. practically every other Austrian) than the blindsided attacking that seems to be going on now.
Personally, though I am political, I love economics for what it is as a science. As such, I love embracing new theories and mulling them over in my head, even if I don't fully agree with those theories. I have investigated Keynesianism in all of its forms, and I will continue to do so. I have investigated monetarism, neoclassicism, etc. in all of its forms, and I will continue to do so. One of my favorite Austrian economists (now dead) is Ludwig Lachmann, who took many contrarian positions. Others who I like - e.g. Garrison, White, Selgin - have also taken positions contrary to the mainstream of Austrian thought. I enjoy such inner debate and I think the Austrian school would greatly develop if more Austrians genuinely investigated genuine ideas within the Austrian school as well as outside of it.
hugolp
12-11-2009, 03:39 AM
I think the main difference is in monetary policy. Chicago school advocates inflation as a way of increasing aggregate demand whereas Austrians want a gold standard or free banking. I'm not convinced that a 2% inflation rate is bad for the economy but I definitely don't think that the Fed has enough knowledge to know where to set the interest rates. It's obvious to me that the Fed policy has been too easy over the last decade which caused the bubbles, but I'm not ready to go as extreme as the Austrians are on the issue yet, and say that monetary policy cannot be helpful in the long run.
Historically, once the people gives away to goverment the control over money it allways leds to inflationary policies. Allways. I dont understand how monetarist can go arround ignoring history and pretending that some day goverment is going to behave responsably once it thas the control over money.
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