Is Austrian Economics Falsifiable?


1) Falsification requires the failure of an empirical test, sufficient to contradict the theory. The purpose of falsification is to require us to rely on evidence that is unobtainable by our senses alone, and independent of the frailty and error of the mind and its perceptions.  None of the criticisms above pass this criteria. 

2) That austrianism, or any body of work, contains insufficiencies is not the same as it whether or not it contains errors.  The failure to see the stickiness of prices is a natural consequence of micro analysis.  Just as the failure to see cognitive biases and irrationality are a natural consequence of macro analysis.   The value in micro analysis is that it correctly informs us as to the behavior that will result from incentives. So it is perhaps best to understand that we need both macro and micro analysis (top down and bottom up).

3) Austiranism (as ten basic principles:… )
makes only one significantly controversial premise: the theory of the business cycle: that government actions increase the severity of necessary experiments and corrections we call booms and busts. Competing interpretations (Keynesianism and Modern Monetary) assert that the economy is a perpetual motion machine that is possible to universally correct with good policy.

4) Praxeology contains both stated and unstated propositions.  The stated proposition is that the incentives of the rational actor are deducible from the incentives available to him.  The unstated proposition is that by exposing these propositions, it becomes visible when and where involuntary transfers of property are occurring.  It is the latter statement that is of value to the libertarian movement because a) humans detest involuntary transfer, even if their construct of property varies   and b) the progressives use involuntary transfer to fund programs which the libertarians object to.  c) all involuntary transfers can be enumerated as thefts, and as thefts, the state may be attacked as a system of legitimized theft.

5) Most of the comments by others in this thread, confuse Rothbardianism libertarianism, or Misesian Praxeology, with austiranism.  While it may be true that Mises followed Menger, and Rothbard relied upon Mises, Rothbard’s assertions are  an attempt to restate the church’s Natural Law in the defense of property rights in order to preserve individual freedom, and to demonstrate the exploitation that will occur whenever we empower the state. While Rothbard does attempt to address the business cycle that is the central tenet of austrian economic argument, it is not clear that he added anything to the debate.  Rothbard was an ANARCHIST. and Mises was a CLASSICAL LIBERAL.  Rothbard however did not succeed. He effectively prohibited all organizations and their ability to add additional rights an obligations to personal property rights which would disallow privatization of the commons (“Cheating”). (An argument that is too technical for this forum but which I’ve addressed elsewhere.)  It required Hans Hoppe to finish Rothbard’s political work, and provide us with a solution to the problem of bureaucracy.  Hoppe succeeds in replacing the bureaucracy with private institutions where Rothbard only placed a universal moral ban them.

6) Caplan’s “Why I am Not An Austrian” is a political piece that I have criticized elsewhere.  One should see this piece as a complaint against the Rothbardian wing’s attempt to hijack Austrianism for its political ends, more than an attack against Austrian economics.   To quote:

“My equation of Austrian economics with Mises and Rothbard rather than F.A. Hayek is bound to be controversial.”  -Caplan

Caplan (and the entire George Mason group), consistently express frustration that the anarchists have been ideologically successful and have intentionally conflated anarchism and austiranism such that austrianism’s dependence upon classical liberalism has been lost in the popular vernacular.

Caplan’s argument must be understood in this context. Unfortunately the rather weak conflated argument he puts forth in his essay has posed a bit of trouble for all of us, myself included.  Since the article is mis-titled.  It should be “Why I am not a Rothbardian Praxeologist”. 

I am a supporter of Caplan’s work (particularly his new work on education).  But as I am the only theorist trying to resolve this conflict by extending praxeological analysis to preserve the insights of both the anarchic and classical liberal wings, I find the use of Caplan’s essay unhelpful and confusing to the general reader.

I hope this somewhat clarifies the topic for readers here, rather than muddying the waters further.  There is a place for both micro analysis and it’s emphasis on prohibition of involuntary transfers in order to create a natural aristocracy, and macro analysis and its emphasis on maximizing involuntary transfers in support of redistribution in order to create communal egalitarianism.  These two ends of the spectrum promote different choices, not truths.  There are certainly statements within each set of preferences which can be subject to tests of truth. But the collections of statements we categorize as macro and micro, because they promote subjective preferences, are not subject to tests of truth or falsity.

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