What do Keynesian and Austrian economists agree about?

LOL. This question got a healthy chuckle out of me. About the only intersect that I can think of is that they both acknowledge the existence of money and markets. Aside from that, I’d say searching for further intersects is like trying to find common ground between the Phoenix (an imaginary bird with no empirical basis) and a Penguin (an actual bird, but one that “flies” underwater) - they are both “birds” in the broadest sense, but that’s about it. Really the Austrian School is more of an individualistic economic materialist religion that has never borne any actual fruit in the real world other than failure, whereas what Keynes observed and proposed — albeit still in the philosophical sphere that economics occupies — has been repeatedly validated by actual historic trends, policies and events.

Comment from Sean King: "…You do know that the concept of opportunity cost was borne from the Austrian School right? And the marginal revolution? It would be one thing to argue that the Austrian hasn't made any significant advances since its revival in the 70s. I'd disagree with you but I could understand that. But to outright dismiss its contributions to our understanding of markets is irresponsible."

That is a fair critical tack to take with my very brief answer — though I would say that, at least at 30,000 feet, the Austrian School has been more wrong than right in its assertions. At a more granular level, however, Menger, von Wieser et al made some pretty salient observations that did contribute to our understanding and dialogue overall. I don’t disagree with that. But there is a BIG difference between accurately observing certain components in economic forces, events or metrics, and then using those observations to create an overall system that demonstrates predictive efficacy. Big difference indeed — and that is what I was speaking to, because that is where the Austrian approach has failed, and where Keynes has prevailed.

As a separate, more specific consideration of the two issues you raised, von Wieser wasn’t the first to observe or describe opportunity cost…he was just the first to attach a very catchy phrase to it — and one that stuck. As for marginal utility, again it was von Wieser who seems to have come up with a useful term that endured, but this concept is widely accepted to have originated with Bernouilli, was then developed by Menger and his non-Austrian contemporaries, all before culminating in the work of Marshal, von Wieser et al. So I wouldn’t say you can really lay the marginal revolution at the feet of the Austrian school…only that they helped support and expand the concept of subjective valuation.

As for being irresponsible, I don’t mean to be dismissive out-of-hand, it’s just that most of what I have encountered in Austrian-leaning thinking (particularly at the Mises/Rothbard end of the spectrum) has proven itself to be utter nonsense in the realm of real-world policy consequences.

From Quora: https://www.quora.com/What-do-Keynesian-and-Austrian-economists-agree-about/answer/T-Collins-Logan


Trackback specific URI for this entry

This link is not meant to be clicked. It contains the trackback URI for this entry. You can use this URI to send ping- & trackbacks from your own blog to this entry. To copy the link, right click and select "Copy Shortcut" in Internet Explorer or "Copy Link Location" in Mozilla.

No Trackbacks


Display comments as Linear | Threaded

No comments

The author does not allow comments to this entry