What Austrian Economics IS and What Austrian Economics Is NOT with Steve Horwitz
Steve Horwitz, Professor of Economics at St. Lawrence University, explains what Austrian Economics is and what Austrian Economics is not, clearing up some co…
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The price system described here is incredibly simplistic… It doesn’t
account for any of the other phenomena that influence cost or market
demand. Take the diamond market, or ISPs for example. The price of the
good/service they offer is artificially raised by the presence of
monopolies. Oil, on the other hand, is becoming more scarce but the market
demand is still rising.
The claim that you can’t regulate or direct a self-organizing system that
arises spontaneously is laughably false. What if we applied the same claim
to biology? “Well, we didn’t invent human biology. It arose spontaneously
via an undirected process. I guess that means we shouldn’t try to cure
disease.”
What Austrian Economics IS and What Austrian Economics Is NOT with Steve
Horwitz
Individuals rarely fully know the cost of their economic actions — at the
social level. The market itself does not take into account externalities
very well in pricing. When it can — or must — it will attempt to
internalize negative externalities, but even then there are problems with
“weak agency” (i.e. consumer ignorance or disadvantage) and any number of
unwanted effects on non consenting 3rd parties (i.e. social and
environmental). It isn’t just the scarcity of a good that should be
reflected in its pricing. Fossil fuel producers don’t want to be forced to
price the externalities into their products, and often individuals, used to
getting these good at such a price, don’t want to pay the “real” cost of
fossil fuels on the environment. The environment is a social good, not
privately owned, and so its welfare is a matter for the people to manage
through govt. The markets do many things well, but they have a problem with
negative externalities.
“Without private property and [owning] means of production there’s no way
to get prices of goods.”
There are plenty of successful coops that would seem to contradict this
statement. The Mondrigan Corporation, for example, is a large collectively
owned business that has been successful since its creation almost 60 years.
So, it depends on how you define “private property.” The individuals
working at the Mondrigan Corporation own private property, homes, cars,
money, etc. It’s the means of production that are not privately owned. So
the Austrian “analytical proposition” that finds common ownership a problem
in pricing and efficiency would seem to be a non sequitur.
“Markets are spontaneous orders… Fatal conceit: The false belief in the
power of our ability to create and design social institutions.”
Do markets not have rules, regulations, goals? This is just another way of
saying that individuals acting in their “self interest” (now there’s a term
that begs the question) results in desired social outcome. The “tragedy of
the commons” and the “prisoner’s dilemma” have shown that acting on self
interest alone can be problematic. (This is more complex than it seems. The
American “dust bowl” is an example of “tragedy of the commons” and might
have turned much of that region into a dessert if not for govt stepping in.
On the other hand, when people define their self interest in the context of
a social goal, then these tragedies can be avoided. Elinor Ostrom has done
extensive research into the ways communities organize without formal top
down govt. This is where far Left and far Right can merge and become almost
indistinct.)
It seems that Austrian Economics utilizes Linear-Minimalism in that it
looks for a straight forward cause & effect in isolation for how an economy
works. The bare minimum is maintained through market adaptations, based
solely on supply & demand without any arbitrary adjustment made by any
outside force other than yourself & the universe. Basically neither God nor
Gov will intervene, because both interventionary forces have accepted this
Linear-Minimalist Standard of behavior & both expect us to abide by it as
well, without the use of any force.(So everyone is living by
Linear-Minimalism)
Linear-Minimalism results in moral objectivity & the scientific thought,
where unnecessary action does not occur (what some people would describe as
evil & irrational) but how much knowledge/experience a person has & their
choice of whether or not to live or die is completely relative.
Again, Linear-Minimalism is the logical course of action required by the
universe in order for you to survive thrive & create. It is understood as
cause & effect in isolation, creation in loneliness, & individualism. It is
the core principle of Deism, which only deals in Universal Absolutes & our
relationship to them without interference (artificial evolution &
distortion), distraction (ignorance & vice), or prejudice
(false-expectation & entitlement).
Each individual is entitled to what is original to them, to do with the
virgin universe what they will, in accordance to its natural laws & nothing
more.
Linear-Minimalism is also how one logically concludes God exists, because
First-Life was alone in the beginning, without anyone else to sacrifice or
enslave. First-Life is the archetype & architect of the discovery &
practice of this way of living. Otherwise, all life simply wouldn’t exist
because we are talking about the bare minimum of individual creative action
necessary for life to survive, thrive, & create new life without being
destroyed by The Universe or destroying other life in order to satisfy its
laws.
Linear-Minimalism is similar to Occams Razer in that it functions as a
rule-of-thumb philosophy, but is absolutely precise & exact….so it
requires that you think like God instead of a dumbass. Got it?
I hope this give you all some lols, but I just gave you the KEY to the
universe which looks like this |.
Flame on morons.
I’ve never studied Austrian Economics before. Always thought I would get
around to it. But those claims didn’t seem to have a lot of… how do I say
this… utility.
This view is way too rational for the intellectual scientific types who
like to compare everything to their brand of knowledge. This is merely the
most efficient way of trading goods and services.
I think the point socialism (and many others) makes is that ‘wealth for the
most people possible’ can’t just mean economic wealth. Prices as knowledge
surrogates only works with knowledge that can be picked up by the market,
i.e., it doesn’t include knowledge about externalities; it can only pick up
information about scarcity that affects the users of that resource. Taking
oil as an example – the market would only transfer knowledge in terms of
remaining oil reserves, it doesn’t pick up any knowledge of climate change,
oil spills, the propping up of authoritarian regimes in the middle east etc
(unless it directly affects supply). The only way for this knowledge to
affect prices is through demand, and again, that only works if a) everyone
buying the product knows about it (which you said in your video that people
often don’t) and acts on it. So with resources with externalities that are
significant (which I’d argue is basically everything) there is no way for
the market to facilitate creating the most wealth. Expect for some form of
government setting prices and thus some form of limit on private property.
This may be relatively arbitrary (though can be informed by research so
potentially comparably accurate) at least it makes an attempt to include
externalities.
why pro Austrian always say ‘We’ ????
Many “Reply” command are missing. Leftists must have stolen them.
If nobody can control markets, why do we still use oil for energy and not
many of alternatives? Doesn’t the monopoly control markets….
The problem with “economics and fiscal policy” is that it’s applied based
on claimed economic merit, rather than basic principle of individual
sanctity– which applies through extension, to one’s own work-product;
meanwhile the state owns only to the land itself.
Keynesian economics, for example, is based on statist claims of individual
“civic duty to the state,” i.e. the state OWNS the People ala collectivism,
communism, socialism etc, which are no different from prior theocracy, i.e.
an abstract living corporate state, rather than simply a PARTNERSHIP among
individuals. By this logic, the state claims the right of “fiscal policy,”
rather than a “hands off” approach to individual wealth ala free trade.
i put short 4 u: austrians pay more taxes but get more social care… and
we like to drink,…i know that has nothing to do with economy, but I WANT
A BEER NOW!
My theory: trade happens because if i simply give you my invention/tell you
how to make it what’s the incentivise for you to make another invention
that would be good for both of us. hence one says no you can trade me
something you come up with to have what i made… however if i think my
thing is better than other inventions sold then i say make it a higher
price than those things. This is how it’s worked whether people have
realised it or not. Subconsciously everybody knows about free riding. It’s
also why the environment is a good the government must provide because it’s
a public good. Nobody wants to die so saving the planet activity must be
pledged ie taxed (ie the mandatory forced pledging).
Goodness is a actually a better idea than ‘scarcity’. There is zero
scarcity for all digital goods essentially yet these have prices.
Apparently diamonds aren’t rare at all (carbon is abundant) however they
artificially make them scarce just to make the price higher. Celebrities
aren’t scarce it’s just that they’re so good they’re at the top hence there
are few… not scarcity… but goodness.
I like that the video emphasized that Austrian economics is value-free;
however, something important left out is the analysis of the business
cycle. Austrians lay out a complete analysis of the business cycle that is
notably absent from Marx.
However, the did mention the role of prices in the system. I guess it can
be extrapolated what Austrian economics think about price fixing of the
cost of capital (interest rates).
Excellent little video. Short + Sweet
The conclusion from Austrian economics is that we need free markets. It
advocates for free markets. It explains how they work. It explains why
policies like tariffs are bad and causes distortions and DOES advocate the
policy of not having them. It advocates many other reasons for free-markets
therefore it IS free market economics ;).
Steve Horwitz, Professor of Economics at St. Lawrence University, explains
what Austrian Economics is and what Austrian Economics is not, clearing up
some common misconceptions.
Stocks are partial ownerships. If a company wants to expand it sells stock
and uses that money to expand. The stocks are then sold back and forth on
the stock market with their prices dependent on bubbles, inflation,
recessions etc. But then… if that is the case, aren’t stocks just a hoax?
Isn’t the stock market a place for buying and selling money, or should I
say confidence(in paper and digits on screens)? Doesn’t sound like real
wealth. What did I miss?
For those who really want to know what is economics !
*Clear and concise*
*Austrian economics is a series of claims about how markets work, about how
economic systems work*. — Prof. Steve Horowitz
If you’re not already familiar, spend nine minutes to enhance your
understanding.
*Clear and concise*
*Austrian economics is a series of claims about how markets work, about how
economic systems work*. — Prof. Steve Horowitz
If you’re not already familiar, spend nine minutes to enhance your
understanding.