Answer all questions.
1. In which ways is the economics mainstream becoming more Austrian? Less Austrian? Discuss, using specific examples.
2. Which idea in Austrian economics has been most neglected by the Austrians themselves? How might it be applied to resolve some outstanding economics questions, puzzles, or issues?
3. One of Hayek’s main criticisms of Keynes was that his economics was overly aggregated. In the intellectual defeat of Keynes, Robert Lucas argued that by consistently applying the microeconomic foundations of macroeconomics would correct for the failures of Keynesian economics. First, what is the common ground between Hayek and Lucas? Second, what are the main points of disagreement between Hayek and Lucas?
4. Ludwig von Mises argued that rational economic calculation under socialism was impossible. Explain Mises’s argument and the debate that emerged surrounding it. What are the strongest points of the argument? What are the weakest points in Mises’s argument? Does the argument possess any relevance today given that socialism as a policy option seems to have faded from history (or has it)?
5. Pick 1 of the following areas and explain the contributions that Austrian economics has to offer in addressing the contemporary policy question and/or contemporary literature:
a. The failure of development aid in Africa;
b. The housing bubble and the subprime mortgage crisis;
c. Antitrust policy and Microsoft;
d. The situation in Iraq;
e. The problem with failed and weak states.
6. What do you understand to be the relationship between praxeology and catallaxy? Is catallaxy reducible to praxeology, or is the relationship more complex; and if it is more complex how would you characterize that relationship? Action is a praxelogical category, but such things as prices, contracts, and organizations are catallactical, as these are not phenomena that would be recognizable to Robinson Crusoe.
7. In your opinion what are the main virtues and vices of the Austrian school of economics.
8. Bruce Caldwell titled his intellectual biography of F. A. Hayek, Hayek Challenge. What does he mean by that? What are the continuities and discontinuities in Hayek’s long research career?
9. In Frank Knight’s review of Mises’s Human Action he states that while he agrees with Mises on method and more or less on policy implications, that Mises’s book is ultimately about a unique approach to capital theory and that he could not follow Mises in that regard because the Austrian theory of capital is flawed. Make sense of Knight’s positive claim about Human Action being a book about Austrian capital theory, and critically discuss his claim about why the theory is wrong.
10. Several of my colleagues and your teachers have forcefully argued that Austrian economics is either fundamentally flawed or outlived its usefulness. Reconstruct their arguments and formulate an effective counter-argument to those claims.