What Separates Austrians from Others in the Science of Economics?

Dan Klein and I will be debating the usefulness of the label 'Austrian' economics tomorrow in the Workshop in Philosophy, Politics and Economics.  I will leave it to you to read the different position statements and make up your mind for yourself.

However, the occassion of the debate has sharpend my appreciation for the 'science wars' that surround economics and the meaning of science as it pertains to the discipline of economics.  Many believe science is about measurement --- if you cannot measure you cannot do science.  If that is indeed your position, then economic 'science' would need to conform to certain standard and any approach that failed to do so would be dimiss as not science.  But of course there are many philosophical difficulties with the science as measurement definition.

I prefer to see modeling and measuring as but one way to pursue science.  Science is not defined by the quest for measurement, but instead the quest to understand the systemic forces at work in the universe -- both the natural and human world.  I am reading at the moment Roger Penrose's The Road to Reality: A Complete Guide to the Laws of the Universe (2004).  Two things are important about Penrose's wonderful book --- first it teaches the principles explaining the order in the natural world through a history of the intellectual quest to find them.  In doing so, Penrose exalts intellectual history as an issue of contemporary relevance for scientific work --- whether he intended to do this or not is not the question.  I personally have always learned by understanding the history of arguments and their evolutionary path, so I find history of thought in political economy central to our intellectual task, not a side issue.  The second point Penrose teaches is that our scientific question is about the forces underlying the order of the universe. These forces bring about the order we see in nature.

Why is this relevant?  Because this is how I view Austrian economics as compared to other schools in the neoclassical tradition. The Austrians share with neoclassical economists the idea that social order emerges out of the choices of individuals.  Where they disagree is that the vast majority of neoclassical economists focus on the state of affairs in that order after all the forces that produced it have done their job.  In short, neoclassical equilibrium theory describes what the human world looks like after all the gains from trade have been exhausted, all plans have been reconciled, and equilibrium has been attained.  The Austrians focus instead on the processes guided by the 'forces' that bring about social order.

Another way to put this is that neoclassical economics concentrates our intellectual attention on the results that emerge once the economic forces at work have done their job, while Austrians focus on examining those forces as they are doing their job.

Comments

[Gabriel Mihalache]

For a second there I thought this was going to be a methodenstreit.
The topic seems OK but compared with my initial understanding, I must admit that I'm disappointed :-)

[Lab_Frog]

Ok, so in your opinion, is Frog wrong on Frog's comment:
While short-term macroeconomics (what most people think of when they think of economics) has no proven models, microeconomics has many theories proven beyond a reasonable doubt. Frog considers the teaching of these proven microeconomic theories of even greater importance than the teaching of biological evolution as ignorance of microeconomics has a greater impact on quality of life than ignorance of evolutionary biology. Also, most evolutionary biology theory was originally based on microeconomic theory as microeconomics encompasses social evolution.
Frog considers testable models to be science, those models that cannot reasonably be tested are mre (but still important) speculation if built off previous "proved" theory).

[Rafe]

After checking out the essays by Klein and Boettke it seems that the term 'Austrian' still has legs because it remains the most identifiable term that is associated with a set of assumptions that self-styled Austrians share with the more enlightened members of neo-classical mainstream. There is a lot to be said for drawing out parallels with biological evolution, and the ecological approach to investigating dynamic systems (the "growth of plants" approach), but not enough to justify a change in the brand name [get the marketing boys to do some focus groups or maybe some telephone polling on that!].

[nn]

I don't know why we can't simultaneously believe that a) much of Austrian and mainstream economics is NOT science and b) there is however useful analysis that is not scientific in the narrow sense of the term.

We shouldn't be trying to broaden the idea of science, we should broaden the idea of useful learning so that rigorous, non-scientific concerns (like mathematical proofs but also rhetoric and analytic economics) are part of the scholarly inquiry.

If it's just marketing, then sure, call it Science. But then, don't be surprised if you get dinged by those who don't accept your definition.

[Peter Boettke]

NN,

But read Penrose's book --- science is not defined solely defined by its method, it is designed just as much by its quest.

Ultimately, I don't really care about the label "science" though I think it is silly to deny that it matters. I have been toying with a book idea for years entited: "Economics as Philosophical Science" (borrowing obviously from Collingwood)--- perhaps I will write that one day.

Pete