(re-blogged from no-treason)
Friedman alleges that the person who wrote the short quiz (long quiz here) is either misrepresenting the Chicago school or doesn’t know what he’s talking about. I can’t speak for the other contributors, but I’ll defend the three questions (on interest, method, and economic value) that I wrote.
1) I said that the “Chicago” (but actually, neoclassical) position on interest is that it’s due to the marginal productivity of capital, and that in equilibrium a consumer is just indifferent between consuming now or waiting another time period and consuming the greater amount due to capital productivity. This is certainly the standard position that everyone at NYU had, including neo-Keynesians and Chicago-educated general equilibrium theorists. It’s also consistent with the canonical treatment of Irving Fisher, who M. Friedman said was the greatest American economist (or something like that). My dissertation at NYU was in capital theory, and my mainstream committee members (including Boyan Jovanovic) couldn’t understand the Austrian position which said that interest was NOT about marginal product of capital. So I really have no idea where D. Friedman is coming from, unless he got so pissed at the other questions that even this one set him off.
2) On methodology, I refer D. Friedman to the Mises Institute’s own blog, where the founder the Polish Mises Institute has gone through M. Friedman’s essays in positive economics and shown the affinity to the natural sciences. Now, if D. Friedman just meant that even physicists don’t exactly follow the Popperian story when doing their science, OK, fair enough. But if he’s objecting to the Austrian claim that mainstream economists try to ape physicists, all I can say is that I’ve talked with plenty of mainstream economists who rip Austrians for not being “scientific” in just this way.
3) On Alfred Marshall: Since I’m going to teach Marshall to my kids in History of Economic Thought in a few weeks, I would appreciate D. Friedman telling me just how I’ve misunderstood Marshall’s famous “scissors” analogy. I’m not being sarcastic; I really want to know.
The quiz isn’t designed to trick anyone or misrepresent anyone’s views. The phrasing of the answers is open to revision.
Posted by Robert Murphy
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