Comments (19)

• Richard Garner

  Hmmm, I was hoping Mises would have mentioned Rothbard's views on monopoly and on "value free economics," the principle areas that Rothbard deviated from Mises in this book at least.

  Published: March 18, 2009 11:09 AM

• to Richard

  Im sure he will read your comment and add those sections :P

  Published: March 18, 2009 3:53 PM

• pbergn

  Disagree with the premise that Mathematical equations cannot properly explain the economic processes and their dynamics.

  Mathematical apparatus is very powerful when correctly applied to economic models. In addition, there are several elements of Game Theory that can be successfully applied to Free Market System models, such as the Iterative Prisoner's Dilemma...

  I am amazed that Rothbard and Mises are so critical of applications of Mathematics to the science of Economics...

  They resemble old skeptic sages that believe that everything can be solved by just letting things alone, since, as they are convinced, no human can completely comprehend the laws of Economics and the nature of Human Action...

  I think while this approach works better than bad science, such as incorrect Mathematical models, it is very limiting in a sense that it does not stimulate or encourage any rigorous or scientific approach to the matters of Economics. I find that very sad and disturbing...

  If the leading scholars in other disciplines thought like Rothbard or Mises, there would have been little to no progress at all. Such as imagine Newton thinking that it is sufficient to acknowledge that the applied force seemingly causes motion as frequently observed in day-to-day life, and therefore not trying to establish the exact correlation between change in velocity, mass and the acting force...

  Published: March 18, 2009 7:07 PM

• Nathan

  The problem with the prisoner's dilema is that it is entirely made up. Show me what you see as a real life example of the prisoners dilema and I will poke all the holes you would like in it. There are always errors in assigning value to outcomes and externalities affecting others.

  If you would like a truly accurate and defensible view on altruism and cooperation I would recommend "The Selfish Gene" by Dawkins.

  Published: March 18, 2009 8:02 PM

• Austroglide

  pbergn,

  I'm not an expert in philosophy or methodology. However, it is my understanding that the turning away from mathematics by Austrians is due to the belief that social phenomena are too complex to be studied in the detail necessary to describe cause and effect in mathematical form.

  In other words, too many causal variables are involved, so cause and effect relationships can only be understood on a relatively general level, where precise quantification has no relevance.

  Published: March 18, 2009 8:38 PM

• Peter

  I find it "sad and disturbing" that someone who evidently takes an interest in Austrian economics can't grasp the difference between modelling the behaviour of an unthinking physical force and the behaviour of an acting man.

  Published: March 18, 2009 8:42 PM

• pbergn

  TO: All My Critics

  With all due respect, ladies and gentlemen:

  The human behavior is increasingly statistically predictable, much like any other stochastic or chaos systems.

  Take for example traffic patterns, or better yet, the weather patterns.

  Nowadays there are many good Mathematical computer-aided models that do a pretty good job at predicting the weather or the traffic congestion, as you would agree, I assume...

  Are you telling me that human behavior cannot be predicted on a statistical level, or that certain patterns and traits cannot be identified in Human Action?!

  Well, then you haven't watched movies! In any given movie even a child can identify a particular stereotype of a character based on appearance, manner of speech, facial expressions and the social environment and backdrop...

  I agree that it is very difficult to predict what a given individual would do and why in a given situation, but it is possible with very high precision to tell statistically what a given person with given character traits would more likely do in a certain situation.... Otherwise we would not have had FBI profilers, Intelligence Analysts and Social Statisticians...

  [DISCLAIMER: I am a supporter of Austrian School of Economics and the Free Market Capitalism in general. But I am NOT a blind follower - I am an independent thinker and an individualist, as I would like to think of myself...]

  Published: March 18, 2009 10:52 PM

• Sukrit

  Of course it's possible to have a rigourous approach to your discipline even without math. What do you think philosophers (at least the good ones) do all day? Some of the most profound ideas have been expressed using verbal logic.

  Published: March 18, 2009 11:22 PM

• scott

  Just a thought.
  What would be the purpose of quantifying human action mathmaticly in an economic sence if not to create a basis for developing an "economic policy"? "Economic policy" by its very existence inevitably violates individual liberty by imposing a set of generalized rules for economic behavior. What of the individual that is presented with a set of social and economic stimuli and cannot react in their best interest because the best action to take would fall outside of the mathmatical equations set forth for the "economic policy"?

  Published: March 19, 2009 1:05 AM

• scott

  Just a thought.
  What would be the purpose of quantifying human action mathmaticly in an economic sence if not to create a basis for developing an "economic policy"? "Economic policy" by its very existence inevitably violates individual liberty by imposing a set of generalized rules for economic behavior. What of the individual that is presented with a set of social and economic stimuli and cannot react in their best interest because the best action to take would fall outside of the mathmatical equations set forth for the "economic policy"?

  Published: March 19, 2009 1:07 AM

• scott ayers

  Just a thought.
  What would be the purpose of quantifying human action mathmaticly in an economic sence if not to create a basis for developing an "economic policy"? "Economic policy" by its very existence inevitably violates individual liberty by imposing a set of generalized rules for economic behavior. What of the individual that is presented with a set of social and economic stimuli and cannot react in their best interest because the best action to take would fall outside of the mathmatical equations set forth for the "economic policy"?

  Published: March 19, 2009 1:17 AM

• scott ayers

  Just a thought.
  What would be the purpose of quantifying human action mathmaticly in an economic sence if not to create a basis for developing an "economic policy"? "Economic policy" by its very existence inevitably violates individual liberty by imposing a set of generalized rules for economic behavior. What of the individual that is presented with a set of social and economic stimuli and cannot react in their best interest because the best action to take would fall outside of the mathmatical equations set forth for the "economic policy"?

  Published: March 19, 2009 1:19 AM

• scott ayers

  Sorry.
  Was getting server time out errors.
  Posting from Blackberry.
  Please forgive the multi posts.

  Published: March 19, 2009 1:28 AM

• newson

  scott says:
  "What would be the purpose of quantifying human action mathmaticly in an economic sence if not to create a basis for developing an "economic policy"?

  precisely. check out the obituary for sir john cowperthwaite, and his thoughts on economic data-gathering. a wise man, indeed.

  Published: March 19, 2009 1:42 AM

• newson

  sorry, forgot the link.
  http://www.cato.org/pub_display.php?pub_id=5432

  Published: March 19, 2009 1:45 AM

• DFallon

  Pbergn,

  Here is the major portion of the economic question:

  How to compare heterogeneous resources for production, choose among myriad methods and combinations for creating an inestimable number of possible goods and services that meet the gazillion incongruent demands of billions of people, while being confined to the reality of evolving scarcity with limited current -and no future- knowledge of an ever changing environment and demand… in the optimal way?

  Before you take the 'that was then, this is now' approach to the possibility of mathematical economics etc. overcoming the calculation objections of Austrian econ, please read the following short (very short) pieces by Mises:

  http://mises.org/journals/qjae/pdf/qjae3_1_2.pdf

  http://mises.org/journals/jls/1_2/1_2_2.pdf

  What aspects of Mises's logic do you disagree with specifically?

  Cheers.

  
  

  Published: March 19, 2009 5:10 AM

• Austroglide

  pbergn,

  I'm not criticizing you.

  "Take for example traffic patterns, or better yet, the weather patterns."

  The economic meltdown was the weather equivalent of a category 5 hurricane. The Austrians predicted it, the Keynesians called for scattered showers. The Keynesians, with their insistence that statistical correlation is synonymous with causal connection need to rethink their methodology and rethink their career as economic weatherpersons. The Austrians deserve a big promotion.

  
  "Are you telling me that human behavior cannot be predicted on a statistical level..."

  Yes

  Published: March 19, 2009 8:21 AM

• C [the forgotten man]

  It sounds like Mises is describing Krugman! How did he know?

  @pbergn:

  As a practitioner and former researcher in psychiatry, I would second Austroglide's concern about the difficulty of predicting human behavior. Statistics can be useful for comparing events that have already occurred, when you have large enough pools of aggregated data on individuals. But even then, the power to interpret (using the strict statistical definition of power and confidence intervals) is based on some very significant assumptions about the variables being examined, and even in the best of "controlled experiments," the interpretation of results must be cautious, because there are so many unknown variables that can affect outcome. This is why experiments must be replicated several times to be convincing.

  In economics, the opportunity to design a "controlled experiment" is essentially non-existent, and would be terribly unethical to do on a macroeconomic level. And the vast array of variables that need to be controlled approaches infinity. The best we can have in that regard are the "natural experiments" of comparing past systems, such as soviet communism, german fascism, japanese corporatism, and our modern "mixed economy" in the west. But in the medical and social sciences, such "descriptive studies" are considered rather weak support of a hypothesis, and should be the basis for designing a "rigorously controlled experimental study" to more definitively support the hypothesis This is why economics cannot ever be a predictive science, the way physics is.

  Even in physical sciences, such as meteorology, the variables can get so complex that the predictive power becomes very poor. Witness the present controversies about climate change, and the great latitude and errors in the probability in daily forecasts locally.

  Human behavior, both in the individual, and in the aggregate, is far too complex to model with enough predictive accuracy to relinquish our individual autonomy to central planners and their "scientific models." It matters not whether we are talking about economic behavior, violence, love, or any other aspect of human thought and action.

  Greenspan once said something like, "just because the Feds models have been wrong for 11 of the last 12 quarters, does not mean they won't be right this time."

  Published: March 19, 2009 9:31 AM

• James Redford

  Hi, pbergn. Actually, Prof. Murray N. Rothbard pointed out that economic science is solidly in the domain of discrete mathematics. Its ratiocination is logical in nature: but discrete and not continuous. The assumptions which must be made in order to attempt to apply calculus to economic issues are non-veridical.

  For Prof. Rothbard's discussions on these matters, see pp. 75-76, note 27 on p. 130, and note 1 on p. 324 of Murray N. Rothbard, Man, Economy, and State: A Treatise on Economic Principles with Power and Market: Government and the Economy, Scholar's Edition (Auburn, Alabama: Ludwig von Mises Institute, second edition, 2009; originally published 1962). http://mises.org/books/mespm.pdf

  And in note 40 on p. 553 of the same work, Prof. Rothbard cites pp. 106-16 of Ludwig von Mises, Human Action: A Treatise on Economics (Auburn, Alabama: Ludwig von Mises Institute, 1998; originally published 1949). http://mises.org/humanaction/pdf/HumanActionScholars.pdf

  Prof. Rothbard himself had a Bachelor of Arts degree in mathematics from Columbia University; as well as a Ph.D. from the same university in economics, of which required knowing the calculus inappropriately used in those courses.

  Published: March 20, 2009 3:17 AM