Austrian Economics: Some Questions

Some proponents of Austrian economics (particularly those of the more severe Rothbardian and Hoppe-ian (Hans-Hermann Hoppe) bent) argue that the advantage Austrian economics has over other forms of economics is that, since Austrian economics is logically deduced from a priori axioms, its truth is known even in the absence of empirical evidence.

Now, if indeed all of Austrian economics is deducible from a set of a priori axioms (which I doubt, since I know of Austrian economists, like Ludwig Lachmann, who use empirical methods), I have the following questions:

  1. I’ve never seen an Austrian economist manage to provide a complete list of all the axioms of Austrian economics. Typically they point to only one, the axiom of human action, but of course one assumption is incapable of proving anything. (For example, if I assume that the sky is green, I can’t prove anything not tautologous to “the sky is green” without introducing another assumption.) Without such a list, how is it possible to argue that Austrian economics is all deducible from these axioms?
  2. Relatedly, I’ve never actually seen a formal logical proof provided for any claim of Austrian economics. I’ve seen arguments, I’ve seen arguments that use deductive logic, but there’s a reason logicians (and philosophers and mathematicians) use formal logical proofs: they make it easy(er) to demonstrate that no hidden assumptions slipped in, and that no fallacious reasoning took place. Particularly, they make it possible to ensure that all theorems proven follow from the axioms and other theorems proven from the axioms.
  3. Moreover, provided some such exact and finite list of axioms existed, why are there no attempts to prove consistency? Any axiomatic system that wishes to produce theorems (true statements) distinct from false statements must first demonstrate that its assumptions are consistent, that is, they do not in some way contradict each other. I’ve never seen this done for Austrian economics, no doubt due to the lack of such a clear and precise list, but if somehow the axioms aren’t consistent (and this isn’t always obvious!) then they could be used to prove literally any statement.

Notice, I’m saying “I’ve never seen” instead of “does not exist.” I’ll admit, I’d be very surprised to find out that such things do exist, because I have read (most of) Human Action and a number of other Austrian books and have never encountered any mention of them. But I’m more than welcome to be corrected (also why the above are questions, not statements.)

My point being: in the absence of any one of the above three (list of axioms, logical proof, consistency), any claim that Austrian economics produces logically necessary truths is simply baseless and premature. That’s not say it is wrong — Cantor’s set theory was largely correct in its conclusions, despite the inherent instability of its construction (notably, the contradiction derived form considering the set of all sets.) Nonetheless, Cantor’s system was not capable of making any broad claims about necessary truths: after all, his theory was contradictory. Equally, without positively demonstrating 1, 2, and 3 above, there is a possibility that Austrian economics is self-contradictory, in which case it requires substantial architectural revision if it wishes to be respected as an axiomatic, logical system.

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6 thoughts on “Austrian Economics: Some Questions

  1. Austrian Economics is more of a philosophical idea rather then a rigorous, emperical system of analysis. Though there are evidence of Austrian notions to be true in very simple cases. When dealing with the Marshalian cross (supply and demand) model in a perfectly competitive market, buyers and sellers are better off with no government intervention (regulation, taxes). The issue comes in to effect when applying this simplification across all economic industries. That is where we saw that most industries are Oligopolies, Monopolies or Duopolies. So the basis of Austrian economics comes in to question then.

  2. I don’t disagree that Austrian economics is more philosophical than empirical: indeed, if their claims regarding the a priori truths of Austrian economics are true, it is then entirely non-empirical. My questions relate more to its status as a logical, axiomatic system (non-empirical by nature.) It is in that situation that my questions regarding the ability of Austrian economists to prove their claims — namely, that the truth of Austrian economics is a priori — come into play.

    But I don’t dispute your points at all.

  3. Interesting view. As an Economic consultation firm we see the practical value in economic analysis. We utilize it to optimize small business and increase their productivity, but we would think that any economist, be it Austrian or not, would need to have extensive evidence to justify their claims. Without the evidence economics is reduced to an idea and an idea can be debated based on its plausability rather than its possibility. This is probably the path your post was taking. Nevertheless, a very interesting read.

  4. Yeah, I strongly agree that economists should be based on strong empirical evidence — that’s why I prefer Steve Keen, say, to most Austrians. But I’m also a mathematician and logician, so the somewhat unbelievable claims made by Austrians befudle me sometimes.

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