2010-10-08

A Bit About Austrian Relevance

The excellent Jonathan Finegold Catalan makes a point about math and the Austrian School (emphasis in the original):
There is a lot of discussion, even within Austrian ranks, on the merit of econometrics, including the use of empirical evidence and mathematics.  I am not sure what the debate is about, because Austrian methodology is not really opposed to the use of statistics or mathematical formula,depending on the intentions of their use.
Catalan rightly points out that the Austrian School doesn't oppose math, but rather the tendency of modern economists to replace economic theory with mathematical derivation. This is an important stipulation.

It got me thinking about the relevance of the Austrian School in general. There is no question that we are outside the mainstream of economics - the question is simply why? Catalan suggests we need a new thinker to write another treatise on par with Human Action, or Man, Economy, and the State.

On the contrary, I think the last thing Austrian economists should do is engage in more navel-gazing and introspection. I think it's incumbent on Austrian School economists to engage modern theories point-by-point. We need to participate in ongoing discussions, rather than sitting back and lamenting that the whole universe has it wrong.

I think we also need to spend some time away from macroeconomics. This is the bread-and-butter of the Austrian School, but it is also the arena in which the Establishment has the most arguments against us. Far better to delve into rich microeconomic discussions and tackle new theories from outside the Austrian School. Perhaps Austrian economists should also think about endorsing theories posited by non-Austrians that are entirely Austrian in nature (Caplan? Kling? etc...)

Participation is how we will start to be taken more seriously.