2012-08-24

My Oddball Austrianism

There are only two kinds of music: good and bad.
-- Apocryphal quote commonly attributed to Duke Ellington

I first encountered this quote at about the age of twenty while trying to talk a couple of local musicians into joining my band. They didn't, but the quote always stuck with me. As John J. Kafalas notes, even though the quote may not really have come from Ellington, it doesn't matter who originally said it. It's simply something true about music.

It is also something true of other things, and by "other things," I mean economic theories.

There are really only two kinds of economic theories: good ones and bad ones. As much as the economics blogosphere features passionate ideological debates between competing schools of thought, a lot of this really just comes down to squabbling among in-groups. What I mean is, if we're talking about science and truth, it doesn't matter who "wins" the squabble. All that matters is reality, the truth.

While I like to call myself an adherent of Austrian School economic theory, as the years go by I become progressively more aware of the differences between my feelings on Austrianism and the feelings apparently held by the majority of self-described Austrian School economists. Holding a heterodox view of an already heterodox discipline elevates the absurdity of all of this to unbelievable levels, but the fact remains: I am not your garden-variety Austrian adherent.

In truth, though, my economic views are closer to orthodox than they are to heterodox. I believe in any theory that is theoretically sound and has strong predictive value. What this means is that I reject things like the Keynesian income identity, because it is circular reasoning; and I embrace things like the Austrian Business Cycle Theory, because there are no logical reasons to believe it isn't true.

I am not one of those Austrian School economists who discount everything every Keynesian or Monetarist or whatever may happen to say, simply because it isn't Austrian. If Greg Mankiw or Paul Krugman says something that makes sense, it makes sense. If Amartya Sen demonstrates something that is undeniably true, then that's what it is. It doesn't matter which in-group these folks happen to belong to. Truth is truth.

But that also means that I don't discount things like heterodox Austrian School economics simply by virtue of the fact that it's heterodox.

One thing is for certain, I am not at all interested in choosing sides among competing in-groups. If something is true, I am more than happy to accept its truth - by virtue of the fact that it is true, not because it happens to be a prevailing opinion.

Therefore, unlike many other fans of Austrian School economics, I accept some theories and concepts from outside the Austrian school. And unlike many fans of more mainstream economic schools of thought, I accept those aspects of the Austrian school approach that are undeniably true. But I am out-growing the idea that, e.g. Ludwig von Mises was a radically different economist than his peers. Instead, I simply view him as a brilliant economist. His ideas are correct as far as I have been able to determine.

But that is a fact about Mises, not a fact about "Austrian economics." There are only two kinds of economic theories: correct ones and incorrect ones.