[Economics] Keynes vs. Hayek

Austrian economics is pseudo-economics. They believe in their hopey-wishy "motivations" of individuals, from whence they derived from no one knows, since they disavow statistics or testability of their theories.

Austrian economics can be summed up as such---"Humans are too complex. We don't really understand the market. We can derive logical processes with our non-scientific method, but more or less, we should just leave it alone because it can never be fully understood."

Mainstream economics has long since absorbed whatever it could from the Austrian school and then cast it into the "irrelevant" pile.

To call Keynes vs. Hayek the "fight of the century" is thus very inaccurate.

There was a time in the early 20th century where Austrian economics still held sway, but ever since the advent of the 1950s, Austrian economics has been outside the mainstream of economic thought.

In this century, the main philosophical conflict in economics is between the neoclassical "non-interventionists" and monatarists like Milton Friedman and "interventionist" spending Keynesians and neo-Keynesians like Krugman. Even more recently, the main conflict could be defined as follows---saltwater (institutions near the sea such as the Ivy League which believe in strong government intervention) vs freshwater economics (institutions such as the University of Chicago, fabled for its' free-market gospel).

However, economics is all about change and synthesis. Now, there's a slow synthesis between neoclassical ideas and Keynesian ideas that take the both of best piles and are slowly working out a better framework. Of course, you'll have people like the Austrians chirping, but they're largely ignored (it should be noted that both Friedman and Krugman avidly attack Austrian economics). This is because mainstream economics has long since embarked on a path of rational science and statistics to define problems and solutions, which Austrians disavow, and for which many mainstream economists deride them for doing so.

As Mankiw put it...

 

and how's that working out for us?

 

Selma Hayek wins, hands down!

 

uniiiiibrowww....

 

Keynes = English
Hayek = Austrian

English = American suck-ups
Austrian = Germans who lived in Austria during WWII

Whose ideas do you think the US government will listen to?

Just saved you years of painful study in both economics and history, and I didn't have to charge you.

 

The fact that anyone equates Hayek and Keynes is absurd. Austrian "economics" is a fanciful and overly simplistic study of behavior. Its not economics in any way at all. It's a dumb logic exercise where you play 5 degrees of separation and eventually you make it back to "the market will solve it."

That stuff should stay in the trash bin. It was thoroughly repudiated in the 40s, there's no reason to mention it in conversation ever again.

 

Seriously, I don't know what's up with the advent of Austrian economics again.

To me it's like Dr.Phil all over again. You create a pseudo-science around a bunch of nothing, and for some reason it pops up in the collective mind as something worth discussing.

The fact that economics should be empirically based and use statistical models is a fight long since won. To say there is a conflict between Keynes and Hayek is to say there is still a conflict between Galileo and the Church or between "round-worlders" and "flat-worlders".