Thursday, 10 February 2011

Austrian School - Baby of the Far Right?

I've written before about how the Austrian economics school seemed wrapped up with the far-right. I also mentioned that the extreme free-marketeering Mises Institute couldn't run as a business and had to exist off of charity - receiving large donations from one wealthy backer whom also supported the extreme far-right with substantial donations.

Whilst looking into the Austrian school I came across a great page of critiques, one of which had a very interesting mention of the Austrian school and the far-right, alongside its stinging criticism:
The Austrian School of Economics is a tiny group of libertarians at war with mainstream economics. They reject even the scientific method that mainstream economists use, preferring to use instead a pre-scientific approach that shuns real-world data and is based purely on logical assumptions. But this is the very method that thousands of religions use when they argue their opposing beliefs, and the fact that the world has thousands of religions proves the fallibility of this approach. Academia has generally ignored the Austrian School, and the only reason it continues to exist is because it is financed by wealthy business donors on the far right. The movement does not exist on its own scholarly merits.
So, financed by 'wealthy business donors on the far-right'. I find it ironic that their message is an extreme sort of economic free-market darwinism, yet they rely on donations (from the far-right!) Yeah, right. Nice work if you can get it?

An ineteresting collection of threads - Mises Institute, Austrian School, wealthy far-right business funding - and its proponents and fans - Ron Paul, Alex Jones, Ryan Dawson, Rivero(ish - who knows what Rivero really digs? He'll even pretend to a bit of socialism when it suits him.) all that jazz.

That site goes on and the criticism of Austrian school is very good - though obviously theAustrians would completely reject it, I suppose:
Mainstream economists dismiss the Austrians as cranks. Nobel economist Paul Samuelson wrote that "I tremble for the reputation of my subject" after reading the "exaggerated claims that used to be made in economics for the power of deduction and a priori reasoning [the Austrian methods]." Noted economist Mark Blaug has called Austrian methodologies "so cranky and idiosyncratic that we can only wonder that they have been taken seriously by anyone."
Haha. That's quite a blast.

Aside from the technical criticism, this is of interest:
For most of the Austrian School's history, mainstream academia has simply ignored it. Even today, none of its works are on the required reading list at Harvard. Most introductory economics texts don't even mention the school, and its economists are absent from many encyclopedias or indexes of the century's great economists. Several of its founding figures struggled to make ends meet, rejected by universities which did not view their work as sound. Even today, the movement's faculty boasts no more than 75 scholars worldwide. By comparison, there are over 20,000 economists in the American Economics Association alone. Their failure to rise in academia has not been for want of publicity -- on the contrary, their leaders have been publishing books for over 120 years, all the while bumping elbows with famous economists like John Maynard Keynes. And after Hayek shared a Nobel Prize in 1974 for a contribution to monetary theory, the school received a huge burst of academic attention. But it was just as quickly rejected. Their dismal showing in academia stems from the fact that they have simply failed to make their case.

In classic crank tradition, Austrians have a conspiracy theory to explain this failure. In an essay subtitled "Ignorance and the Universities," Austrian professor Patrick Gunning writes:
"The aim of this essay is to try to explain why positivism [the mainstream approach] has succeeded in professional economics, while subjectivist economics [the Austrian approach] has failed. It… identifies two main reasons for this phenomenon. The first is that ordinary people cannot tell the difference between good and bad economics. The second is that the training ground for professional economics is the university. In modern times, the university is more likely than not to be funded by the government. In a democracy, government funding implies a competition for funds and bureaucracy. Both of these characteristics favor positivism."
Today the Austrian tradition is kept alive by the Ludwig von Mises Institute, a think tank financed entirely by wealthy business donors. It is part of a broader phenomenon, the explosion of far-right think tanks in the last 20 years, funded by such conservative and libertarian donors as the Bradley, Coors and Koch family foundations. These foundations have poured hundreds of millions of dollars into the creation of an "alternate academia" of right-wing think tanks, after the failure of mainstream academia to support right-wing dogma. This alternate academia comes complete with extensive media ties to publicize their research, which is why Austrians are so frequently found on conservative talk radio. Austrian economist Israel Kirzner describes the critical role that their primary backer, the Foundation for Economic Education (FEE), has played in the "revival" of Austrian economics:
"It was their vision which brought Ludwig von Mises to FEE at a time when he was, to put it mildly, all but ignored on the academic scene. It was through the resources of FEE, its skilled use of the tools of communication and public education, which ensured that Mises' message would survive."
Very interesting.

Their criticism of Austrian economics is good. Several of the criticisms are of Austrian positions which are akin to religious claims - which is doubtless part of why it seems to appeal to conservative christian folk - rich and poor.

Here's a very good page on criticism of Austrian economics (Ron Paul, Mises, Lew Rockwell etc)

No comments: