Today I came across a recent essay on the economicshelp.org website blog. Although the author describes the characteristics of Austrian Economic theory well enough, the criticisms they list at the end indicate a lack of understanding of the fundamentals of it. Whether the criticisms listed are the author’s or not isn’t made clear. Either way they are misleading and so I took it upon myself to provide corrections.
The criticisms can be read here, and below are my corrections.
1). This criticism can be dismissed. The credit crisis of 2008 is merely further evidence of the failure of government-controlled/regulated markets. Not, as asserted, the failure of markets in general. Only government controlled/regulated markets exist.
2). This can also be dismissed. Taxation IS an impingement on all freedoms. It prevents people distributing the products of their mind/labour as they wish. Also, healthcare is expensive in the U.S. because entry into the market is highly restricted by government. No competition/freedom to enter the market prevents prices being driven down. That healthcare is expensive in the U.S. is only evidence to support the argument AGAINST government control of people’s economic affairs, not for.
3). Austrian economics does not advocate ‘controlling’ of money supply, and so this is not a criticism of Austrian economics.
4). Evidence? Also, post-war government fiat currencies, central banking, government control of the money supply and interest rates, and expansionist economic policies have created the most severe global economic depression in human history. Even if we accept the assertion that a Gold Standard can create ‘severe economic problems’, that still isn’t an argument for the government-induced economic meltdown we are living through now.
4). Too vague in itself to be a valid criticism. Examples needed. I suspect what this is really bemoaning is the fact that Austrian economic theory describes exactly what we should NOT be doing, and actually prescribes very little positive action. People who mistakenly see economies as ‘things’ in themselves to be steered, controlled, managed and tinkered with cannot comprehend such a theory.
5). It is utterly absurd to describe Austrian Economic ‘prescriptions’ as ‘nihilistic’. It is the ONLY theory of economics that holds the life of the individual as worth anything at all, as it’s the only one that does not deny self-ownership. All other theories that are built on the assumption that government force is necessary for society to function hold the products of the minds of individuals (alive and yet to be born) to be the means to the ends of the imaginary entity known as The State. When government borrows money secured against the future earnings of unborn tax payers and repeatedly prints money they demonstrate an utter contempt for the well-being of those individuals because they know what their actions will lead to: inflation, higher taxes, and much lower levels of general prosperity.
Austrian economics isn’t mainstream because it disproves Keynesian economic theory and therefore invalidates the virtue of everyone who has and is benefiting most from the governments’ control of people’s economic affairs – i.e. politicians and their cronies, public sector workers and corrupt corporations. It is attacked and vilified, and not taught in state schools or mainstream colleges, precisely because it exposes their immorality.