Market demand determines the value of everything. A square wheel has no value whatsoever, save for the price it can be sold for as scrap, or as a collector's item.
Carl Menger
invented subjective value and almost single-handedly stamped out the labor theory of Smith, Marx,
et al.
It is both amazing and sad to see modern "Austrians" giving lip-service to Menger while simultaniously, and apparently obliviously, turning away from subjective value.
Question #8 of
my questionaire reads:
8) Which of these quotations about the capital structure do you agree with?
a) “There is no clear basis for the choice of weights for the PPI, comparable to the market basket that gives the weights for the CPI. As a result, there is much less interest in the monthly value of the PPI.”
b) “The consumer’s good is always the 1st order, regardless of how far back we push the analysis, even if we go back to axes carved by prehistoric men.”
c) “The perspective that we want is from right now, at time zero, looking forward into the future. Thus, the Distribution of Wealth over the Capital Structure is defined from zero to positive infinity.”
I thought that this was a
total gimme question! No mainstream economist will embrace the ignorance implicit in choice "a" and no Austrian will support Robert Murphy (choice "b") against Carl Menger, the founder of their school, I reasoned.
But, in fact, the stats so far are:
a) Mainstream. 24%
b) Austrian. 43%
c) Axiomatic. 32%
(Note: Every time someone takes the quiz, the order of the answers changes. So a, b and c are arbitrary labels.)
Menger, Mises and this author are the only truly subjectivist economists.
I can't even determine what [the Austrians'] core beliefs are.
Nobody can. That is because they have no leadership. This is the point that I was trying to make in my paper,
War between the Mice and the Weasels.
I advocate that the ethnic term "Austrian" be abandoned. In the conclusion to my
Critique of Austrian Economics I write:
"Austrian economists (by nationality – they were not a school until Hayek’s famous lectures) were already weak by 1930. Menger was good. His 1871
Principles of Economics (1981) is one of the most important economics book ever written. But, with the publication of Böhm-Bawerk’s 1889
Positive Theory of Capital (1959), Austrian economists split into two branches. Menger did not find a worthy successor until Mises and together they laid the groundwork for the Axiomatic School founded by this author (1999). Meanwhile, Böhm-Bawerk was laying the groundwork for what would become the Hayekian School. This branch has grown progressively weaker all the way up to 1990. We found only
problems with it while the legacy of Mises contains
some good ideas.
"Hayek lost his debate with Keynes because he saw that 'it would be open to us to deal with the difficulties by the aid of higher mathematics' (1967, p. 43) but chose the easy way out instead...
"The
introduction of the DWCS has greatly strengthened the Hayekian position. If they follow through with these ideas they can have a viable theory. In return, I ask that they stop describing their theory as deductive and based on the platitudinous action axiom. The use of words like 'deduction' and 'axiom' is inappropriate for people who have not provided a clear and concise statement of their postulate set. Kolmogorov had it easy – mathematicians were already familiar with axiomatic systems like geometry, so the only question put to him was whether his particular postulate set was an adequate foundation for the theory of probability. But with Debreu’s breathtaking dismissal of the real world on one hand and Hoppe’s catch-22 on the other, most of my time is spent
banishing misconceptions about what 'axiomatic' means. The first step is a clean split between the Misesians and the Hayekians.
"To adopt this division, the economists known as 'Austrians' (e.g. Garrison and Skousen) must take the less ethnic name of 'Hayekians.' Keynesians do not call themselves 'English' and Sraffians do not call themselves 'Italian,' so why do Hayekians call themselves 'Austrian?' Skousen has recorded (2001, p. 434) that Anna Schwartz refused to contribute to
Feminist Economics and, for the same reason, I have grave doubts about identifying economists by their ethnicity. The four leading Austrian-born economists of this century, Mises, Hayek, Strigl and Morgenstern, are associated with four different schools of thought. There is no more an 'Austrian' economics than there is a Feminist or a Black economics.
"It would be more accurate to consider Menger and Mises forerunners of this author’s Axiomatic School while making Hayek the founder (and Böhm-Bawerk the forerunner) of the Hayekian School. Menger, Mises and this author are the only truly subjectivist economists...
"A word to the wise: There is no such thing as acceptance, only submission. What QJAE contributors need is not to look more like mainstream economists, but a bigger stick to beat them with. If it was not clear in the seventies, it is now: Austrian economics is inadequate. But it is inadequate because the axioms were chosen badly, not because economics cannot be deduced from a few general axioms. While Mises does not deserve the ostracism that he gets in the mainstream journals, neither is he worthy of the adulation that he gets from QJAE contributors. Leadership of an 'outsider' organization should go to one who does not value followers who worship him so much as enemies who fear him."