An Austrian Critique of Mainstream Economics | Walter Block

Archived from the live Mises.tv broadcast, this lecture by Walter Block was presented at the 2012 Mises University in Auburn, Alabama. Includes an introduction by Mark Thornton. Music by Kevin MacLeod.

[@HarryPainter]

Who else had this saved on their Watch Later list for 9 years and is finally watching it

[@CJFRANKS7]

Opportunity cost of watching this video: homework time :P

[@ristovoluntaryist9001]

another great lecture/presentation. feels good to be austrian...

[@idunusegoogleplus]

I just started a University course on intro to econs (mainstream) and all this is gold! My first few lessons left me boggled, esp the indifference curves. I thought to myself how could an individual be able to exchange one combination of item a and b with another combination if he is truly indifferent? he'd not exchange at all.

[@randy109]

I got my Econ Degree in the mid 1970's. Very Keynesian and quite "liberal" (modern Liberal, NOT Liberal as Von Mises would put it) at that time in California. I've learned MORE in the last 20 years of studying the Austrian School in my own free time in my own Library than I did at any State University in California. Henry Hazlitt was the guy who inspired Ronald Reagan and is the guy who inspired me to dig deep into Ludwig Von Mises, Adam Smith, Hayek, Bastiat, et al. Walter Block delivers the Austrian view quite well at a time when we really need it... I'd pay a Thousand Dollars to get Obama to read "Economics in One Lesson" by Henry Hazlitt. He's a very smart man but he probably couldn't comprehend it...

[@MakMuk]

Austrian Economics appeals to people who are too stupid to understand real Economics.

[@sevencck]

Mak Muk Trolling all the Austrian vids on youtube I see.

[@SaulOhio]

Mak Muk If randy109 is too stupid to understand real economics, how did he earn a degree in economics at a school that teaches Keynesian economics?

[@MakMuk]

SaulOhio It's easy to get a degree in economics or anything without really understanding the topic. You must not have an education.

[@SaulOhio]

Mak Muk The typical liberal ploy when confronted with a real argument: Attack the person. Proof that you DO have an education. Because it seems in modern liberal universities, especially in the humanities, it seems as if ad hominem and strawman arguments are taught now, not as logical fallacies, but as rhetorical techniques. Yes, I do have an education. Bachelor's degree. Even your ad hominem fails. In particular, most Austrian economists HAVE to study mainstream economics to pass education classes and get their degrees. If the people you are attacking instead of debating are so stupid and ignorant of economics, you should easily be able to explain how they have their economics wrong. You should be able to mop the floor with them in a debate on the actual subject. But instead you resort to name calling.

[@d4n4nable]

I really love Walter, he's my favourite of the mises-crew, but sometimes I believe he over-simplifys the neo-classical position. From what I know they agree that utility is ordinal (at least that's what I've been told). If there are certain arguments that only hold true if you assume cardinal utility (and his monopoly example could be this case) he should state it directly and explain why consumer and producer surplus is only a viable concept to compare utility if you assume it's cardinal.

[@gurugeorge]

I think part of the reason why Austrians are viewed so dimly by the mainstream is because of the common modern idea that logic is something intrinsically detached from reality (you have a calculus of symbols and rules for shuffling them around, that only applies to reality if it's given an "interpretation"). On an Aristotelian view of logic, which is that it's intrinsically descriptive of reality, praxeology is just an extension of logic into the domain of human action, and is therefore fully scientific. The reason why empirical science is based on falsifiability is that science is the discovery of the unknown (the hidden structure of reality that provides us with the experience we have) - IOW the subject matter of science is an unknown that we're trying to discover, and our only way of discovering that unknown is throwing stuff against the wall and seeing what sticks (i.e. projecting hypotheses into that unknown, and testing via _modus tollens_ whatever implications they might have that would have consequences for the known, the experienced). But in the case of economics as a science, the subject matter is already _intimately_ known to us - it's the way we think and act day today (to transform less preferred into more preferred circumstances), recognizable as soon as it's called to attention. Economics as praxeology just works out the implications fully.

[@jattat1109]

Bravo

[@jamesbancroft2467]

I would agree-but you still need to be mathematical in the same way Hayek was-and also empiricist (in the sense of simply checking to see if things are true). The empiricist side of this is best shown in the modern field of “behavioral economics”-where surveys are taken.

[@RKAddict101]

LOL the amount of sexual references in this lecture

[@charronfamilyconnect]

When you dont require many needs, you have a reduced stress load and more time to focus on important ideas. Americans enslave themselves by wanting to many material things, but fail badly at committing to relationships with people and especially in the institution of marriage. Money and material wealth accumulation is not as fulfilling as you might think. I think sacrificing our time and slaving away until we are old and frail and full of regret is a life wasted away...

[@anarchic_ramblings]

Funnily, Pythagoras was actually a cult leader.

[@krisandre2002]

Euclidian Geometry only applies in narrow circumstances. How do we know that? We have tested It.

[@BartoszKosiarski]

@@krisandre2002 Narrow? :)

[@GeorgWilde]

@@krisandre2002 Applies? :D Euclidean geometry is a collection of appriory truths, not a physical model like Newtonian physics.

[@o11k]

@@GeorgWilde Physical space isn't Euclidian though, so you can have as many tautulogies as you want - they woudn't help you predict the real world.

[@GeorgWilde]

@@o11k Of course euclidean geometry doesn't predict physical phenomena. Geometry is about mental constructions, not about physical. No type of geometry predicts anything. Physical theories contain the geometrical axioms but also another axioms in addition. For example Newtonian physics is based on euclidean geometry, calculus, definitions of physical quantities and Newton's laws of motion. These laws are basically axioms of the theory (together with the axioms of geometry and calculus). There are other physical models that are more general than Newtonian physics (relativity), or more accurate in certain contexts (quantum) and they have their own geometrical presuppositions. There is no space independent of our experiences, so any kind of geometry , be it eucldiean or non-eucliden is necessarily only pure abstraction, sort of overlay we put over our observation. There is no theory that explains everything and will be not. "Any theory alone is incomplete. All theories together are incoherent." - someone said that, not me originally It is incredibly simple matter. Model is not what it models.

[@bobby33x97]

I believe the Primary elements of Production are: Capital, Management, Resource & Labor, w/Labor the LEAST important & Management the MOST important, followed by Capital, Resource & Labor.

[@LarsAndersenFrihed]

Awesome lecture.

[@d4n4nable]

It's certainly true that the big journals narrowly focus on maths and this devalues economics. It's also the case that the failed mathematicians in econometrics departments are a pain in the ass. But most neo-classicals I met agree that the only virtue of indifference curves is to provide a smooth model to illustrate things, but has no basis in reality because of all it's assumptions. It's only there to show trends, as Walter put it and maybe to try(!) to make it somewhat quantifiable.

[@gavinschuette9826]

I love this dude!!!

[@whatsavailaible]

Can anyone Please share the title of Rothbard's essay he is referencing at 57:46?

[@DeanApril14]

Walter Block = THA BAUS!

[@saudielbamber4227]

Austrian economics makes logical sense. Its hard to produce charts for rational thinking. Ive read up on socialism, communism, different studies of economics and ive come to the conclusion that Austrian economics makes the most sense but I fail to see the difference between classical and Austrian economics. Any differences you can give me? Only difference i can see is classical economics focuses with the gold standard or other precious metal standard. Austrian economics can work with fiat currency as long as the feds let banks determine their own interest rate and keep inflation at 0 percent. Am i correct?

[@billmelater6470]

Hard to type on a phone a proper answer but, Austrians disagree with the idea of fiat currency, full stop. It would be better if banks and only banks set their own interest rates but under a fiat system, it doesn't actually work that way.

Indifference curves are not about exchange, they in particular show the collection of points where there is no incentives to switch. The popular example to demonstrate the essence of the indifference curve only includes exchange with the purpose to show that it would make no difference to the consumer which combination of the goods he gets. The switch is only triggered by fluctuations in prices or income which change the possible combinations available to the consumer.

[@matthewapsey4869]

How do you know if your logically deductive claims about the effect of a given policy are logically complete without testing, though, ie that you haven't arrived at a bogus line of reasoning?

[@Goodatconnect4]

Isn't it another part of the theory of indifference curves that one can only maximize utility if only they spend all the money they have on hand (when the indifference curve is tangent to the budget curve)?

[@SaulOhio]

0:59:20, he says "in the 1930's", I think he means 1830's.

[@charronfamilyconnect]

sacrificing so much time for material accumulation is what I am referring too. What is important to a quality of life to you? To me its what I have already explained, and may I add that I would like to reside in a safe community with low crime and happy friendly people living a life worry free with abundance of energy, good health, and enough wealth to be self sufficient.

[@MWCstream]

26:00 i have to disagree here. There is work because you are going against gravity. I am not sure of the formula but the mass of the weights against the gravity is definitely work. I think gravity is slightly less at higher altitudes.

[@rgaleny]

what should a moderate disciplines libertarian say, or a mod disciplined conservative. what is ordered liberty sport?

[@charronfamilyconnect]

I am an investor in prescious metals also. I was just questioning philisophically why humanity craves Gold? Its just a nice looking shiny metal that is hard to find. About rivers, no one should own it. We should share it collectively since its a resource that we share, and violators should be penalized severely if they pollute it. Man's mentality is about owning everything, and extracting, and exploiting until there is no more left. This is very distructive parasitic behaviour which is appaling

[@charronfamilyconnect]

@Patchworth You mean preserve it by erecting buildings and homes. Preserve it by growing crops that are sprayed with toxic chemicals? You really think most people have a long term view or want to make a quick buck? Reality is far more different then your theory about what people will do with their land. If I owed land and wanted to make money those are the things I would do.

[@Lechteron]

Soapyshoe's recommendation is great, You can also look up "Praxgirl" here on KZbin.

Well, I personally do not see any problem with the concept of indifference as presented by the neoclassical school per se. But similarly to Rothbard I find it hard to see it having any use in economics and it being more of a matter of psychology. I suppose you could see the indifference curves (when applied with budget restrictions) as the link between psychology and economics in a larger praxeological context but I do not think that this has any relevance to economic analysis.

[@RPFS2008]

"my high school children who I still have to put through university" Hang on! You should be sharing those resources between us all. They're mine, and everyone else's, just as much as yours. Right?

[@backalleyphilosophy4763]

How are you entitled to the product of another person's actions?

[@soapyshoe]

Read Human Action.

[@charronfamilyconnect]

The only belongings I need is good shelter, clothing, food, and enough land and fresh water source. Anything else is just extra. I know a lad that built an earth ship. Look that up and learn something. Look up Mike Reynolds. He helped a village of survivors of the tsunami flood in Indonesia to built one of these shelters that gave them abundant fresh water (from the sky), and ability to grow food, and shelter themselves from the elements. He also helped earthquake victims in Mexico. He's a saint

[@marcuso4365]

oh dear

[@idunusegoogleplus]

nah, it's a core module for accounting and finance degree first year so i'll just get it over with and make sure not to pick anything related to econs in my 2nd and 3rd year.

[@Joe11Blue]

Work is an increase in momentum or variation of trajectory through acceleration. Also known as the increase in velocity. There is work being done chemically through the burning of calories to hold his muscles taunt against gravity's work, but there is no Physics aspect of work in that example. Even if we are talking relativistic and viewing from an external viewpoint such as the moon where it would appear he is working as the planet rotates, but he really is not doing any work.

[@MWCstream]

Yes that much is obvious, but obviously it isnt obvious that, i was taking the conversation a different way to make a small point. The title say Economics and that is what i was talking about. I wasn't disagreeing with you.

[@Joe11Blue]

Faith doesn't grow enough corn to last a winter or raise enough chickens to survive. Those communities are too inefficient, and people generally would rather not live the subsistence lifestyle. They want computers and electricity and movies. It's ok, I will make sure your grandchildren understand fully and can turn back the mess.

[@christiansmith-of7dt]

Mr and Bernie go way back

[@marcuso4365]

enron

[@idunusegoogleplus]

I know what you are saying but indifference is not true indifference if it is forced onto the consumer by "fluctuations in prices or income" is it? Furthermore there is no empirical evidence to show such indifference curves exist in reality (i say this because neoclassicals emphasize empirical evidence no?) and logically it makes no sense.

[@rastogiumesh7972]

This is economics-you dont exchange anything-but sit in the old markets for months together to buy a loaf you had to sell your donkey. You had to learn economics until you start thinking if it was the science or Economics brought this earth to this stage.Science created the abundance, but Economics changed the goods in an hour or minute or second.

[@bamboobarnicles3063]

W = F x D man! come on!

[@Xasew]

That doesn't make sense on so many levels.

[@Joe11Blue]

You say that you don't want to sacrifice time to accumulate enough wealth, but you want enough wealth to be self-sufficient. Did you even think that reply out first? You want everything but are unwilling to work to obtain it. That's called greed and avarice. The same things you would likely accuse those willing to work for those things of being guilty of.

[@JudgeSabo]

No, its really not a complete sentence.

[@jb4127]

Both theories are incomplete.

[@adolfcritler4299]

yes, indeed. So grab a brain, a pen and a piece of paper and go to work!

[@noyb154]

Not as incomplete as this criticism.

[@cyrusol]

Any theory is either incomplete or false. Gödel's incompleteness theorems... So you are not putting an actual argument up by saying this. Just a tautology.

[@MWCstream]

Work is work but unless that work is producing something such as a product of food to eat, you're not really contributing to the economic growth, but rather spreading around the growth that others have already worked for by producing a product.

[@JudgeSabo]

...is not a complete sentence.

[@charronfamilyconnect]

No man you got me all pegged completely wrong. I have already worked and saved enough to be self sufficient. The only thing holding me back right now is my high school children who I still have to put through university. You dont need much to be self sufficient at all with a life of simplicity! I am the furthest from greedy. I donate directly to 3rd world countries as I have family in South America. So because you dont really know me other than on this youtube channel I wont hold it against you.

[@charronfamilyconnect]

Before you call me a communist, let me tell you what I really am. I am a Communalist. I believe in communalism/barter/free market system. Look that up as you probably never heard of it.

[@Joe11Blue]

He wasn't talking about Economic work. He was talking about work as in the Physics definition of work, which is distinctively different from the Economics definition of work, and relies purely on variation of relative velocity.

[@charronfamilyconnect]

You need to have more faith in humankind if you think we can't be self sufficient. Ideally, a self sufficient community would be optimal. Such communities used to be more common, but what happened to us? Did we get too greedy? Did we allow the state to take over? Is this what you are talking about in your reasoning about why we can't be self sufficient? I don't really get the full picture of what you are saying sorry.

[@stutzpunkt]

Putting time on the vertical axis= what passes for a breakthrough in austrian economics

[@Barskor1]

As you don't understand the implications of that it is why you are not impressed.

[@lowersaxon]

Incredible. What he argued on indifference ( curves).... pfffffff. Ha, ha. Same confusing cost curves. Nobody calls in antitrust when the market is imperfect. This is simply not t r u e. So I close vid.

[@Atika55555]

The market will never be perfect, except in absurd walrassian world. Also, many people including libertarians support antitrust laws

[@shazbovalen7026]

No, it's the people who find this shit compelling.

[@RPFS2008]

Stop making excuses for not following your own alleged principles. No-one is stopping you from sharing out the resources that you have control over (in fact, according to you, your control is illegitimate to begin with)

[@FishFromInnsmouth]

Monica Lewinsky made 7 fake accounts and disliked this.

[@Xasew]

If you think going to a gold standard is about evenly distributing all of the gold and "forgetting about food and energy," then you've wasted 17 years of your life. I think you know very well that that's a strawman.

[@DanZhukovin]

((mises))

[@cowboy1165]

But you believe in a nickle and copper standard...I think you have wasted 17 years looking for the door in a room with only windows.

[@adielstephenson2929]

What's this guy waffling on about?

[@Joe11Blue]

Sure I don't know you, but you apparently are not aware what greed, avarice, and self-sufficient actually mean. No human is capable of being self-sufficient.

[@placeswelive5388]

The Pythagorean theorem has proofs. This ...

[@bheblynn]

To my ears, what he is talking about is backed by a bunch of undeclared and implicit axioms, and since I don't know what his axioms are I don't understand shiite of what he is talking about. Economics is a human invention and what's the point of talking about it to other humans if they don't understand, unless if it's precisely to steal from them? Had to stop watching after 10 minutes, he lost me completely. I don't study economics, so i don't know many of the hot shots out there, just saying that when someone with a mathematics background talks, like Fekete, i feel much more like the argument is sincere and the fundamentals identified and explained.

[@MakMuk]

The assumption is markets are perfectly efficient and self-regulating until some greedy Jewish banker lends out a demand deposit and then the economy becomes fake.

[@SaulOhio]

No. He states his axioms very explicitly. The first axiom of Austrian economics is humans act.

[@MakMuk]

SaulOhio Wrong. The action axiom is "humans act purposefully towards a chosen goal." The axiom is easy to prove wrong. That means Austrian Economics is based on a false premise.

[@SaulOhio]

Mak Muk So, you stated it more completely. I was simply using the shorthand that Austrian economists use repeatedly, as Walter Block did at least once. 4:02 If it is so easily proven wrong, then do it. Explain to me how it is wrong. But wait, the very act of trying to prove it wrong is a human action, so you would be relying on it being true in the very ACT of disproving it. Did you listen to the video? Walter Block explains this if you had paid attention. The very attempt to disprove this axiom is itself proof OF the axiom. The very ACT of typing a reply to this comment is itself an example of HUMAN ACTION, and thus proof of the axiom.

[@MakMuk]

SaulOhio You're a bit mixed up. The action axiom does not claim that some human action is purposeful towards a chosen goal. It claims that ALL human action is purposeful towards a chosen goal. Simply acting purposeful towards a chosen goal does not verify the action axiom. All action has to fall into the category. If you can find a single instance of action that is not purposeful towards a chosen goal, then it's proven false.

[@newaddress456]

This guy uses strawman arguments . Shallow.

[@gavinschuette9826]

lower gov spending 99% and cancel regulations.....end fed and income tax and stop artificial real estate scarcity

[@JudgeSabo]

...is not a complete sentence.