Austrian vs. Neoclassical Analytics | Robert P. Murphy

Presented by Robert Murphy at the 2009 Mises University. Recorded 28 July 2009 at the Ludwig von Mises Institute; Auburn, Alabama.

[@sulfursoul5533]

Bob Murphy is the Man. Sweet, delicate lecture.

[@Anfwon]

You watching Jordan?

[@aphelionofficial4384]

the whole point of keynesian theory is to legitimize what government wants to do. that's the only reason it exists and that's why, no matter how much it fails, it will remain. i fully believe that if keynes could be revived and dosed with truth serum, he would reveal that he developed his ideas in order to gain favor with the establishment, thereby securing for himself a cushy job of high prestige.

[@ChaplainDaveSparks]

AphelionOfficial Right! Bureaucrats are typically compensated based on how much budget they administer, how many subordinates they have on an org chart, etc. (On a macro level, there is the cycle of spending, wages, union dues, political donations, election of big government politicians, rinse and repeat...)

[@01Tanthallas]

Look kids, more people who like to talk about Keynes but haven’t read Keynes

[@Jaycephus01]

"We know that physics works. That's the Queen of the Sciences. So everyone who want's to call themselves scientists wants to be like a physicist... like in the 40's when we built the atom bomb. 'Wow, WE -economists- can't kill millions of people... these guys are cool!' " I immediately thought, "Except Marxists, socialists, etc. with THEIR economics CAN..." And then Murphy makes the point that, "Actually, Keynesians could..." LOL

[@tecmason]

Murphy is the man. I am a stubborn, stubborn person, and he almost single-handedly changed my political affiliation from republican/small government to Anarcho-Capitalist with his "Chaos Theory: 2 essays on Market Anarchy". His ability to predict objections to his theories and answer them is second only to Murray Rothbard from what I hav read.

[@TheSkoaler10]

What an awesome lecture. I wish I was in attendence but I was fooling with the ladies.

[@bravinneff1]

He was careful to add the caveat neoclassicists say ordinality is preserved by showing linear transformations do not change order. While true, he seems to miss the fact any pricing scheme, using any currency, is itself a linear transformation and hence ordinality preserving. Inflation is ordinality preserving. The moment an individual accepts a pricing scheme (e.g., dollars) using his individual utility function, he has translated individual utility with one that fits with social utility.

[@draganostojic6297]

Very clear and insightful.

[@bravinneff1]

Since neoclassical economics starts with ordinal utility, it allows us to devise marginal rates of substitution, or indifference curves. You can’t get there without ordinal utility, and it is hard to see how he got this so wrong.

[@yydd4954]

Forget about him getting wrong I see a trend where these guys brainwash people

[@Linguiphile]

Keynesians back up their theories with mathematical formulas, Austrians back up their theories with actual historical facts.

[@FilosSofo]

Which are both shitty ways of understanding our world.

[@brenito2092]

Austrian back it up with a priori fundamental facts

[@gabbar51ngh]

Monetarists are going to be dominant

[@StrafingMoose]

What Bob is saying when he says you have to know what facts to focus on before having a theory is; use philosophy. Philosophy is having a self-consistent logical premise before delving into empirical facts. If you don't then, then you end up with nonsense like; the sun is closer to the earth than the moon because it seems somewhat bigger, earth is flat because yeah, when you look at the horizon it indeed looks flat, etc.

[@bravinneff1]

Ordinality means things are ordered (A is before B, which in turn is before than C, etc.). Cardinality means, e.g., A is first, B is second, C is third, etc. Cardinality has ordinality bulit in as a matter of logic, but ordinality doesn't have cardinality built in.

[@Eurodollartrader]

Lol that pool example is gold ahahaha!

[@t3hFunt]

This is basically my whole 2000 word research essay, woo!! And now to find some fake references. Love youtube!

[@itsmoreeasy]

Robert Murphy is the truth.

[@s0beit]

@mjbarrowful I think he did answer it... or, if you don't think he was detailed enough look up praxeology on youtube.

[@LibertyWarrior68]

Yes, bring back freedom.

[@russellbray4594]

So George Costanza became an economist. Cool

[@NicosMind]

Lol i just did a search there and i found Robert singing in that Karaoke he mentioned watch?v=TaqXalODVxc

[@ChaplainDaveSparks]

"Rational", sure, but comparative utility can fluctuate. I can buy something for $100 because I want the item more than the money, then have buyer's remorse the next day and want to return the item in exchange for my $100. There may be nothing wrong with the item, but the buyer would rather have his $100 for whatever reason. Maybe he remembered/discovered something he wanted even more that also costs $100.

[@cemvural7245]

Neo-classicals: Agents are rational, they take the utility function and take the derivative of it equating it to another number and make their decision.

[@swanmix10]

Can you please give me some examples of the mistakes he has made, or point to some literature that he wrote that has been criticized by other economists. I am just curious.

[@tonybatisa9448]

I see! Why even have Ordinality then Right, It's like Cardinalities Nutsack, just Dragging along, Kind of like Austrian Economics is to Neoclassical Economics! Thanks Bravinneff1.

[@Teadon86]

There's these funny peoples that claims that when something is heterogeneous - empirical data don't prove anything. That what was the meaning with "blaming" and "heterogeneous". I did answer the "it" in the meaning above as well. but just because you're logical doesn't mean you're right - get it? Even because you've logically followed the conclusions of a thesis doesn't mean you're right about the real conclusions of it when applied to other systems or the world itself etc.

[@BeeeeeeFreeeeee]

...and you are a non-biased economist. riiiiight. In fact, you are wrong. I fact-check Murphy all the time, and I have never found him wrong.

[@BeeeeeeFreeeeee]

Also, Krugman and Bernanke are the only people in the debate assuming that they are correct EVEN WHEN THE DATA LOOKS HOW YOU WOULD EXPECT IF THEY WERE WRONG. You stand with the kooks! sucker...

[@pipem4n]

Throw some more ad hominem so we know that he pissed you off really nice :D

[@marnik.minelli]

“We know CO2 causes global warming”... Do we? 😏

[@thomashooper9148]

Smashinbedrock , well some people don’t. Some people don’t know the earth is round....

[@bravinneff1]

His comments on oridinal vs. cardinal utility are totally confused. He says that neoclassicists claim to believe in ordinal utility but then act like they believe in cardinal utility. His example was that of Alex Tabarrok’s, Matt Yglesias’ and others’ discussion of progressive taxation and the consequences on social utility, as if one couldn’t talk this way without committing to a view rooted in cardinal utility. Totally wrong.

[@Goodatconnect4]

The Austrian school uses logic in its theories, not empiricism; so anyone who dismisses Austrian economics as unscientific must also dismiss logic, geometry, and mathematics in general as unscientific: the root of all these sciences is logic. Empirical data is neither a proof nor a disproof of theory. Empirical data is only useful in physical sciences where the actors are homogeneous (ie two Hydrogen atoms and one Oxygen atom make water); economics involves heterogeneous actors (people).

[@bravinneff1]

But it does lead him to make his brief remarks about Bryan Caplan’s critique backwards exactly on this point, which was one of Caplan’s main thrusts: it is the foundation of neoclassical economics that leads to major discoveries like income and substitution effects that are not available to Austrians because of their methodology. There are other problems galore (ahem, “praxeology”), but that’s enough for now.

[@tonybatisa9448]

Austrians Don't back up their Theories with Mathematics or Empirical Data! & Isn't Ordinal & Cardinal Utility the same Thing?

[@anarchic_ramblings]

Mathematics doesn't 'back up' anything in any field. Maths is just a very efficient way of describing certain aspects of the universe. And Austrians certainly do use empirical data.

[@ericc183]

Ok ok PA ij

[@Teadon86]

Empirical date do come from something called experience, experiment and so on - something scientists do quite often when they wish to prove or disprove something. Empiricist is something that's empirical in nature. Also if you're serious about trying to confirm or falsify something you will eventually have to use a method that is scientific enough. True a hypothesis is either true or false but you must test it sooner or later; else you're just a highbrow show-off.