Attention: Austrian Economics Nerds!

There is an interesting discussion in progress over at Cato Unbound called "Theory and Practice in the Austrian School."

Steven Horwitz kicked the debate off with an article titled: The Empirics of Austrian Economics.

Essentially Horwitz argues that Austrian economics has been given a bum rap by mainstream critics. Austrians, Horwitz says, are not all merely armchair theorists. Some Austrians actually do empirical research, he states, and in many cases do it better than mainstream economists.


In a post at The Circle Bastiat, Daniel James Sanchez contributes his two cents worth writing:

Horwitz’s error is to think that, if you introduce assumptions to your theorizing because of experience, that makes the result “empirical” or “applied theory”.  But that is not the case.  For the truth of a theory, it makes no difference why it was constructed the way it was (that is to say, why it includes the assumptions it does).  A self-contained theorem is true or false based on its logical structure, regardless of whether the assumptions are introduced because of experience, because of pure fancy, or for any other reason.

Bryan Caplan takes a completely different tact in criticizing the Horwitz article. He claims that the Austrians Horwitz cites as doing empirical research are really doing mainstream economics using Austrian lingo:

But if Austrians can translate their empirical insights into mainstream language and sell them to a broad audience, why don’t they use mainstream language in the first place? Austrian contributions will continue to be undervalued as long as they continue to spend most of their time talking to each other in their own eccentric dialect.

Though they do empirical research, Caplan asserts, Austrians contribute no insights to this research that are "uniquely Austrian."

On Monday, George A. Selgin will weigh in. On Wednesday, Antony Davies has his say.