Reply To: Methodology: Austrian School vs. Neoclassical/Chicago School

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#18048
jmherbener
Moderator

What you presented was fine. In a back-and-forth discussion, it helps to see what you and your opponent agree upon in order to focus on key points of difference. If Westman agrees with you that Misesian “economic theory” refers to a different aspect of knowledge about human action from that of neoclassical “economic theory,” then you can probe elsewhere. And then you can find out if he whether he thinks that the abstract knowledge gained in Misesian economic theory, what F.A. Hayek called the logic of action, helps us understand actual real human action. The next step might be to pose that the Misesian approach to understanding events that occur in the world is “economic history” whereas the neoclassical approach is empirically testing models. In other words, the abstract theory of Misesians is used to explain the empirical evidence of events in the world by using judgment to weigh the importance of the various causal factors that produce the evidence. The neoclassical abstract model is used to explain empirical evidence by empirically testing implications drawn from it. Use an example, like the Great Depression, to illustrate. After that you might point out the major criticisms Misesians make of the modelling technique in discovering real economic laws, i.e., universally true cause and effect relationship in human action. (Of course, you’ve already done this in your previous post.) And finally you might concede that empirical hypothesis testing may be able to establish historically contingent correlations. Such knowledge is not not vacuous, but its not everything we can know about human action. To get at this other knowledge we must proceed in a different way.