Modern Austrian Economics #2

In Volume 2 of Modern Austrian Economics Murray Rothbard opines on other economic schools and the other sub-schools of Austrian economics. The chapter's title is 'The Present State of Austrian Economics' (also here). Rothbard was highly polemical and made strawmen of his Austrian school competitors. For example:

"My contentions are: that the correct Austrian paradigm is and can only be the Misesian, that is, the paradigm of Misesian praxeology; that the competing Austrian paradigms, in particular the fundamentally irrational “evolved rules,” “knowledge,” “plans,” and “spontaneous order” paradigm of Hayek and the more extreme “ultra-subjectivist” or nihilist paradigm of Lachmann, have both been fallacious and pernicious" (7).

"Hayek’s entire work, on the contrary, is devoted to a denigration of human reason. As David Gordon has pointed out, Hayek virtually assumes that human beings act unconsciously—of course, a contradiction in terms—and therefore that they neither know nor think nor choose. Therefore, their actions do not require understanding; hence Hayek’s emphasis that the best that can be done is rely on a blind and unconscious adherence to evolved rules" (23).

"Hayek presents three crucial concepts as ways of highlighting his reliance on human blindness and irrationality: “spontaneous order”; the “unintended consequences of human action”; and the product of “human action, but not human design.” We need not tarry on the phrase “spontaneous order,” except to note that the word “spontaneous,” once again, connotes lack of thought, activity that is not consciously chosen, but rather purely reflexive and tropistic. It would have been far more accurate to use a term such as “voluntary,” which would at least focus on voluntarily chosen, rather than coerced, actions" (25-6).

Hayek did denigrate "constructivist rationalism", but not human reason in the absurd, sweeping manner Rothbard claims. Hayek's main criticism was for advocates of central planning and their hubris and ignorance, not typical private sector producers and consumers. Hayek's "spontaneous order" was a contrast to the "command order" advocated by fans of central planning. Hayek's "unintended consequences" was mainly to identify consequences of implementing central planning that the central planners or their supporters did not intend or anticipate.

A clear case of Rothbard making a strawman is others' alleged misuse of "evolution."  Rothbard says evolution requires the existence of genes and mutations. That misses the point. When analogies have been made between economics and evolutionary biology, the noted similarity has been adaptation, competition, and comparing the trial-and-error method of entrepreneurs to mutations.

Rothbard was also very critical of the ideas of Israel Kirzner and Ludwig Lachmann. I skip more details.

The next chapter of Modern Austrian Economics 'Praxeology and Understanding: An Analysis of the Controversy in Austrian Economics' (also here) by G. A. Selgin gives a much more balanced and objective view. For example, in Hayek's view:

"Praxeology, in seeking "apodictically certain" conclusions, had so drained itself of content as to become useless as an independent means for deriving useful truths about reality. Far from relying exclusively upon the fact of purposefulness, applications of praxeology to catallactic phenomena involve unacknowledged auxiliary assumptions about the dissemination and use of knowledge by market participants; assumptions "about causation in the real world"."

"The thrust of Hayek's essay is, however, unaffected by the specific type of empirical evidence it recommends. It claims that even pure economics, insofar as it concerns market phenomena and not merely isolated actions of individuals, must be partly an empirical or psychological science rather than a logical-deductive one. It must investigate the meanings attached by individual actors to their situation, and it must examine the particular motivations and stimuli that give rise to their choices. It must become a science, not just of action, but of people's reactions, and how these reactions may reflect the use and dissemination of knowledge."