Bob Roddis claims: “5. We know that the market does not fail and does not lead to mass unemployment.”
This is the fundamental Austrian hallucination. Since von Mises, Austrians are known as talented storytellers/agenda-pushers and incompetent scientists. Von Mises’ most profound insight was that “anti-capitalist sentiment was rooted in ‘envy’.” This was the intellectual level around 1900 in Vienna where Freud established penis envy as an all-purpose psychological explanans which was happily adopted by the Austro-Hungarian cretins of which Karl Kraus has given an intimate 30,000 pages portrait spanning from 1899 to 1936.
Austrians NEVER proved that the market system is self-stabilizing and optimizing if left alone. Fact is that the opposite has been proved.#1
Because the foundational premise of Austrianism is false all the rest is false. It was, however, usable for auto-hypnosis in the seances of the Mont Pelerin Society which institutionalized the political corruption of economics.
There is nothing to chose between Austrianism and MMT. Both are proto-scientific garbage.
#1 Proof of the inherent instability of the market economy
You tell me: “You have to prove the market fails. I don’t have to prove it does not. But I will anyway.”
Your idea of proof is ridiculous. You need a well-articulated theory in order to carry out proof. As Feynman made clear: “By having a vague theory it is possible to get either result.” and “Another thing I must point out is that you cannot prove a vague theory wrong.”
Austrianism is NOT a well-articulated theory but confused blather.
Also, your historical examples count for nothing. As an Austrian, you should at least have a superficial knowledge of Popper who was an active co-agenda-pusher of the Mont Pelerin Society.
Here are some highlights:#1
• Almost anything can be a verification, as it can be justified after the fact.
• Confirmations are easy to find if you look for them.
• A theory that is non-refutable is not scientific.
• Confirming evidence doesn’t count unless it is a result of a genuine test.
Austrianism is logical BS: (i) Markets never fail if left alone, (ii) no, the Great Depression is proof that markets fail, (iii) no, the Great Depression happened because the Central Bank and those pesky Keynesians intervened, (iv) if no-one had messed things up markets would have worked just fine because of (i).
Austrians swallow this methodological garbage without turning an eyelid.
#1 Karl Popper Conjectures and Refutations, presented by Lucas Kempe-Cook
Science is about proof. You parrot the Austrian tenet: “We know that the market does not fail and does not lead to mass unemployment.” Austrians know nothing. Austrians are storytellers and political agenda pushers. Walrasians at least understood that they had to deliver proof that partial supply-demand-equilibrium logically entails the existence of a General Equilibrium with certain welfare properties. Austrians have never felt any obligation to prove their central tenet. You just echo this methodological deficiency: “You have to prove the market fails. I don’t have to prove it does not.”
The first point to mention is that Austrians never understood what profit is. There can be no greater laughing stock than an economist who has no idea about the foundational concept of his subject matter.
The second point is that Austrians never understood how the price mechanism works. The core of the price mechanism is the relationship between wage rate and employment.
The Employment Law is a macrofounded relationship which states that overall employment INCREASES if the average wage rate W INCREASES relative to average price P and productivity R. This is the OPPOSITE of what microfounded Walrasianism and Austrianism say.
“We economists have all learned, and many of us teach, that the remedy for excess supply in any market is a reduction in price. If this is prevented by combinations in restraint of trade or by government regulations, then those impediments to competition should be removed. Applied to economy-wide unemployment, this doctrine places the blame on trade unions and governments, not on any failure of competitive markets.” (Tobin)
This is provably false. The macroeconomic Employment Law states that a reduction of the average wage rate REDUCES overall employment. This means that the price mechanism is NOT self-stabilizing. Just the opposite. At the heart of the market economy is a destabilizing positive feedback-loop.#1
The macroeconomic Employment Law is a testable relationship that can also be used to empirically refute the central Austrian tenet.#1, #2
In sum, Austrian Profit Theory and Price Theory are provably false.
So Austrians, it’s over. Only proof counts. Now pack your bag and get out of economics. And do not forget to take the MMTers and their falsified sectoral balances equation with you.
#1 The Three Fatal Mistakes of Yesterday Economics: Profit, I=S, Employment
#2 For details of the big picture see cross-references Employment/Phillips Curve