Is the Austrian school closer to the truth than Marx?

I know most of the people on Dope, and the rational community in general tend to be anti-communist, and favor some kind of capitalism. Would most people here go so far as to say the Austrian school, supply-side type of economics is somewhat more realistic and successful than Marxist communism, or is it equally bad in its own way?

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Since this seems to be informally polling for user opinions here, let’s move it to our opinion forum.

Moving thread from General Questions to In My Humble Opinion.

I would distinguish the Austrian from the supply side school, though I assume they have overlap.

Similarly, Marxism (which is mostly a critique of capitalism) is a separate thing from Soviet style communism (which I assume is what you are referring to).
Austrians are at bottom reactionaries. They want to turn back the clock to the era before 1906, when Upton Sinclair published his expose of the meat packing industry, The Jungle. The US economy was viable from, say, 1870-1906. But so was the Soviet economy before c. 1991, though they had severe human rights problems and economic sclerosis during the latter part of that era.

It would be reasonable to compare the US post-bellum era favorably with the Soviet Union. But recall that post-bellum US was basically an industrializing but mostly agrarian society. So one could argue that the Great Depression shows what happens when laissez faire meets a modern developed economy. That was exactly the time when sympathy for communism grew, before the New Deal and later federal spending saved capitalism from itself.

So I would order them as follows:

Agrarian Austrianism > Soviet Communism > Industrialized Austrianism

The problem, though, is you can’t have “Soviet Communism” without an authoritarian state. So that has to be factored in as well. You have to be OK with living in an authoritarian, single party state to accept that conclusion.

Yeah, but you could have a command control economy with free speech and civil rights protections. You could even have elections, though such a system would probably evolve into a more mixed economy.

The OP specified Marxist communism, so there’s some wiggle room. Pedantically, Marxist communism comes after Marxist socialism, but I assume that’s not what he meant.

Incidentally, you could argue that the Soviet Union during the 1970s had a substantially higher standard of living, all things considered, than Great Britain during the 1870s. Forced equity has got to count for something. I’m also not entirely clear about the meaning of “More realistic and successful”. A more precise question could change my ordering in a number of ways.

They are both hilarious pseudosciences.

Maybe I’m missing something here (what I know of formal economics can be written on the head of a very small pin and still leave room for a score or more of dancing angels), but I thought that there was a split in the Austrian school, with part of it being classical while there is another part that is considered less loopy and more modern. Isn’t or I suppose wasn’t Hayek part of that school? Or am I totally mis-remebering here?

Which, if true, had more to do with the state of the art in science, medicine and technology than in the particular economic system in either place.

Agreed, which would make answering a more precisely stated question difficult.

FTR: Heck if I know. Ayn Randians are among the loopier varieties of Libertarians but the Hayeks and the Van Mises of the world seem to blur together in my mind.

Are there two varieties of Bigfoot hunters? Or three?

Yes, Hayek seems to have supported some sort of a rudimentary welfare state with basic regulations:
https://en.wikipedia.org/wiki/Friedrich_Hayek#Hayek.27s_views_on_safety_net

You don’t know much about it, but you’re sure it’s on par with Bigfoot hunting. Since we’re in IMHO, I guess I’ll just say that’s a very interesting, if uninformed, opinion.

Libertarianism/current conservative thinking follows the same pattern of thought as bolshevism > although obviously applied to different ( but only slightly different ) resolutions — the sort of engaged, passionate people, often monomaniac loonies who were engaged directly in either communist theory or fellow travellers in the first three decades of the 20th century and libertarian/capitalist lackeys in the first three decades of the 21st.

And the famous trotskyist ( trotskyism remained bolshevism, and in it’s own view the only real bolshevism ) fragmentation pattern plays out with this group too, not because of any inherent viciousness, but as with presbyterians ( as opposed to the accomodating broad church of the Church of England with loose tolerances ) the quest for purity, particularly ideological purity means tolerating other views is a sin. Plus they’re dicks.

There have been many arguments in the libertarian religion ---- then again the first 300 years of christianity weren’t dedicated to sweetness and light — but maybe you’re referring to the Hayek - von Mises Split ( although v. Mises was long dead at that point, but death never stopped a good communist from fronting for a faction ):

According to economist Bryan Caplan, by the late twentieth century, a split had developed among those who self-identify with the Austrian School. One group, building on the work of Hayek, follows the broad framework of mainstream neoclassical economics, including its use of mathematical models and general equilibrium, and brings a critical perspective to mainstream methodology merely influenced by the Austrian notions such as the economic calculation problem and the independent role of logical reasoning in developing economic theory.
Okely-Dokely.
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Wikipedia Austrian School**
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However more recently there was the Cato Affair ( we’re really reaching into Eric Ambler territory here… ) when the revered Koch Brothers, Godfathers of contemporary libertarianism — and bank-rollers of such since theoretical politico-economic research can only provide an income from those who benefit from the resulting opinions, in other words it has no productive value — tried to take over The Cato Institute. And as far as I can see, succeeded: but this was fair enough because it’s original name was the Charles Koch Foundation.

Few are the number of us with a self-named foundation.,
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According to an agreement signed in 1977, there were to be four shareholders of the Cato Institute. They were Charles and David H. Koch, Ed Crane,[105] and William A. Niskanen. Niskanen died in October 2011.[106] In March 2012, a dispute broke out over the ownership of Niskanen’s shares.[105][106] Charles and David Koch filed suit in Kansas, seeking to void his shareholder seat. The Kochs argued that Niskanen’s shares should first be offered to the board of the Institute, and then to the remaining shareholders.*

Cato ** — and it couldn’t have been named after a more delightful chap, whether it be that vicious old slave-owner or he who died for aristocracy — believes:

To originate, disseminate, and increase understanding of public policies based on the principles of individual liberty, limited government, free markets, and peace
Whereas the Ludwig von Mises Institute, equally founded by Rothbard after he broke with Cato, believes:

To advance the Misesian tradition of thought through the defense of the market economy, private property, sound money, and peaceful international relations, while opposing government intervention as economically and socially destructive.
Okely-Dokely bis.

In a 1999 book published by the Ludwig von Mises Institute (Mises Institute),[61] Hans-Hermann Hoppe asserted that Murray Rothbard was the leader of the “mainstream within Austrian Economics” and contrasted Rothbard with Nobel Laureate Friedrich Hayek, whom he identified as a British empiricist and an opponent of the thought of Mises and Rothbard. Hoppe acknowledged that Hayek was the most prominent Austrian economist within academia, but stated that Hayek was an opponent of the Austrian tradition which led from Carl Menger and Böhm-Bawerk through Mises to Rothbard. Austrian economist Walter Block says that the “Austrian school” can be distinguished from other schools of economic thought through two categories - economic theory and political theory. According to Block, while Hayek can be considered an “Austrian economist”, his views on political theory clash with the libertarian political theory which Block sees as an integral part of the Austrian school.
In a 1949 book published by the Friedrich Engels Institute (Engels Institute), A. V. Norsky asserted that A.J. Kripkin was the leader of the “mainstream within Marxist-Leninist Theory” and contrasted Kripkin with Soviet Laureate L. V. Brosskov, whom he identified as a British spy and an opponent of the thought of Suslov and Kripkin. Hoppe acknowledged that Brosskov was the most prominent Austrian economist within academia, but stated that Brosskov was an opponent of the Soviet tradition which led from Liebknecht and Schmidt-Klossen through Suslov to Kripkin. Soviet economist O. F. Sipsky says that the “Soviet school” can be distinguished from other schools of economic thought through two categories - economic theory and political theory. According to Block, while Brosskov can be considered an “Soviet economist”, his views on political theory clash with the bolshevist political theory which Sipsky sees as an integral part of the Soviet school

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Oddly enough, I see Cato is funded among others by the Ford Foundation, which is generally accounted as one of the One-World bastions of sinister liberalism by those who still subscribe to the Dearborn Independent

I’ve encountered many of their arguments, but I’m unfamiliar with their within group squabbles. I see that I was correct in IDing Mises as the leader of the opposing faction. Huh. Mises was the guy who thought that all of economics could be derived from axioms: empirical evidence was unhelpful. In contrast Hayek was the fellow who persuaded his fellows inmates that tyranny inevitably followed from a welfare state, so that it was ok to prop mass murdering dictators as long as they were right wing. Hayek was particularly infatuated with Augusto Pinochet after he overthrew a 100 year old democracy in Chile and massacred thousands.

You are correct that I can sometimes forget which one of these characters is the allegedly neurotypical one.

Chalk and cheese. AIUI Marx was more of an analyst of the processes within the capitalism of his time that would, in his view, ultimately overturn it and pass economic and political power to the workers, than a prescriber of policies about the management of a functioning economy (beyond some very vague and general idealised notions).

In any case, each school of thought pursued different a priori values anyway, so some sense of objective “truth” doesn’t come into it.

The Austrian school has made many contributions to economics, the subjective theory of value, marginalism in price theory, and the economic calculation problem. These are all parts of mainstream economics and disputed by practically no one. What has Marxist economics ever given economics except a blackeye?
Marx said that socialism would create such abundance most people would only have to work part time. Austrian economists said that socialism would not work and explained why it would not work. Marxist ideas were tried out for 80 years and they produced society with horrific economies just as the Austrians predicted.
Contemporary Austrians go wrong in blaming the entire business cycle on governments and do not appreciate the impact of monetary policy. However over its lifetime the Austrian school made important contributions to economics, those contributions have mostly been absorbed into mainstream economics and the school is for the most part not relevant anymore.

The other great schools of capitalism-the mainstream classical Anglo-American capitalist school of men like Smith and Friedman, the Keynesian school, and the German Historical School could all have told you Marxism would not have worked either. Additionally, if nothing else Marxism did produce some useful critiques of 19th Century laissez-faire capitalism and encouraged more economically oriented study of history.

Asking which is more correct is akin to asking who was more correct, Galileo or Newton.

Both contributed to the study of physics (or in the case of the Marxists and Austrians, economics.) Both were factually incorrect in many of their opinions, and neither would have made a very good head of state.

Nobody else needed to explain why socialism would not work after Hayek published “The Use of Knowledge in Society”. It is one of the most important papers of the twentieth century. If other economists could have produced that paper, why didn’t they?
If you include Coase as an austrian then they produced 3 of the top five economics papers of the twentieth century. That is a very important contribution.
Marxism produced no useful critiques of 19th century capitalism and economically oriented study of history would have happened anyway.

LOL. Marginalism IIRC was presented by Jevons: he did empirical work and had nothing to do with Austrianism. Ditto for the subjective theory of value, created by Jevons and 2 other non-Austrians. None of these characters believed that logic was everything and facts irrelevant to economic thinking.

As for Marx, he was a mixed bag, he had six things to say, three good and three bad.

That’s basically the only contribution.

And if you include Einstein and Keynes, Austrians were incredibly successful. But hey, why not say Karl Marx was an Austrian?

Let’s consider some distinctions. The preeminant citation on nutbaggery is crank.net. They distinguish between cranky (Bernard Palacki for President, 2000), crankier (Science of God), crankiest (Income Tax is Unconstitutional), bizarre (Zinn Mathematics) and illucid (General Theory of Evolution or Dukascopy Foundation).

Supply side theorists believe that tax cuts pay for themselves because lower taxes leads to a greater willingness to work harder and longer. To them taxes represent a theory of everything: according to Jude Wanniski high taxes even led to the rise of Hilter1. They are cranks.

Milton Friedman was a monetarist, a libertarian and a mainstream economist. Other libertarian economists included Stigler and Gary Becker. They respect theory and data. Coase was less of an ideologue and wrote a couple of terrific papers: his influence is all over the map. All are mainstream.

Marxist economists and modern Austrians are… fringe. That’s a significant step up from crank. Such folks might have something to say. Hayek is widely regarded as seeing that the market was an information processor: he identified a key feature of market systems and a key challenge (though not the only one) of command control economies. (Another challenge economic systems face is getting someone to spend their evening with a sick cow for example: oddly enough both Stalinist tyranny and Breshnev’s schlerotic Russia struggled with this.) That said, Hayek’s The Use of Knowledge in Society isn’t that widely read today, mainly because it was first published 70 years ago and there aren’t many who argue that the state should run all businesses anymore, at least outside of North Korea or Cuba. The ideas do make their way into introductory college textbooks though. In contrast Marx tends to get a tip of the hat in chapter 1, before the real stuff is presented.
ETA: Introductory textbooks in economics. I understand Marx has greater influence in sociology.