Austrian economics and value judgements: a critical comparison with neoclassical economics
AbstractThe article points out the limits of Austrian economics in so far as the passage from positive to normative economics is concerned. We propose a comparison with neoclassical economics and discuss the different theoretical solutions adopted by these two schools of thought in their legitimization of the normative discourse. The bridge from positive to normative economics is analyzed as resting upon two interdependent pillars, one of a technical nature, the other of an ethical one. In the case of neoclassical theory, these two pillars are, respectively, the “Pareto principle” and the so-called “minimal benevolence principle”. In the case of Austrian economics, they are the “coordination principle” and the set of “quasi-universal” value judgements. A first problem for Austrian economics is that the coordination principle turns out to be incompatible with process analysis, the latter being a central theoretical tenet of the Austrian school. A second problem, which overwhelms both the schools of thought, has to do with distribution. Our thesis is that whereas the neoclassical solution of the distributive problem is formally consistent (although deeply unrealistic), the Austrian solution is theoretically untenable and based on strong, although implicit, value judgements.
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Bibliographic InfoPaper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 08-2003.
Length: 27 pages
Date of creation: Mar 2003
Date of revision:
Other versions of this item:
- Sandye Gloria-Palermo & Giulio Palermo, 2005. "Austrian economics and value judgments: a critical comparison with Neoclassical Economics," Review of Political Economy, Taylor & Francis Journals, vol. 17(1), pages 63-78.
- NEP-HPE-2003-07-10 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cowen, Tyler & Fink, Richard, 1985. "Inconsistent Equilibrium Constructs: The Evenly Rotating Economy of Mises and Rothbard," American Economic Review, American Economic Association, vol. 75(4), pages 866-69, September.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Austrian Welfare Economics Confused
by Robert Vienneau in Thoughts on Economics on 2011-06-02 12:18:00
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