Wednesday, May 13, 2009

Interview with Israel Kirzner at

Thank you Jake for helping me find this. The interview makes some very solid points about Austrian economics and its relation to other schools of economic thought.

On Keynesian economics:

I have never really seen myself as a macroeconomist. Of course I've taught macro for many years, yet I felt I never understood Keynesian economics. It assumes that decision making doesn't matter. All that matters are the relationships between totals. While I often pointed out what seemed to me gaping holes, I had no great desire to counter this with a separate macroeconomic theory of some sort.
On the Austrian Business Cycle Theory:'s one thing to develop a theory which could explain a downturn. It's quite another to claim that historically every downturn is to be attributed to that particular theory. That does not necessarily follow. If one were asked, does this theory necessarily explain each and every cycle, I would say no.
On human action:

The fundamental Misesian insight into human action is that it involves a tendency to be right rather than to be wrong. People have an interest in being right. They do not have an interest in being wrong. This definitely, distinctively weights the tendency of human action in the direction of being right.
Each of these points is incredibly interesting in its own right. I think they speak for themselves, but I would like to add to the third point.

If people generally have more of an interest in being right, or getting something right, then in the long run we will all be better off economically. In trading it is often said that when you're losing money the market is trying to tell you that you're wrong. Every person has a different threshold of pain, but once that point is reached people adjust and strive to be right.

No comments:

Post a Comment