Theoria and Austrian Economics [from what I can see]

First, I want to state that I think vehement argument is somewhat akin to what, I have surmised, the Austrian School could have some commonality. An artifice of insular, academic jargon could be thought as a kind of intellectual credit bubble. It provides certain sheltered, intellectual framework where truths can be maintained or dismissed, careers can be made, artificial ‘bubbles’ of certainty can be maintained that would not be possible without the academic organizational structure. Interdisciplinary argument is a bit like heterogeneity of intellectuality in the ‘free market’ of ideas. When argument is stripped of rigid boundary conditions that defines various traditional paradigms (i.e., Austrian, Keynes, Freidman, Frieburg, etc.), the raw force of the argument is brought to the fore. The tendency for the argument to rely on justifications within its tradition is deemphasized as it must rely more on its own logic and empirical backing. To the degree that an academic discipline sets up its own internal language, unfalsifiable assumptions, barriers to entry and relevancy is to the same degree that it becomes a dogma and not a science (I use dogma and science here more are pure ideals or poles and not any implied designation or a particular discipline). To the degree that academic rigor becomes mesmerized with itself and encrusted in its professional (and economic) certitude is the same degree that it fails to respond to intellectual ‘market’ risk and uncertainties with agility and relevance. On a personal note, I love the free, no holds barred, market of ideas and never mean anything personal or hold personal feelings about the enterprise. I am a bit of an iconoclast and do not recognize artifice or title; only a good, backed up argument. In my opinion there are no ‘educators’ except in sophistry (i.e., paid academicians), -only better students. I am a student most of all and value learning above all no matter if I prevail or fail in the argument. I have learned most when I failed. I make no pretense to knowledge of Austrian economics. I only point out, in a rather nag fly ‘internet’ manner, the problematic issues I perceive.

It seems to me that Austrian economics is too focused on pure capital and not the underlying value dynamic (or better, referent in linguistic philosophy) of capital. To illustrate this, let’s look at this case. There is a tendency for monopolistic endeavor to initially reduce the cost of goods from consolidation, economies of scale, domination of suppliers and systemic abolition of competition through lower pricing and de facto regulation. Once a monopoly has effectively eliminated competitors, created a bubble, there is nothing to stop it from using its position to maximize profits by increasing pricing for some time, effectively regulating the market either with public or private market regulation. Private market regulation would mean prohibiting market entry by, for example, the monopolist requiring ‘compatibility certification’ (by you guessed it) or imputing any kind of standard on the market that requires monopolistic approval. This effectively sets up barriers to market entry and competition and ‘regulates’ the market by its own internally generated rules. A monopoly can effectively produce a lower expectation of cost in the market. This can artificially effect the perception of entrepreneurial investment and perceived cost of entry for production requiring consumption of monopolistically produced goods or services. Furthermore, if market entry is determined and controlled by monopolistic concerns, bubbles can result that the Austrians appear to reserve for central banking. Empirically, these kinds of monopolistic bubbles has occurred the U.S. with railroads and energy to name a few. Monopolistic entities will push risk down to their suppliers, consumers and end producers. As monopolies succeed, this will effectively shift the damage of the inevitable bust to suppliers and consumers. Monopolies effectively become economic ‘governments’. While they may dominate the market, produce the conditions for bubbles and busts, they will eventually become bloated, diluted and dispersed from sheer size. Of course, this assumes that they do not literally become the government as in a monopolistic ‘planned’ economy. It seems that making an essential distinction between private business and public ‘government’ may have some ideological underpinnings and historical, economic artifice. However, the critical dynamics that produce bubble and burst in an economy may be more effectively diagnosed from an analog continuum of small to large organizational dynamics resulting from within the organization, its environment and its market footprint. This would seem to take account of market heterogeneity better than starting with the a priori notion of ‘kind’ (as in public versus private). Certainly there are legitimate differences between public and private that should be part of an economic analysis but when unsustainable assumptions become the ‘economy’ of an intellectual enterprise, inefficient analysis becomes authorized and perhaps, other, more efficient models are dismissed. Why is it that “boom and bust” seems to be only reserved for government intervention (i.e., central banks) and dismissed entirely from the possibility of anything that could happen strictly in the private market?

Additionally, if the ‘government’ or even the central bank system is assumed to be homogenous as opposed to the heterogeny of the ‘free market’, a certain kind of over-simplification seems to prevail. The U.S. government is comprised of states each with constitutionally protected and at times, somewhat ambivalent powers from the Federal Government. The electorate also introduces much uncertainly and heterogeny into the ‘government’. The central bank is not so central. In the U.S., it is comprised of Board of Governors, the Federal Open Market Committee, twelve regional Federal Reserve Banks, and privately owned U.S. member banks with various advisory councils. However, relatively speaking, the U.S. central bank is probably more homogenous than the U.S. Government. The same could also be said of large corporations with board members, executives, management and employees. When the U.S. Government is thought as a monolith, a certain kind of “internet” thinking is imputed on its heterogeneity. These issues need to be thought in terms of the dynamics of relative size, organizational diffusion and market impact not in terms of ‘nouns’ that carry pre-understood connotations.

In contemporary philosophical terms, if the referent of capital (or value) is thought to END in adjectives like ‘free’, ‘unhindered’, ‘just’ [proper function of the] market as opposed to the ‘distorted’, ‘boom and bust’, ‘unjust’ [improper interference] market of government intervention, the referent points to nouns (‘ends’ as determinates) and not verbs. The value of capital is sustained and maintained vis-à-vis an ideal of real and artifice, free and not-free, natural market dynamic as opposed to forced and destructive market regulation, private versus public and authentic versus illegitimate. This is what contemporary philosophy refers to as a meta-language; a language that contains its own terms for what constitutes relevance and minimizes externality. To the degree that externality, the dynamic that faces us, is filtered as already understood theoria is to the same degree that market activity is NOT largely a product of emergent order. I would also add that this will always be a matter of degrees. Theoria is not optional; it is ‘seeing’. However, when it tends towards static, encrusted academic ‘job security’ it shuts down the process of emergence and replays the error of ordination. As Thomas Kuhn would suggest the received beliefs become the normal science that often suppress “fundamental novelties because they are necessarily subversive of its basic commitments”. Thus scientific revolutions are required as “tradition-shattering complements to the tradition-bound activity of normal science”. In Austrian economics I would think this could be coined as ‘boom and bust’.

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