Reddit mentions of Hayek's Challenge: An Intellectual Biography of F.A. Hayek

Since this is a issue I really care about, let me give you my 2 cents. My backgorund is this, I started reading economics gut into austrian economics and got ouf of it a little bit again. Meaing that for some time I tought only austrians had insights but then found much more diffrent economists that also had great insides.

Lets get to it. I think to a some extent they talk past each other. In some ways they agree.

Murphy keeps making the point that what we learn from econoimst and how most arguments we make are not empricly tested but logicly deduced. This is clearly correct. On the otherhand you have friedman who agrees but still wants to attmept to test them.

It seams to me that you can easly except that we can not really test many of the clames very well but just because something is very hard does not mean we should not do it. Meaning that when you do empirical work, you have to be aware of the limtations of empical work.

Hayek was asked how then in such a complex system can we falsify a theory (assuming the are both logicly possible). Hayeks answer basiclly is, its very hard, lots of experiments, lots of thinking, lots of time.

So the question it all comes down to is, given emprical stuff is so hard should we even try it. It seams to me that we should, because if we dont we will just have two logicly consistent systems with diffrent assumtions about human action. Groupe X belives that increas in minimum wage does not increase unemployment because they belive humans act like that and the others disagree. For such cases it is usful to test these.

So for me it comes down to this, use clean well thought out logic of human action system, think abut how people would act, there insentives and form a theory. Then think of a way to test this theory as well as you can, cleary admit that the tests are probebly not clear enougth and much more testing has to be done befor we could call the system anything close to a low.

I also have to note that most modern austrians or GMU school if you like do follow that approch much closer then the Mises one.

For anybody who cares about this I would recomend a book, Hayek's Challenge: An Intellectual Biography of F.A. Hayek (http://www.amazon.com/Hayeks-Challenge-Intellectual-Biography-Hayek/dp/0226091937). The book is really in large part about methodology so dont let the title fool you to much.

There is one more thing they differ about, namly how you deal with assumiton that seam to be wrong but still deliver good results but I dont want to get into that, since my thinking is not 100% on that yet.

Edit: That guy at 47min does not get the debate at all.

Edit 2: Murphy on GD. I think the standard view with austrians is that both money and govemrent intervantion worked togather. One would have to ask everybody. There is clearly a groupe including murphy who dont buy the money stuff at all but I do think that the GMU Austrians (or Free Banking Austrians) would largly disagree.

Edit 3: Murphy makes a good point with the price example. In large part Friedman agrees but one would still wants to test it the other does not.

Edit 4: About P. Schiff. The housing bubble is not the same as the larger crisis. Schiff know much about the housing market but that has not much to do with the larger crisis or with autrian theory. The market is never in complet equillibrium, that means any one actor can be better then the market but it is unlikly that you can consistently outperfrom the market.

Edit 5: Took out one paragrapth, that I am not sure about.

No offense but your grasp of Hayek's work and its importance in economics is pretty superficial at best, and wildly off base at worst (e.g. "basically one idea", though I'm not sure how literally you meant that). And you don't have to take my word on it, several prominent Nobel prize winners-- working in diverse fields in economics-- were deeply influenced by his work, and notably the fields in which they were most prominent seem to have little if anything to do with business cycles or political polemics like RtS (for what it's worth, in my view RtS is Hayek's least interesting work by a fairly significant margin). Just off the top of the head: Douglass North, Elinor Ostrom, Vernon Smith, James Buchanan, and Ronald Coase.

North himself is on the record in saying Hayek was the greatest social scientist of the 20th century. That would be an astonishing claim for someone of North's stature to make if Hayek's important work was limited to business cycles (which, as you correctly note, hasn't found any kind of widespread acceptance in contemporary econ) or political polemics. It's at least slightly less astonishing if you drop that assumption and instead recognize that Hayek worked on a number of other projects, and that his work in particular on institutions and how they structure human behavior laid much of the groundwork for North's own later work.

It's probably also worth pointing out his influence hasn't been limited to economists, e.g. see political philosopher Jerry Gaus's work. I think John Tomasi is another, though I'm not as familiar with his work.

For secondary sources, you might find Bruce Caldwell's intellectual biography Hayek's Challenge to be a useful starting point, or perhaps Peter Boettke's FA Hayek. For primary sources, I'd recommend starting with the first volume of the Law, Legistlation, and Liberty series, Rules and Order.