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To: CalculatedRisk who wrote (52084)	6/5/2006 3:45:30 PM
From: gpowell	Respond to of 116555

Like Krugman, I've tended to ignore the Austrian school. The older Austrian school is well integrated into mainstream academic economics, i.e. marginal analysis, capital theory, opportunity cost basis of supply, etc. There is a branch of Austrians, mainly followers of Rothbard, who reject most formal analysis and any and all state created institutions and those are the “Austrians” that Krugman is reacting to. Where differences exist between the “academic Austrians” and, let’s say, “neo-Keynesians” they are in areas not usually covered until graduate school – and not until the 1980’s and later. It is my understanding that Hayek favored a small government that was only involved in keeping the peace. Otherwise he felt the market should work its magic. If that is correct, its not so much that I disagree with him always - just sometimes, like in the example I gave earlier. Hayek wasn’t concerned with the size or role of government in society. His concern was only that government and society be free to evolve. His main objection was to statism of any form. I think the view you are ascribing to Hayek is more correctly associated with Rothbard. Economics and normative issues can't be separated. Thats why you have it backwards ... ask first where you want to go, then ask how to get there. You get “there” in any way that you can. I see a glimpse of the socialist/progressive movement in your thoughts here. Yes, according to this view, science (including economics) and the power of the state are to be used to engineer a higher state of utility than would have existed without rational planning. In this regard, economics is simply a means to an end. However, economics, as a means of inquiry, was not developed, nor does it advance, for that purpose and would (does) exist without such a normative goal. BTW, Marxists would argue that society evolves regardless of the rational plans of society and the state. That you and I, or our descendents, would find our normative goals, values, morality changing and adapting to whatever path served to create the highest collective utility (given the constraints of any particular era). Given, that economics, in part, is about the study of such long-term evolution it is hard to reconcile that fact with your assertion that economics is tied to the normative issues of any one era.

To: CalculatedRisk who wrote (52084)	6/6/2006 11:57:44 PM
From: Wildstar	Read Replies (1) \| Respond to of 116555

Of course economics starts with normative issues. I recommend reading Adam Smith's: "The Theory of Moral Sentiments". Economics and normative issues can't be separated. Thats why you have it backwards ... ask first where you want to go, then ask how to get there. Economics is a positive science; it makes statements. It's about facts, cause and effect, the consequences of rules. Ethics is normative; it makes judgements. The two are wholly separate. Economics may inform our ethics, but by itself is not normative. One can easily make the conclusion, "Minimum wage laws hurt the poor," as a purely factual statement. Whether or not we then ought to enact minimum wage laws will depend our subjective view of how much we care about the poor.