If the Austrian school is speaking in a descriptive mode, telling us the causes of inflation and the effect of currency and credit manipulation by a "central" agency, one can evaluate its explanation against the explanations offered by other economic schools. (Though one must be careful, as even this form of explanation, whether it is historical narrative, when applied to understanding events in the past like the Great Depression, or as an idealized "law" falls short of the necessity strictly required by a true science.) I have not read other schools on monetary economics, but Ron Paul is a follower of the Austrian school and makes much use of it in his discussion of the Federal Reserve and its policies.
However, as far as I can tell, much of the problem with the positions of the Austrian school arises when it is speaking in a normative mode, making claims about what ought to be done, or the relation of economics with respect to ethics and politics. One cannot sever economic behavior from the natural law if the goods attained by economic actions are subordinate to the ultimate end of human life. Nor can it be argued that the ultimate end of a political community is merely the production of wealth, or that idealized laws that supposedly represent human behavior should therefore be elevated to the status of norms. Models of practical rationality are only good in so far as they admit of the full range of human freedom, which is rooted in the conception of the good, however erroneous it may be in certain people. When those models become reductionistic in order to simplify the explanation being given and to give them the semblance of necessity needed for them to appear "scientific," some form of determinism is inevitable.
If the Austrian school is wrong with respect to its first principles in the practical realm, then its conclusions [concrete recommendations] cannot but be flawed.
While Lew Rockwell.com has no problems publishing the political tracts of Paul Craig Roberts, as far as I can tell, it will not reprint what he says about the economy, and for a good reason. The sort of "protectionism" that Mr. Roberts endorses is opposed by the Austrian school. It is not clear to me how well-grounded the protectionism of Messrs. Roberts, Buchanan, or Dobbs might be. Let me instead refer to the protectionism advocated by Wendell Berry, in The Idea of a Local Economy, which is a normative claim rooted in a conception of what the good life should be like for a community and is virtually identical with Aristotelian-Thomistic politics on this point:
SO FAR AS I CAN SEE, the idea of a local economy rests upon only two principles: neighborhood and subsistence. In a viable neighborhood, neighbors ask themselves what they can do or provide for one another, and they find answers that they and their place can afford. This, and nothing else, is the practice of neighborhood. This practice must be, in part, charitable, but it must also be economic, and the economic part must be equitable; there is a significant charity in just prices.Legislators are not concerned merely with bringing about a state of affairs that is "best for the consumer" (i.e. an abudance of goods at the cheapest prices possible)--they must consider what is best for the producers who are also members of that community, and for the community as a whole. Life is not just about consumption, and both production and consumption are ordered towards higher things.
Of course, everything needed locally cannot be produced locally. But a viable neighborhood is a community; and a viable community is made up of neighbors who cherish and protect what they have in common. This is the principle of subsistence. A viable community, like a viable farm, protects its own production capacities. It does not import products that it can produce for itself. And it does not export local products until local needs have been met. The economic products of a viable community are understood either as belonging to the community's subsistence or as surplus, and only the surplus is considered to be marketable abroad. A community, if it is to be viable, cannot think of producing solely for export, and it cannot permit importers to use cheaper labor and goods from other places to destroy the local capacity to produce goods that are needed locally. In charity, moreover, it must refuse to import goods that are produced at the cost of human or ecological degradation elsewhere. This principle applies not just to localities, but to regions and nations as well.
The principles of neighborhood and subsistence will be disparaged by the globalists as "protectionism" - and that is exactly what it is. It is a protectionism that is just and sound, because it protects local producers and is the best assurance of adequate supplies to local consumers. And the idea that local needs should be met first and only surpluses exported does not imply any prejudice against charity toward people in other places or trade with them. The principle of neighborhood at home always implies the principle of charity abroad. And the principle of subsistence is in fact the best guarantee of giveable or marketable surpluses. This kind of protection is not "isolationism."
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