Down the Rabbit Hole That Is Austrian Economics – Simply Explained

Economic laws are the same no matter your ideology and aren't disputable. But there's a whole universe of dynamics that are poorly understood. I think what distinguishes the Austrian school is an ideology that considers state intervention invariably negative; and separately that we should all use a gold standard. (I'm not sure how they square the passive, descriptivist perspective wrt market volatility on the one hand, with the prescriptivist preference for a gold standard.) But the arguments behind these policy preferences aren't falsifiable.

The basic argument for Keynsian interventions is reflected in Keynes' famous line, "In the long run we are all dead."[1] From a policy perspective, it doesn't matter that a free market will eventually return to equilibrium (or is by definition in a stable cycle regardless of volatility) if in the short term people are starving and will never live long enough to see better days. Keynes was railing against the gold standard and effectively deflationary monetary policy which manifestly was causing severe deprivations in Britain.

The Austrians counter that volatility is induced by interventionism. No doubt that can be true and has been true, but it's also true that intervention can reduce volatility; indeed, all forms of human organization have sought and ultimately succeeded in reducing extreme volatility. Austrian vs Keynesian seems more like a debate about normative social policies than concrete economics.

[1] Longer quote: "The long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again."