Review of Austrian Economics - The Ludwig von Mises Institute

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Book Reviews 127 can retort to Mirowski that his vague references to strategic considerations and game theory (p. 236) are no substitute for a rigorous refutation of the law. Of course, common-sense arguments have no place in a system that purports to be completely mathematical, and to the extent that neoclassicism has this goal, Mirowski's challenge to the law of single price is perfectly justified. But does contemporary economics altogether eschew arguments not based on physics? It will hardly do to dismiss the use of such arguments just because they do not conform to Mirowski's own picture of neoclassicism. Regardless of this and other details, Mirowski's case is formidable. How can economics escape its longstanding bewitchment by physics? Readers familiar with Austrian economics cannot fail to note that the Austrian school avoids all of the errors that Mirowski finds in both classical substance accounts of value and neoclassical energetic theories of utility. Mirowski rightly notes that Carl Menger "cannot be considered a neoclassical economist" (p. 261), since he repudiated the imitation of physical science. But evidently viewing Menger's path as leading nowhere, he does not give a detailed analysis of the Austrian system. (Elsewhere, he refers briefly to Hayek but never to Mises.) Had Mirowski done so, he would have found the answer to his difficulties. In the Austrian view, exchange takes place only where each party values the good he gains more than the good he surrenders. By repudiating the spurious principle that exchange is an equality, the problem of conservation of utility disappears. Further, the best developed version of Austrianism, that of Mises and Murray Rothbard, views utility as simply a ranking of goods. It is not a mysterious substance or field; and there is no problem of integrating production and distribution. The theory always operates with preferences for concrete goods and services, not the quintessence "utility" to which Mirowski objects. With this school, I suggest, not with the institutionalism Mirowski favors, lies the future of economics. There is much else in this outstanding work that merits discussion. Influenced by the anthropologist Mary Douglas, Mirowski believes that both economics and physics take many of their concepts from the human body; and he presents an elaborate scheme of the evolution of these concepts. Further, he views theories as metaphors that are imposed on reality. Like Donald McCloskey and Richard Rorty, he rejects a realistic theory of knowledge. I do not think this is the place to discuss these views at length, and any attempt to do so is handicapped by the failure of our author to define "metaphor." One question that does come to mind, however, is this: is not
128 The Review of Austrian Economics, Vol. 5, No. 1 Mirowski's continual claim that precisely the same conservation laws are present in both physics and economics itself an instance of just the sort of domination by the metaphor of conservation he complains of in others? For Mirowski, it is apparently the conservation laws that must be conserved. The book is immensely stimulating and suggestive. It is must reading for all economists and intellectual historians. David Gordon The Ludwig von Mises Institute
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