Laudato Si
On Methodology, which is an important issue of contention among economists:
In economics, many accuse Austrianism as being a pseudoscience, because it is not empirical. It isn’t and any proponent of the economic theories of Austrianism knows that deductive logic is the weapon that is used for all theory. But people act as if not being empirical is enough to discredit the school entirely. Two responses. First, empirical has a particular meaning, and it is usually that a premise is scientific, or can make hypotheses that are testable in a lab, the results of which always following a general trend. The problem with this is that economic laws, if you can call them that, cannot be tested in a lab. There is no way to isolate monetary theory and determine if effects of a certain policy will be one way or another. In this way, no economic theory is empirical, and Austrianism is only admitting what it knows to be true: yes, we are not empirical. But no one else is either, in the strict sense of the word…
The second response is that empiricism requires (in addition to the above – testable hypotheses) predictive power. If a hypothesis is true, it will follow the scientific process to the next step and become theory after it has been verified as generally true. [Some mainstreamers deny that theory can exist outside of a particular place at a particular time altogether. This isn’t taken as an admission that mainstream economics isn’t empirical, but it should be.] From theory, a person studying the science should be able to predict economic functions generally, and act accordingly. However, as you will notice with the bailouts, the stimulus, and the bubbles bursting in the last 30 years, mainstream economic has little-to-no predictive power, as it should if it is empirical. On the other hand, the deductive methodology of Austrianism predicted both the tech bubble of the 90s, and the housing bubble of ’08, as well as many international bubbles. Its track record has been far better than any mainstream school, despite the accusations that since it is not empirical it is not intellectually rigorous enough…
In fact, though it is a topic for another day, Austrianism holds that it is the mainstream theories themselves in many cases, that are causing the economic problems we are having today – especially the extension of credit that is not backed by wealth in the first place, which inflates the value of everything, requiring a natural deflation later to decrease the false money supply…
Related: Speaking of false money supply, here is a visualization of our debt.