In my critique of Austrian economics1 (Caplan 1999), I carved out a virtually unique position: Despite the Austrians’ professed devotion to “realism” against neoclassical pragmatism, the latter approach is in fact far more realistic than the former. My critics (Hülsmann 1999, Block 1999) remain unconvinced. The editor’s invitation to respond provides me with an ideal opportunity not only to def...

How are prices determined? This is a very basic economic question that many economists have sought to answer. The short explanation from neoclassical economics is that firms, seeking to maximize profits, produce until their marginal revenue equals their marginal cost, thereby generating a supply of goods and services. Consumer demand for these products arises from income-constrained utility max...

Behavioral economics confronts a problem when it argues for its scientific relevance based on claims of superior empirical realism while defending models that are almost surely wrong as descriptions of true psychological processes (e.g., prospect theory, hyperbolic discounting, and social preference utility functions). Behavioral economists frequently observe that constrained optimization of ne...

The foreign policy of states determines the way they behave in the international arena. Accurate analysis of official foreign policy documents of a country is helpful in that it shows what the international priorities of a country are at specific periods. This article reviews the U.S. National Security Strategy documents published in 2002, 2006, 2010 and 2015 from the perspective of the percept...

Robert Lucas' ([1972b] 1981a) article on the neutrality of money represented first effective challenge to Samuelson’s neoclassical synthesis methodological separation between static microeconomic optimisation and macroeconomic dynamics. Lucas rejected disequilibrium price dynamics, as expressed by Walrasian tâtonnement auctioneer mechanisms. Lucas’ new treatment equilibrium an expectational con...