I can tell you that I am not an Austrian Economist. Like Haley (see post), I must confess my own ignorance about many of the topics discussed in Bryan Caplan's "Why I Am Not an Austrian Economist". However, I will attempt to focus on 2.4 Welfare Economics. In his essay, Caplan notes how Rothbard (Austrian School) distinguishes the free market from the government.
"His (Rothbard) main conclusions are simple and austere: every market transaction benefits all participants, while every act of government intervention benefits some people at the expense of others."
Caplin disputes this in a complex roundabout way, so maybe i can do it better. This first Austrian conclusion is good in theory, but in practice can be very misleading. Every market transaction may benefit (or seems to benefit) all participants at the exact moment of the transaction, but not the time before or after the transaction. when values have changed, will there still have been gains on both sides of the deal? Change in values is inevitable, due to constant changes in our environment. There are some gaps between the ideal and practice. I conclude that subjective value is an unreliable basis for this claim.
I will value things in my life differently around different circumstances. The author of this article may arrange a transaction for a seemingly comfortable futon on Craigslist.com, but cannot return this good (for nothing) after having slept on a metal bar ALL NIGHT if the previous owner doesn't do returns! To accept that all market transactions are mutually beneficial is to deny the existence of lemon transactions (getting ripped off)...
Subjective value theory
Every day more musicians go through being wealthy for a month to obscure poverty once their one single falters. While Aqua CD's were valuable (barbie girl) in 1997, today they are not. Which brings up the necessity to include a temporal element to value, as well as a marketing element. It's very important to include an analysis of potential value (+-value due to marketing) and temporal value (avg value/time or stand the test of time?) when operating under subjective value theory, because some things are worthless even though people value them temporarily. How else can we differentiate between seemingly valuable goods, and truly valuable goods?
Rothbard's second conclusion seems to suggest that each person pays a small amount for the government to give a bundled benefit to a select few. Yeah okay, can't argue that. Maybe I'm not all criticisms.
Bryan Caplin's work supports many of my previous accusation towards the current mission of economics (if you've not tuned in, EVERYBODY KNOWS EVERYBODY ELSE IS WRONG). Nobody can seem to agree on anything, but intellectual growth is contained therein. If there is an objective truth to economics, this convergence is supporting evidence of it. I find the Austrian school differentiating itself from the neoclassical rival in fairly minor ways to be extremely encouraging.
Hope is not yet lost for economics!
Politics is still full of $#!T, though.