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Looks great! I like the changes!

"In the narrative that I am constructing, Mises and Hayek in their own respective ways made major theoretical innovations in the 1940s which were presented in Human Action and Individualism and Economic Order."

This looks like some kind of postmodernist philosophy to me - "constructing narratives"! Maybe you should include Derida and Foucault (or maybe Gadamer) in the curriculum as well. They are supreme masters in (de)constructing narratives :)

"Major theoretical innovations". Maybe here should be added "that waited in the darkness of ignorance for more than 25 years, to be recognized and appreciated as such only by Izrael Kirzner in 1973." :)


Your understanding of Kirzner's lecture is very weak, perhaps you should write to him. He does answer mail from careful scholars. In fact, what you claim about the socialist calculation debate is so far removed from the argument that Kirzner (and Lavoie) provide that it is almost impossible to correct in this medium as you get wrong every single statement of the position articulated. THEY NEVER CLAIMED THE SOCIALIST ARGUMENT WORKED AGAINST MISES. They claim the socialist misunderstood the dynamic nature of Mises's argument (something Mises himself said often in Socialism and subsequent writings). Hayek is not changing the argument, he is emphasizing a different slice of the argument --- that is why there is a Mises-Hayek argument. I hope you will read a paper I have coming out entitled "The Context of Context" which explains why Hayek was led to emphasize the contextual nature of knowledge in the context of the socialist calculation debate.

As for my class, we are not engaged in any "deconstruction", but we are engaged in interpretation and the telling the story of modern Austrian economics --- just as anyone must when doing this sort of history of ideas. And as I have said before for the philosophically literate mixing deconstruction with hermeneutics is actually very wrong; to the philosophically illiterate it is excusable but sad (in the same way that it is sad when the economically illiterate might believe this or that popular myth about markets).

But you will note, I don't have a single article on the syllabus about hermeneutics let alone deconstructionism. But instead a lot from Mises and Rothbard. But since neither of them can be there, we have to read and interpret their work. Wow, there comes that word again "interpret".

How you jump from the necessity to interpret texts and constructing narratives to "postmodernist philosophy" I have actually no idea unless that is what you wanted to see before you read it and wanted to believe before you could think through it. Same with the Kirzner lecture the other day. You watched but didn't listen; you heard words, but didn't understand. You only understood what you already had decided in your own head.

It must be nice to know what everyone is saying before they say it.

Seriously, don't you think you should engage individuals before dismissing them for positions they in fact do not hold? You bring a lot of energy to these issues. Why not direct that energy in a positive and productive direction rather than paranoid delusions about a Kirznerian hidden agenda and or a Lavoie/Boettke plot to corrupt Austrian ideas with deconstructionism?

I would like to know how students who learned their micro from Mas-Colell react to Rothbard's chapters on factor pricing. If you want a really, really good standard introduction to the Austrian version of costs, what about Haberler’s International Trade, published as Der internationale Handel in 1933? This text is more modern than late Rothbard and much more representative for the Austrian School (Wieser, Böhm, Hayek, or Robbins).

Don't get me wrong. I like Rothbard and love Mises. But their approach to capital and the resulting confusion with factor pricing may have an adverse selection effect on curious young scholars. You may lose the most promising. Instead you could discuss the way the neoclassical cost theory became dominated by the Austrian emphasis on opportunity costs (after Marshall prior dominance), how Knight, Robbins and Haberler brought this approach to the mainstream, that its significance is often obscured by pure equilibrium analysis (Knight) and that Buchanan subjective cost development is an interesting new approach to the old Austrian quest.


I am not philosophically illiterate. At the contrary, I have graduated with excellent grades in Philosophy from the university with very long tradition, specially in teaching Classical German philosophy. I am familiar with subtle distinction between hermeneutics and deconstruction you are talking about, because I have read both Gadamer and Derida in original as a part of my curriculum.

But, although there are differences between them, deconstruction is only a dissident fraction within hermeneutic tradition. As Habermas said once, eventually deconstructionist river flow into the hermeneutics sea. I referred to what was common element in hermeneutics and deconstruction - idea of truth and science as constructs, or narratives as you said. There is no objective truth, there is only endless interpretative and reinterpretative intervention of understanding into the historical material, or deconstruction and redescription of narratives. In their relationship towards traditional demands for objective scientific truth, commonalities of Gadamer and Derida are far greater than their philosophical differences. Both deny traditional notions of scientific objectivity, pursuing the truth and so on. When you say you are "constructing narrative", you don't mean "interpreting" in the old fashioned way (seeking for "true" explanation of the things or theories), but playing the game of creating interesting literary stories about them.

The reason I reacted was the fact that you used such a typical postmodernist notion, "narrative", to describe your interpretation of modern Austrian economics. I did not expected infiltration of Deridian mumbo-jumbo into the syllabus of the Austrian economics course. Your formula "In the narrative I am constructing" in postmodernist tradition means "in my particular literary story, in my idiosyncratic, subjective notion". As I said, "creating narratives" has nothing to do with objective science, it does not mean interpreting in the old fashioned way, but telling story without any ambition to discover the truth. Your narrative is only your narrative, and by definition it can not be interpreted as more truthful or in any way cognitively better than mine. It could be more interesting, more provocative, more useful for some practical or theoretical purposes (as neo-pragmatist Rorty, close theoretical friend of both Gadamer and Derida would say), but it cannot be true. Narrative is even critical notion in postmodern thought, used to denounce relativist and culturally defined nature of such a logocentric, metaphysical constructs as science, philosophy, capitalism, religion (for example "narrative of late capitalism").

As for Kirnzer, you misunderstood me. My point is not that he has some "hidden agenda", but only that he has self-serving interpretation of Mises and Hayek, according to which nobody was not able to understand the real meaning of their 1949 books, including themselves, until Kirzner did that in his 1973 book. You are certainly familiar with the problem of Mises's laudatory foreword to Kirzner's early book from 1960s, book that was completely Bohm Baverkian and Rothbardian, and thus "wrong", according to mature Kirzner. How then was possible that Mises praised the book that contained a "wrong" interpretation of his own ideas? One of Kirzner's speculations was that Mises did not understand real implications of Human Action at that time. With all due respect, I don't find that interpretation very convincing. Kirzner did not give any serious argument for that (see my comment in previous thread on his talk).

In that regard you are self-contradictory. On one hand you say Mises and Hayek were not refuted in 1930, but only "misunderstood" by socialists. If so, then their 1940s contribution should be seen only as a clarification and better exposition of the same ideas and arguments from 1920s and 1930s. But, you (channeling Kirzner) claim at the same time that they introduced a "major theoretical innovations" in 1940s. It cannot be both - either they only clarified their correct and misunderstood arguments, or they developed "revolutionary and new arguments". You cannot eat the cake and have it uneaten for tomorrow at the same time.


Is it possible that what happened in the 40s is that in the process of clarifying and improving their arguments, both Mises and Hayek came to realize how different they were from what had by then become the mainstream? And is it possible that this realization led them to rethink and reframe what exactly Austrian economics was saying? They may well have been both "right all along" but also led to restate AE in a way that reflected a major innovation in self-understanding.

As for the "narrative" stuff, give me a break. The idea of "analytic narrative" is well-established in social science and the word "narrative" need not imply being unhinged from any interest in truth the way you suggest. "Telling a story" about the evolution of Austrian economics IS an attempt to get at the truth of the matter, even as we realize that no individual narrative is capable of Objective Truth. Some narratives are more truthful than others because they are more logically coherent, better conform to the historical evidence, etc., but knowing objectively which explanation is True simply isn't possible. We have to make judgments of better and worse, but unless you have a pipeline to God that we don't, True History is going to be beyond the reach of bumbling, stumbling, Mengerian man.

(I'm sure that I'll now be called every nihilist name in the book, which will make a nice addition to all the inflationist names I've been called over the last few months. :) )

Dear Steve,

I really don't understand what problem you see in using such descriptive terms as "inflationist" of "Austro-Keynesian". They help us to illuminate real features of one's theory. Selgin himself described implications of free banking theory as entirely consistent with Keynesianism. By the same token, I don't object to using such terms as "extreme apriorist" to describe Mises' methodology for example, because it describes something, it tells us something about Mises's methodology, in the same way label "Austro-Keynesianism" tells us something real and valuable about the position of the person who believes that increase in demand for money justifies credit inflation (expansion) from the part of banks.

Problem with "narratives" is that they are part and parcel of philosophical program which by definition excludes traditional criteria of objective truth, science and philosophy. Rorty considers philosophy to be a sort of literature, of narrative about how western people understand their history and culture. He considers even physics to be some kind of literary narrative about physical world. He rejects completely the old, "macho" idea of truth as waiting out there to be discovered and conquered by man, and human reason as "mirror of the nature". The same, and even worse, holds true for Derida. It is not by accident that deconstruction is at North American universities mainly taught on departments of literature, not philosophy. That tradition uses notion of "narrative" as a critical concept to deconstruct "logocentric discourse" of objective metaphysical truth.

As for Mises and Hayek, my whole point was that Kirzner's interpretation of what Mises and Hayek did in their 1949 books is highly dubious. He claims that they suddenly abandoned Bohm Baverkian objectivist approach and adopted what he describes as entrepreneurial market process approach, and considers that as major innovation that effectively refuted previous socialist claims in the context of calculation debate. What we see in both Human Action and IEO, however, is exactly the opposite - their repeating the old "Bohm Baverkian" calculation argument. Misesian entrepreneur is a fellow who risks real material resources, capital, on the market in pursuit of profit. This is pretty same "praxeological" (sorry for using this dirty word :) ) concept Mises used from the beginning. Where is the radical innovation there? Main Hayek's objection in "Competitive Solution..." from IEO to market socialists is not impossibility to centralize knowledge, but impossibility of socialist manager to produce cost-effectively in absence of price competition, which is consequence of absence of genuine private property. Again praxeological, objectivist, not-capital free Stone Age Austrian dogma.

Contrary to Salerno, Hoppe and other Rothbardians I think that Mises and Hayek should be in large part "re-homogenized". But unlike Kirzner and you, younger Kirznerians, I think that re-homogenization must be carried out along the Bohm Baverkian, praxeological, objectivist lines, not in accordance with Kirzner's interpretation in CE. As I said already, it is highly unlikely that Mises did not understand what he meant by notions of entrepreneurship and market process in Human Action. It is even more bizarre to believe that Hayek, who devoted many hundred of pages to development of capital theory in order to perfect Bohm Baverk's approach would suddenly in 1949 abandon all of that and adopt some kind of Kirznerian "alertness" and his radically subjectivist reinterpretation of competition and entrepreneurship.

I think that Kirzner wants to say that his position from CE is a culmination of Austrian school, and to make that picture more plausible he ascribes his views to Mises and Hayek. Therefore, whole previous history must be manipulated accordingly by constructing bizarre "narrative" of nobody actually understanding alleged "revolution of 1949" until early 1970s (until him, that is), even at the cost of gross and sometimes painfully obvious distortions of Mises's and Hayek's ideas, as well as throwing Rothbard's and his own early works under the bus, as basically nonsense. I don't buy that.

Wow, Nikolaj, you just fell right down the rabbit hole, didn't you? I can't understand a word of your comments on Kirzner and the socialist calculation debate. As for "narratives" I think we should, like, um, respond to the position a person actually, you know, um, puts forward. Don't falsely equate a person's position with some other view that you then attack. It's just bad form, Nikolaj, and totally uncool.

I will only say that my reading of Kirzner of Competition and Entrepreneurship is that he recognized that Mises's entrepreneur was the way in which the learning that Hayek described in 1937, 1940, and 1945 is promoted. Entrepreneurship (which Hayek certainly mentions in the 1940 article) is the vehicle by which expectations are dovetailed in the market process.

I'll ask my colleagues here to tell me if they think that's an accurate reading of Kirzner. If it is, then it makes hash of Nicolaj's rather convoluted reading of the last 75 years of Austrian economics.

(And how Kirzner is saying Hayek abandoned capital theory is utterly beyond my ability to comprehend. Rabbit hole indeed.)

Roger Koopl,

I don't see how the fact that you don't understand something imply anything about my "falling down the rabbit hole".


Kirzner's thesis in the talk was that Human Action and IEO introduce revolutionary changes in AE that were unrecognized until 1970s. That's very bold, and I would dare to say very bizarre statement. It implies not only that Hayek dramatically abandoned Bohm Baverkian position, but also Mises.

It is correct that Kirzner interprets Human Action as substantiating Hayek's psychological and epistemological paradigm of market as a tool of communicating knowledge. There i son doubt about, I assrted exactly that. But, problem is that such reading of HA is manifestly false. Entrepreneur as devised by HA is not "alert" knowledge seeker from CE and from some Hayek's "convulted" and fashionable philosophical pieces about market, this Misesian entrepreneur is owner of physical capital who risks it in pursuit of profit. He is choosing and economizing in the circumstances of uncertainty, not "discovering knowledge".

If you read for example Hayek's "Competitive" Solution" you'll see that he is Misesian to the core in that paper. Certainly, he is talking about "entrepreneur", but that is not the guy who first grabs 100$ bill on the street (Kirznerian "entrepreneur"), but capitalist, owner of capital, who manages physical assets, calculates the costs and depends on price competition in order to be able to calculate. So Hayek's entrepreneur and Mises's entrepreneur is capitalist forming and dissolving enterprises and banks, borrowing money and investing in time consuming processes of production, calculating costs in the conditions of price competition, and finally gaining profit or incurring loss. He has nothing to do with Kirzner's entrepreneur/ arbitrager, who only uses his knowledge in buying/selling operations.

Various words can have different meanings, depending upon the "narrative" which part they are. :) So the "entrepreneur".

Pete, would you be kind enough to post the full citations to the "recommended journal articles" in the syllabus, so that some of us non-academics will know where to dig, please? Thanks much.

Interesting book Machine Dreams. How credible is this man? He drops the usual leftwing clanger on Maggie Thatcher's "no such thing as society" indicating that neither he nor any of his readers checked the source. John von Neumann is his pinup boy, interesting, he was the man who introduced the idea of formalism trumping realism into quantum theory and then he repeated the move in economics.

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