Earlier this year I spent some time at the LSE archives. Prior to that I have been reading as much as I could about the LSE in the 1930s for two other projects that have occupied my research time for the past year or so. I actually have become quite a fan of Lionel Robbins in the process -- more so than at any other time in my academic career. But I have also come to the position that most economists -- even those very interested in Robbins -- simply have a hard time reading and comprehending him because, I suspect, their own priors simply will not enable them to access what Robbins is saying.
I came across an methodological appendix to The Nature and Significance in the LSE archives that explains in a very nuanced way his own understanding of the a priori nature of economic reasoning in light of German language methodological writings such as Mises and Schutz and in contrast with Anglo-Analytic philosophy. It is sophisticated, it is subtle, and it is pragmatic. It is also brilliant, and in my reading spot on and if others read it and comprehended it, they too would avoid wasting a lot of time arguing over positions which were in fact not held. But unless you understand this you have a hard time actually comprehending the full meaning of Robbins's so-called repudiation of the Austrian Theory of the Trade Cycle (let alone claims folks make about his retreat in the socialist calculation debate). Read this passage from his Autobiography (1971, p. 154): "Now I still think that there is much in this theory as an explanation of a possible generation of boom and crisis. But, as an explanation of what was going on in the early ’30s, I now think it was misleading. Whatever the genetic factors of the pre-1929 boom, their sequelae, in the sense of inappropriate investments fostered by wrong expectations, were completely swamped by vast deflationary forces sweeping away all those elements of constancy in the situation which otherwise might have provided a framework for an explanation in my terms. The theory was inadequate to the facts. Nor was this approach any more adequate as a guide to policy. Confronted with the freezing deflation of those days, the idea that the prime essential was the writing down of mistaken investments and the easing of capital markets by fostering the disposition to save and reducing the pressure on consumption was completely inappropriate." (emphasis added)
Robbins does not repudiate the theory in this passage -- far from it, look at the first italicized sentence --- he finds much of merit in the price theoretic explanation of the boom-bust cycle. But, as the bold sentences reveal, he believes the theory was not applicable to the particular historical events of the 1930s. So lets recap for those challenged -- Robbins doesn't refute the logic of the theory, he is questioning its application to understanding a particular set of historical circumstances. I believe he is wrong about that -- especially if you merge the Austrian price theoretic explanation of the manipulation of money and credit with a understanding of monetary disequilibrium theory as well as with non-monetary factors that resulted in "regime uncertainty" along the lines laid out by Robert Higgs. Trying to explain something as complicated as the length and severity of the Great Depression of the 1930s with a single theory focusing on a single causal explanation just doesn't seem to be the way to go. There were monetary and non-monetary factors; there were market difficulties in recalculation during adjustment and non-market political activities which result in capital consumption and a worsening of economic conditions. So Robbins definitely rejects an Austrian explanation of the Great Depression of the 1930s, but he doesn't repudiate the theory nor does he necessarily say that that ABCT was followed and failed in the 1930s -- he says it was in fact impotent guide to policy in those circumstances.
For example, it would be interesting to see what, if anything, he would say about this diagnosis of his from 1934 and where he would disagree: "The habit of intervening to prop up unsound positions and to support particular interests must cease. Nothing must be done which will encourage business men to believe that they will not be allowed to go under if they make mistakes or if the conditions of the market make necessary a contraction of their industry. Instead of being more and more an official of the State, hampered on all sides by administrative rules and regulations, the business man should be freed as far as possible to perform that function which is his main justification in a society organized, not for the benefit of the part but of the whole, namely, the assumption of risk and the planning of initiative. The same principle must underlie the treatment of private property. Property must be left to stand on its own legs. Intervention to maintain the value of existing property - i.e., to frustrate the effects of change in the conditions of demand and supply - must cease. The property owner must learn that only by continually satisfying the demands of the consumer can he hope to maintain intact its value. Only in such conditions can we hope for the emergence of a structure of industry which is stable in the sense that it can change without recurrent catastrophe." (1934, p. 190)
Would he say businesses should be bailed out and that special interests should be allowed to lobby for protections from the rigors of competition? Should property owners be protected against market re-evaluations?
Does this passage imply that he would have to agree to bail outs, special interest exemptions, protections from competition, and guarding against market re-evaluations: "To treat what developed subsequently in the way which I then thought valid was as unsuitable as denying blankets and stimulants to a drunk who has fallen into an icy pond, on the ground that his original trouble was overheating.” (Robbins 1971: 154). I don't think so, I think an appropriate reading of Robbins would see him striving to find that intellectual space -- as all economists from Adam Smith to F. A. Hayek had also done -- to address human suffering in the short run in a way that doesn't distort the operation of the very mechanisms that tend to eradicate poverty, ignorance and squalor in the long run. Long term economic growth must not continually be sacrificed for short term relief. Unfortunately, the caldron of politics tends to produce public polices that exhibit such a short sightedness bias. As a result capital is consumed rather than invested, and thus wealth creation is curtailed and the spread of generalized prosperity is thwarted.