Chill to the Next Episode: Best Wishes for 2006

Best wishes to all for a peaceful, productive, and prosperous New Year.

As we end 2005, Brad deLong set off a discussion on his blog by raising the question of the ideologue status of Hayek.  The general consensus of the 70 plus comments and the track back is that Hayek is a ideological dogmatist.  With the lone exception of J. Barkley Rosser, however, nobody took the time to critically assess Hayek's analytical argument.  Instead, we are treated to claims of guilt by association (Hayek supposedly never publicly criticized Pinochet and therefore supported the right wing authoritarian) and policy myths (rich get richer, poor get poorer and it is Hayek's fault). 

My original post, which de Long took as the starting point of his post, was an invitation to engage Hayek (and Austrian economics more generally) analytical argument and to avoid these sort of ideologically blinded discussions.  First, rather than a hermeneutics of suspicion, I prefer to advocate the Lachmann principle of "charitable reading".  Second, while I think policy relevance is a virtue and not a vice, I think our critical focus should be on the reasons and evidence a thinker brings to bear on his policy positions and not those policy positions per se.

Austrian economics as a school of economic thought puts forth various propositions that follow from their methodological position and analytical methods.  They are committed methodological individualists (but not atomistic) and methodological dualists (but not post-modernists).  The analytical focus is on decision making in a world with an uncertain future.  The capital structure in a modern economy consists of heterogeneous capital goods that have multi-specific uses, and the entrepreneurial market process is one of on-going discovery of better ways for individuals to arrange their affairs to coordinate production plans with consumption demands.

But rarely does debates over the relative merits of Austrian economics in modern economic discourse turn on these questions of methodology and method.  Instead, the critique gets bogged down in outrage over the policy positions offered.  This just seems to be the fate of Mises and Hayek.

To be frank this annoys the hell out of me.  One of my favorite Dr. Dre songs has him warning his critics that they better watch out or "They will bring back the old me."  But rather than respond to uncharitable readings with uncharitable readings of ones own, I do hope that Austrian economists will heed Lachmann's demand for us to follow the principle of charitable interpretation, and they follow the scholarly example of civility that Israel Kirzner has represented throughout his career.

So as we end 2005 with charges flying of ideological dogmatism, lets hope that in 2006 (especially since policy issues of extreme importance such as the war, universal health care, financial instability, market regulations, globalization, etc. will be no doubt on the table) that cooler heads will prevail and that honest debate will take place and reason and evidence will be the guide.

Comments

[Ian Lewis]

This is a little off topic, but I am curious to know which major economists are admired on the Left. Every now and then I Google 'site:DailyKos.com Economist Economists'.

And, with the exception of Delong, they dont like any.

And I believe this is because, regardless of where you are on the Political spectrum (i.e. Left, Right, Austrian, Chicago School, Neo-Classical, etc.) you are going to have some conclusions that say "...therefore, people should be free to choose."

And this kills people on the Left. There can be no equality if the state is not controlling the peoples' actions.

So, if I were you, I would not get too annoyed. You should be no more upset by this than hearing stupid arguments from an 8 year old.

Simply tolerate his actions and then work and associate with reasonable and intelligent people.

(I am realizing that none of this is probably new to ANYONE on this site, but it felt good to say it anyway.)

Happy New Year!

[Zac]

But what does peter Bottke make of delongs claim that hayek is just nutty with those silly comments about atlee killing the rule of law?

[alex]

interesting nugget from the delong comments (which seems to have escaped notice):

'Barkey Rosser suggests that RTS was only an attack on command planning which leads to serfdom, etc. In the 76 preface to RTS H argues that the welfare state (eg - Sweden) leads to serfdom also, but that the process occurs "more slowly, indirectly, and
imperfectly" (p. xxiii)'.

[Peter Boettke]

In response to Ian --- economics puts parameters on people's utopia so even a left leaning economist (say Larry Summers) will sound "right wing" to those who have an unconstrained vision of the world --- e.g., look at the uproar over Summer's comments on Kyoto from a few years back. But I would say favorite economists on the left would include Joseph Stiglitz, Paul Krugman, and John Roemer.

In response to Zac --- Brad De Long is a very intelligent man and usually an astute observer. I believe he has a blind spot when it comes to Hayek.

Finally, in respone to Alex --- I criticize Barkley's reading of TRS in the most recent issue of the European Journal of Political Economy. My essay "On Reading Hayek" is available at: http://www.gmu.edu/departments/economics/pboettke/pubs/Reading_Hayek.pdf

Best wishes to all for a Happy and Productive New Year in 2006.

[alex]

I read PB's EJPE piece, I don't think you really dented Rosser, let alone Levy

Do you think H was a kook when he argued that welfare state (eg - sweden 76) led to serfdom?

[Peter Boettke]

Alex,

Obviously I am more impressed with my response than you are :).

But the bottom line is that no I do not think Hayek was a kook, and the reason is, as I stated in the article pointed to, that Hayek's argument is not deterministic. Instead, we have to take into account the endogenous public choice theorist to use a term U. Witt's once coined.

I do believe that the welfare state creates serious problems in terms of state power, distortion of incentives, and the atrophing of self-governing norms among the citizenry. These are hypotheses I think we should be exploring as economists because I find the arguments of Hayek, Buchanan, V. Ostrom (among others) to be very persuasive on these issues.

[alan]

what on earth is the endogenous public choice theorist?

i thought your reply to rosser was ok (I liked his piece too)

[Colin Danby]

1. There's a problem with the way *both* the Austrian and Keynesian traditions are read (and, sometimes, understood by their partisans) in light of the postwar planning debates -- people get set in opposing aprioristic positions about the state.

2. I'm interested in "They are committed methodological individualists (but not atomistic)" I'm stumbling across this blog for the first time so please point me in the right direction if this has been covered, but is there more sustained reflection on social *ontology* in Austrianism? What exactly is entailed in the "not atomistic" and how far can that be taken to incorporate intersubjectivity and the possibility that close personal ties incorporate power?

3. Brad's response was unsympathetic, but at least he went to the trouble of citing chapter and verse, and one can make a serious response to it as Steve H. did. And it actually raises a halfway serious question about what a more nuanced Austrian position on the postwar Brit labour govts would be.

4. Ian: I think progress on your question requires more careful definition of "left." Brad is a fairly conventional neoclassical and broadly neoliberal; he periodically lashes out at the traditional left. And Kos is an interesting web phenomenon, but too large and frenzied for careful thinking. Who exactly says "there can be no equality if the state is not controlling the peoples' actions"? What or whose concept of "equality" is this?

[Peter Boettke]

Colin,

Joseph Aggassi wrote some papers on what could be termed "institutional individualism" in the 1970s in philosophy journals, and I picked up some of these themes in a couple of essays ... "Evolution and Economics" and "Austrian Institutionalism" in Research in the History of Economic Thought and Methodology, Vol. 6 (1989) and also in "Institutions and Individuals," Critical Review (1990). All can be found on my publications page off my home page. Obviously there are criticisms of this position ... notably by the critical realists, one example is Paul Lewis's very intriguing criticism of my own work recently published in the Review of Austrian Economics (available at www.gmu.edu/rae and in the archives of 2005 issues).

On the British Labour government, I think Lawrence White in the comment section at Brad's blog raises a serious interpretive question about the "chapter and verse" issue.

On the other hand, Steve Horwitz is certainly correct that economists such as Mises and Hayek who wrote from their 20s and into their 80s certainly said some silly things. I am sure Keynes did too, and I am quite certain those of us considered followers of the Austrians and the Keynesians have said many silly things --- especially in this age of internet "publication". But the point of my original post was to push for "charitable interpretations" --- the best readings of intellectual opponents, not dismissive readings. I know many Austrians (myself included) would have to plead guilty to violating that principle at times, but I cannot help but think that the comment section to Brad's post has been an excellent example of criticizing Hayek by NOT reading him charitably.

[alan (i want tenure)]

Very glad to hear that Prof Boettke is less than thrilled with the Mises Institute (& their simplistic free market propaganda). That said, however, I do not read Hayek’s serfdom in a deterministic fashion (it is clearly not that kind of argument & people are incorrect to thik it is), but simply (re)ask the following:

"You want Hayek to be saying the equivalent of "if you smoke one cigarette, you're guaranteed to get lung cancer." Unfortunately, that's not what he's saying." (Steven H)
I don't read hayek as saying that, I just read him as not persuasively showing how starting with a puff will lead to 10,000 packs per day.
Public libraries to concentration camps (which is what worst give us in chapter 10 of RTS) mechanism please?
"Democracy does not take the problems out of severely restricting the market process" (Steven |H)
how severe before RTS kicks-in?
Same as "significant scope" for state in welfare - how significant for RTS to kick-in?

Coherent story please folks/resident austrians like Peter and Steven)?

[Rafe Champion]

Just posted this comment by mistake on the Brad deLong site.

"Interesting to see the experiment with comments! It is very difficult to decide how much time to put into these debates, if you think you have serious work to do, you cannot spend more than about five minutes a day planting comments deep in ephemeral threads of discourse."

"On the other hand, it is my hope that the meeting of minds in blogs will expose open-minded persons of the left to ideas that they never would have met (at least in a coherent form) in the ordinary course of events prior to the rise of the net and the interaction that we now get on blogs".

Some random comments:

1. On Sweden, they probably have the best record on free trade of any place in the world, so they have the motor of dynamic export industries to keep them afloat. Is this due to the influence of Wicksell who was a huge admirer of Menger and protested the way that Marshall diminished the Austrian content with successive revisions of the Principles? On the civil libertities front, Sweden has the second most repressive drug laws in the western world (after the US).

2. My new year resolution is to make Bill Hutt a household word, not just for his work on trade unions and the labour market but also his analysis of the vote-buying motive as the Achilles heel of democracy and other work in classical political economy. Some of this I have already put on line because nonwadays if it is not on the net then a lot of students will never see it.

3. Another resolution is to regularly update all the blogs and discussion groups where I have access with news about the research projects and publications by Austrians and fellow-travellers worldwide.

[Nathan T. Freeman]

Prof. Boettke, first, thanks for enabling comments. I've been hoping to say hello since I saw that you had a blog.

It might be polemic rather than real academia, but it looks like Mark Steyn's been reading (or re-reading, I really don't know) RTS lately. http://www.opinionjournal.com/extra/?id=110007760

Don't know whether that argues for or against anyone's attitude about Hayek, but as I read over that piece, I couldn't help but think back to discussions about Hayek in Prof. Kirzner's classes.

Glad to see you are doing well. I miss sitting in on those amazing colloquiums.

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