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Obviously you are right, Pete. Times hopefully are changing. When Jerry O'Driscoll and I tried the primary literature approach (boosted by a certain interpretation of our history)we were dumped on by Rothbard, Kirzner and others. It would have been one thing to disagree but it was quite another to say that we were destroying Austrian economics and confusing the young students (eg, you and Steve and the NYU students). Only Ludwig Lachmann, of the "old guard", came to our defense.

Personally, I was somewhat demoralized for quite a few years after the initial publication of the book.

Great Blog Post!

But I disagree somehow. What attracts me to think about Austrian Economics is it's awareness of the history of economic thought. Granted I don't share the ideology and I've problems with the exegesis approach but still history matters. And that separates Austrians from the rest of the herd. Which matters.

Luckily Austrians have not yet appropriated Schumpeter. But in his "History of Economic Analysis" he states very clearly that his first choice is history and the second statistics to analyze economic phenomena. I think that is a very wise choice provided you always analyze phenomena in their current context. One example: you can't understand current affairs if you watch them with your gold-standard goggles on.

Thus I think to learn history is a smart choice and will most probable lead to a much better understanding provided ideology doesn't stand in the way.

PS: If you have some connections to mises.org please tell them that the original title of Ludwig Erhard's book was "Wohlstand für Alle" which translates into "Prosperity for Everybody" and not "Prosperity through Competition". I find this appropriation very annoying. Thanks.

So where do those vices come from? Fellow Austrians (and would-be Austrian) peer pressure? Too much glorification of past Austrian figures?

It seems to me that pretty much every vice on Pete Leeson's list follow from vice 6; 'Do not confuse "correctness" for "goodness" in economics and vice versa.' Why is it that it seems Austrian economics inspires intolerance and close-mindedness on young students or attracts a lot intolerant and close-minded students?

> PS: If you have some connections to mises.org please
> tell them that the original title of Ludwig Erhard's
> book was "Wohlstand für Alle"

Just email Jeff Tucker. I've sent him correction of things in the literature section and he's fixed them.

I've been thinking about this topic as well, although I'm not sure if my thoughts on the subject are similar to yours. It seems to me that the "revival" of Austrian economics, at least in the past three or so years, has been led by economists who have simply re-stated classical Austrian positions on certain topics. So, as far as it's easily seen, the most work has gone into defending Austrian theory amongst the mainstream.

While I am far too young of a student of economics to know to just what extent Austrian economics has truly developed - or, development of theory - in the past ten years (and, I'm sure development has taken place), it just seems to me that the field has little to offer towards that end.

There have been, of course, continued developments: theory of free banking (Selgin, et. al.), theory of interest (specifically, Hülsmann and Reisman), et cetera. It just seems as if this is but a minor backdrop, and that most efforts are pitted towards validating existing Austrian theory.

It's not to say that the task of defending Austrian theory in the mainstream is unimportant. The truth is actually the very opposite. The growing spotlight on Austrian economics has only brought in a large number of potentially future economists. My point is more that perhaps too many people have been focusing on this task.

To put it in economic terms: Austrian economics's division of labor has not extended and specialized as much as it should.

Maybe it is the general lack of interest in the theoretical. But, again, I am no position to objectively judge if this is true. Given my relatively young age (23), I have been exposed only to a limited amount of contemporary Austrian economics.

I don't think the job of an economist is only to address contemporary problems. You can address contemporary problems with old theory, defunct theory, or ridiculous theory. This is, indeed, what most economists or econo-journalists are currently doing. What we need is development of the theory used to address contemporary problems, applicable not just in the present but also in the future.

>"Why is it that it seems Austrian economics inspires intolerance and close-mindedness on young students or attracts a lot intolerant and close-minded students?"

That's a very good question! I'm curious what the answer will be. My take: to much crusaders on a historical djihad who once in their youth subscribed to a scripture and are not prepared and willing or able to move on. Like Don Boudreaux or Russ Roberts.

With Mario, I commend Pete Boettke for his post and express my agreement with it. The problem was the older generation, who found new ideas threatening.

Ludwig Lachmann stood apart and supported organic growth in the Austrian tradition. That is why Mario and I dedicated the Economics of Time and Ignorance to him.

The "revival" of Austrian economics began in 1974 at South Royalton, VT. From the beginning, there were internal debates of which those between the old and then-new generations -- already mentioned -- lingered until deaths and retirements settled the issues (Schumpeter's formula for scientific progress).

The generation of Pete Boettke, Steve Horwitz, et al., fostered openness and civility. One sees that carried on in their students. If there is a generational issue, I don't see young people as the source of the problem. ("Young" is relative here.)

Austrian economics does attract a disproportionate share of "enthusiasts," as opposed to scholars. I have no good explanation for that. But the scholars have done the tradition proud.

Most of the incivility I have noted here and at TM comes from those curious folks who like to troll the Internet. The certainty of their convictions is in direct proportion to their ignorance of the issues.

I didn't know that also Kirzner, so to say, opposed innovation, at least in 1985.

Anyway, I completely agree with the post. For instance, in the field which interests me more, business cycles, it appears that there is lots of work to do. The point shouldn't be what Mises said, but ask new questions, such as "why did quantitative easing failed in Japan and at present?", or "what's the role of international capital markets in the austrian cycle?", or "are credit aggregates and derivatives some sort of money?", or "in which markets is there malinvestment now?"...

It is also a good idea, to the extent that it is possible, to restate Austrian themes in contemporary economics language.

@Jerry O'Driscoll
My question is: what's the problem of Austrians to reach out and respond to other heterodox schools of economics? There's so much to gain.

For instance L. Randall Wray asked serious questions in his blog "Towards a Libertarian/Austrian Modern Money Theory" and reached out to you folks. Perfect opening for scholars like Steve Horwitz. The response? Silence. Most probably because everybody is obsessed to read P. Krugman. That's not good.


Do you know what 'hagiography' is? That's what the austrians professor Boettke critizises do with Mises, Hayek, Rothbard and the rest. And what about their followers? They've developed a cult of personality with regard to those figures. As a result, many of Leeson's vices (what a great post, by the way) arise. If you put together this phenomenon with the ideology issue (even worse, with the LRC-paleoist issue) you get a deeply discredited sect, which is what some strands of the Austrian School are nowadays.


While I understand that a revival in scholarly interest resumed in the 1970s (well, in all honesty, I don't think the Austrian school ever died; it was just during the 1970s that the discussion shifted to entrepreneurial economics, where there was obviously an increase in interest), I was referring more to the revival in terms of mainstream recognition.

While it's hard for me to know to what degree the Austrian school was widely recognized during the 1970s (and, I'm sure recognition grew with Hayek's Nobel prize), it just seems to me that the school has been taken more seriously only recently.

On the other hand, one of the great things of the 1970s "revival" was that it was mostly theoretical (entrepreneurship, banking, et cetera). Our current revival seems to be more about advertising what already exists.

"But I also think this is the #1 problem with modern Austrian economics"

Really? Still today? Perhaps, although I think things have come around thanks in large part to you, Pete.

Hm . . . Well, why don't we start listing what's new in AE since 1973?

I"ll get the ball rolling by mentioning the obvious blockbuster: The Economics of Time and Ignorance.


Please remember the context and the claim being made. First, context -- dealing with the reality of Eamonn Butler's Austrian Economics: A Primer (2010). The book could have been written, with the exception of Larry White, without reference to any contemporary Austrian work. How do we make an assessment of that? Could a book say published in 1955 written Austrian Economics: A Primer have been published which only made reference to Menger, Bohm-Bawerk and Wieser? Would we have said that was right? Could a book today be written called Public Choice: A Primer, and the only discussion would be the Calculus of Consent? And if that was the case, what would that say about the scholars who had in fact been working in that field?

Second, the claim is simple -- Mises and Hayek made significant improvements over the economics that was handed to them by Menger, Bohm-Bawerk and Wieser. Mises and Hayek didn't see their task as providing a more accessible treatment of the older writers, or doing a translation of the older ideas to a modern audience. They saw their task as pursuing ideas in a new direction to address new problems for a new age. [Note to Jonathan - please read my post, I mention theory as the primary issue, the purpose of which is to address contemporary problems; but theory development is the key]

I want us to mimic Mises and Hayek. Appropriate the good ideas, make them our own, develop them as we see fit and push them in new directions. This is why while the historian of thought in me cares deeply about faithfulness to the texts and its meaning, the contra-whig theorist does not [see my essay linked]. It is the evolutionary potential of ideas that matters in my capacity as an economic theorist and political economy theorist.

It is not an issue of how many block quotes you can marshall in a paper, it is an issue of how you develop economic ideas; build out from rational choice, specify institutional context, identify mechanisms, and demonstrate the power of the insights so derived with careful and creative case selection (that is methodological sound).

This is an exciting time to be an economist and political economist, and it is a particularly exciting time to be one of our perspective. I wouldn't want the young students deciding to enter the field to get the wrong impression --- that all the great thinking has already been done in the past, and that their role is limited to either being a caretaker of a grand tradition, or at best a slick marketing agent for a set of fixed ideas.

The greatness of Mises and Hayek (as in Smith and Say and Mill etc.) is to be judged not by how many of their ideas remain fixed in time, but instead on how much creative thought is inspired by working in their tradition. It is the evolutionary potential that can be the only justification for looking backward in time for intellectual advance on the theoretical and empirical puzzles of our age.

BTW, Roger -- every scholar is going to have there own myopic view on advances. Especially given the increased specialization in economics, it is hard to imagine someone will have the wide scope to see the entire landscape. But I do think there are have been some further developments in theory that should be pointed to:

1. Expectations --- talk to Bill about what I had to say about your joint work up at FEE and its relationship to the entire regime uncertainty debate;

2. Social cooperation under the division of labor and the issues of anonymity --- you understand this, but many others simply let Paul Seabright's book pass them by; and also this is how you have to understand the work Pete Leeson is doing and its fundamental importance to the development of Misesian economics.

3. Monetary equilibrium theory --- Selgin's productivity norm; Horwitz's work on microfoundations and macroeconomics, etc.

4. Comparative institutional analysis --- the work Lavoie has inspired in comparative and in development; its contemporary relevance to the institutions rule debate.

5. Epistemic turn in public choice --- V. Ostrom highlighted this problem, but scholars such as Dick Wagner and Randy Holcombe have worked on the intersection of Austrian and public choice economics for decades and this direction of research has many advantages to it; it is also the case that the work that you and Levy are doing on experts is consistent with what Ostrom was talking about.

I could go on, but if you think about a primer of contemporary Austrian economics, I think at least a final chapter should be devote to where are the arguments going today, what is being discussed in their journals, where are they having an impact in the professional literature.

When Jerry O'Driscoll writes his analysis in the WSJ on why the fed cannot fix this, nobody ask him, nor does his supply, the Mises quote to justify his claims. He builds an argument from good economics. If he can do that in the WSJ, my contention is that we can do that in the RAE, and better yet hopefully in the AER.


In the 1990s, it was common to see Hayek referenced. But almost always to his work on knowledge and information.

When I wrote my dissertation, I wanted to accomplish two things. First, I wanted to show the unity of Hayek's vision on issues as apparently different as information, competition, money and the socialist calculation problem. Second, I wanted to establish the relevancy of that vision today.

The first goal was more easily accomplished. The second took more time. What you call the recent revival coincides with the financial crisis.


Mario did reach out to the Keynesians. We were well received in some quarters and spurned in others. I have from time-to-time done so since then.

Prof. Rizzo writes: " When Jerry O'Driscoll and I tried the primary literature approach (boosted by a certain interpretation of our history)we were dumped on by Rothbard, Kirzner and others."

Prof. O'Driscoll writes: "The "revival" of Austrian economics began in 1974 at South Royalton, VT. From the beginning, there were internal debates of which those between the old and then-new generations -- already mentioned -- lingered until deaths and retirements settled the issues (Schumpeter's formula for scientific progress)."

Has someone documented this modern history of austrian economic thought? Or (more likely, I guess) is it just something you all know because you were there at the time (or had advisors who were there). I've heard many stories about the South Royalton conference. But I'd definitely be interested in reading something a little more comprehensive if you could offer some citations. Thanks in advance.

I agree with all that, Pete, although I seem to be more optimistic about how progressive we are. I might add couple of things to your excellent list. (Thanks for the kind remark.) There is good "Austrian" work being done in entrepreneurship. Jeff McMullen is important in this regard. See, e.g.,
Chiles, T.H., Tuggle, C.S., McMullen, J.S., Bierman, L., and Greening, D.W. 2010. “Dynamic Creation: Extending a Radical Austrian Approach to Entrepreneurship.” Organization Studies, 31(1): 1-40.

We could add, of course, Peter Klein and David Harper. Personally, I would also count Maria Minniti, who is quite important in the entrepreneurship literature.

I think Coyne's work on foreign intervention deserves mention independently of comparative institutional analysis, although it is that too.

Finally, I might also mention Mario's work with Glen Whitman in law and economics. Their critique of certain strands of behavioral economics and of libertarian paternalism exemplify the ideal you describe.

And what about Jeffrey Friedman?

You may not agree with his view on public choice, or on what historical economists thought, I certainly don't. But I think he has a lot to say that's useful.

"The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds." - JMK

Great post Peter!

For those interested, I have written a survey of recent Austrian work for the New Palgrave Dictionary of Economics (online). If you don't have access to the NP through your university library, you can check my bepress site: http://works.bepress.com/mario_rizzo

Mario and Jerry, with respect: You've both written on multiple occasions that the 1985 book was rejected by the older generation *because it was new*. Jerry suggests above that Kirzner and Rothbard "found new ideas threatening." I wasn't around in those days and can't speak to informal reactions you received, but I don't see anything in the published record to support this interpretation. I've read most of the published reviews of ETI and, while many are critical, none gives the impression the writer rejects the thesis because is isn't sufficiently hagiographic. I always assumed that Lachmann was the most receptive of the old guard because, well, the ideas in the book are close to his own -- not because he was somehow more "progressive" per se. Could you please elaborate on what you mean?

Further to Roger's point about entrepreneurship, I have a list of recent papers applying Austrian ideas to the theory of the firm, firm strategy, and entrepreneurship:


Lots of new and exciting work out there! (Suggested additions and corrections welcome.)

Professor Boettke can you list off your works where you make original contributions to the Austrian tradition? Or at the very least what theories or ideas have you developed that have helped move the tradition forward?

I almost don't want to post because I don't want to sound critical, and I feel as if I have read almost this identical post several times and made almost the same remarks I will now make, at least once or twice before.

"Schools" of economic thought are useful as a way to describe some agreed-upon ideas/methodology etc. by a group. This is fine - this is useful. However, too often the school itself then becomes a hindrance on the economists in it, because they feel as if these are their boundaries: the school defines what they can study, how they can study, what topics, what is permitted and what isn't, etc. It is only an extreme version of this tendency that binds some to only go over the works of the heroes of the school--describing what they said, dwelling on what they thought, because the core of the school in which everything is permitted is within the thoughts of the heroes of the school. You can't go wrong so long as you only study what these heroes said.

In any case, to me the goal is to be a good economist, not to be an Austrian economist. If that is your goal, let go of the label. Say Austrian-leaning or Austrian-inspired, but not Austrian school. Blend the Austrian ideas and perspective or methodology with insights from other schools. Purposely step over the line, mix and explore, challenge yourself by trying to be almost completely non-Austrian in papers from time to time.

I am NOT saying to pretend to be mainstream neoclassical or to go against your own beliefs - I AM saying to try to incorporate other ideas that you AGREE with from another school, and try to not quote any Austrians or rely on purely Austrian insights if possible for one paper; I AM saying also to challenge the Austrian conclusions by getting into the shoes of another school of thought, and seeing whether they might not be right about something, after all.

In my opinion the greatest Austrian vice (along with the greatest vice of every other school) is not doing this enough. This is what perpetuates bad economics -- the isolation of economists within a "school" -- and it explains the "stagnation" of the Austrian school completely.


I think it's sort of obvious that no one is going to say in print, "This is threatening to me and must therefore be wrong." And I think we should respect the interpretations of persons who were present. I remember when Israel said of ETI in the NYU colloquium, "This is a disaster for Austrian economics." And Murray used to say explicitly "plumb-line Misesianism!" He was most definitely hostile to anything really innovative within the Austrian tradition. I remember his rants against "probababilists," for example. Now, I have an ever deeper respect for Kirzner as well as what he did for Austrian economics, but it must be admitted that he was initially hostile to ETI.

I don't think it's worth worrying about all this much. Eamonn Butler wrote a book about the Austrian School without mentioning recent work, so what? It doesn't mean there isn't any recent work, clearly there is and it's important and interesting.

Remember, lots of general introductions to economic don't include many concepts beyond late 19th century marginalism.

@Peter Klein,

Roger made the main point.

Mario can speak to life at NYU after ETI was published. I left in 1982, 3 years before that. But there was great resistance to new thinking before I left.

I can speak to a Liberty Fund colloquium held on the book when it was in page proofs. Kirzner was very critical and clearly did not like it.

The reviews were positive overall. We made new friends and lost old ones.

Roger, you're missing my point. I know that Kirzner and Rothbard were initially hostile to ETI. As far as I know they remained hostile. But that could be because they thought the ideas were wrong, not because they opposed innovation per se!

I'm trying to be delicate here, because of my great respect for Mario and Jerry as scholars, but I'm uncomfortable with the self-congratulatory, more-progressive-than-thou tone running through these discussions. We all embrace new ideas, but novelty per se is neither good nor bad.

Jerry, what I said to Roger. I'm not questioning the fact of the criticisms you and Mario received within the Austrian community, just the interpretation of these criticisms. Are you saying that at NYU there was great resistance to new thinking *because it was new*, not because it was thought to be wrong?


Do you read what the economists who run this website write? They do precisely what you recommend, and do none of what you criticize. Who precisely is committing the "Austrian vice" and where?

There have always been recognized schools of thought, and often it is outsiders who give it a name. It was Brunner and Meltzer who dubbed the work of Friedman and his students "monetarism." Are you suggesting there was never a Monetarist School, distinct from a Keynesian School (even though within each there was always disagreement)?

The Austrian School was so named because it was originally the product of economists living in Austria. As with the Chicago School. And the Virginia School. And UCLA. Over time, in each case, the geographical linkage blurred, but the name may persist.

In modern times, "Austrian" became anachronistic. But outsiders kept using the term, and those working in the tradition could not agree on a new name. But surely you have noticed that this website is no longer called "The Austrian Economists?"


Read my first paragraph -- I didn't claim that I had made any original contributions. That is for others to determine not me. And much of my work is correctly categorized as history of thought. Though I did write 3 books on the history, collapse and transition from socialism, and I edited a book and have written several essays in development economics.

But again, the originality of mine contribution and whether or not I have helped or hurt the Mises/Hayek tradition is left to others to determine, not me, I just keep trying to track truth and do the best that I can to pursue what I consider interesting and relevant topics given my talents and my inclinations.

What do you have in mind as major contributions?

Peter and Roger,

I do think entrepreneurship is a major field where Austrians have made major contributions to the literature, same with managerial and organizational studies.


On the "Austrianism" of "Austrian Economics" --- I actually think that starting with your group the idea of purely trained Austrianism became something of a lie -- you are undoubtedly influenced by UCLA just as I am as influenced by Buchanan, Tullock, and the Virginia School as I am my roots in Sennholz and mentoring relationship I had with Israel Kirzner. I often try to tell people (in my moments of cockiness) that I try to combine Buchanan and Kirzner in terms of style and substance to work with Mises and Hayek's ideas to address the problems in the world with Sennholz's passion. I obviously fail to live up to the standards on each of those margins. And in making that statement I am looking backward, rather than "onward and upward", but it is that sort of mix of ideas (along with Alchian [think the textbook with Heyne as an attempted water-down version of Exchange and Production], and Boulding, and Schumpeter, and the Ostroms, and Olson, and then the modern political economists who I try to engage in my areas.

I don't think I am any different from others and I actually think this is a good thing for the growth of knowledge. We are all a mix of a variety of training in ideas that stay in our heads long after graduate school. So I actually think Guinevere is not quite right in her analysis of the problem as it relates to professional economists, but it definitely is the problem one encounters in the popular discourse about economics and public policy.

Oh come on, Peter, I explicitly said we " we should respect the *interpretations* of persons who were present." So it's not a matter of geometric proof, but of interpretation. Oh, and false dichotomy alert: "because it was new" vs. "because it was thought to be wrong." The very person who resists innovation per se will not think of himself or herself as resistant to change. He or she will just think the new idea is wrong.

I should probably also note one point for the sake of anyone who might be getting the wrong impression: No one is denying that the persons with the new ideas must actually argue for them, rather than merely castigate the backward. Jerry's comment were reflections after over 25 years and after the ideas he put forward with Mario have succeeded greatly.

@ Pete B:

I think we should also remember a point you are sensitive to: Virginia Political Economy was heavily "Austrian" influenced. For example, Leland Yeager taught the socialist calculation argument from his earliest days and UVa.


On the resistance. There was both -- critical assessment, and also blind spots with regard to new ideas. I know many others will deny this, but I will say the following about Murray Rothbard. I came out of college and entered graduate school a 100% Rothbardian even though I was trained by Hans Sennholz. Man, Economy and State, and For a New Liberty basically set the agenda for everything I wanted to do. Spring of my first year in graduate school (1985) I got to meet Murray Rothbard for the first time. It was an amazing moment for me. And as you know he was an amazingly charismatic man and very generous with his time. But when I over dinner asked him over dinner that first night what topics a graduate student should work on to advance Austrian economics, he did not have a very exciting answer. He said, and I am not making this up, that Man, Economy and State had covered pretty much everything, well perhaps there were some issues with antitrust that you could work on. I was devastated. I didn't want to work on anti-trust, and I was interested in doing theory and challenging the mainstream of economic thought circa 1980s. Murray (at least to me) did not give me the guidance to work on new and interesting ideas in economics. Compare that with a conversation you have with James Buchanan and/or Vernon Smith. Buchanan and Smith always see new avenues to pursue; new problems to solve, etc. My professors in graduate school -- Buchanan, Tullock, Boulding, as well as Lavoie, encouraged thinking in new ways, not in fixed ways; though they also had strong adherence to the economic way of thinking --- newness within boundaries; creativity within discipline. But the emphasis was on newness and creativity. At least in my interactions with Murray (1985-1990, at least 2 times a year and in some instances in formal settings and in others very informal settings; a very memorable night was spent at Roy Cordato's house with Dom Armentano and others just having a blast with him), he did not have that same attitude that a Buchanan and V. Smith have, he was more concerned with encouraging the plumb-line. Kirzner while a very different man than Murray, was closer to that position than what I am calling the Buchanan/Smith attitude. Lachmann (who I also interacted with and corresponded with regularly between 1984-1989) was closer in attitude to Buchanan/Smith.

In the divisions within the modern Austrian school, there are those who see it this way, and those who don't. And I actually think that is the divide, more than the pure assessment of the correctness of the ideas being discussed. Though as I said, that is there as well. And for those who were never part of it, they cannot see this.

Roger, you'll get no such false dichotomies from me! I didn't say those were mutually exclusive, just observationally equivalent.

I'm glad you added the second paragraph to your 07:12pm post; I was concerned that readers were getting exactly that impression.

Peter Klein seems to have hit a nerve here.

Bottom line: most Austrians have not been persuaded to change their views based on ETI. Call them neanderthals, whatever, that's still a fact.

Pete Boettke is correct about the influences on me and my generation. UCLA played a big role. There was some influence from Hayek and Mises on UCLA, but the intellectual ferment there in the 1970s was a mixture of many traditions. Anyone who went to UCLA in that era will tell you there was a distinct approach, and we continue to be influenced by it.

I think Roger and Mario have adequately characterized what went on at NYU. It was as they said.

Why, cuttlefish, does nobody want to listen to the suggested rules? No anonymous posts or pseudonyms to make sure the conversation can actually be real, rather than phony.

And by most Austrians I take it you mean those on the internet posting with anonymous or pseudonyms and not those teaching in college or university let alone publishing in journals; Yes, you are right. Among those who have real names, and actually real jobs as professional economists; well that would be an empirical claim that might be a bit more difficult to come to your conclusion on.

Prof. Boetkke, there have been several anonymous posters here, they seem not to have raised your ire (or maybe they've just escaped your attention). At any rate, I'm not sure what that has to do with any substantive point. As an example, I see little influence of ETI in the works of Steve Horwitz, an Austrian with whom I have serious disagreements on a range of issues, yet whom I regard as a serious scholar who is continuing the Austrian tradition. Maybe he can dispute that claim, but this is not a partisan issue on my part.

With all do respect to current Austrians, maybe the caliber of thinking within the current group of Austrians just isn't sufficent to make pathbreaking advances that will cause others to sit up and take notice.

Perhaps some Austrians are in the incubation stage, but Peter is correct if by his statement he is saying there hasn't been any "sit up and take notice" product since Kirzner.

It may not be that the focus is misplaced in the sense that the focus is on interpreting Mises et al, it may be an inability to focus otherwise in a pathbreaking manner.

CofC: you clearly have not read much Horwitz! ETI was a huge influence on those of us who were in grad school in the mid and late 80s. The dual reviews by Kirzner and Lachman in Market Process basically set the agenda for Pete, Dave, and I back then. Our joint "Beyond Equilibrium Economics" paper, reprinted several times since, was, among other things, an attempt to defend Lachmann and the world-view of ETI against the older line Kirznerianism.

Have you read my first book/dissertation? That book was totally within the agenda set by ETI.

You might also read my piece on "Subjectivism" in the Elgar Companion. You might also read my paper with Gene Callahan forthcoming in Advances (http://mercatus.org/publication/role-ideal-types-austrian-business-cycle-theory?id=27538 ), which is completely based on the typical/unique distinction that ETI really brought to AE. The RAE paper with Lewin on marriage/family and the structure of plans has a strong ETI influence in it.

Or you could try "Money and the Interpretive Turn" http://myslu.stlawu.edu/~shorwitz/Papers/Interpretive%20Turn%202004.pdf . Or this piece on Lachmann, institutions, and subjectivism: http://myslu.stlawu.edu/~shorwitz/Papers/Hierarchical%20Metaphors%201998.pdf

Shall I go on?

Having been attacked for years by Rothbardians as a hermeneutics-loving, Lachmann worshipping, inflationist-nihilist, I find it endlessly amusing that it's now being claimed that I was not influence by the very book normally pointed to as starting all that "poison."

I've read some absurd comments on this blog before, but in terms of being contradictory to the facts, this one's near the top.

And since I've been driving back and forth to Ithaca today and missing all this fun: it should go without saying that I think Pete's original post is right on the money. I'll just add two points:

1. As is often the case, Pete is too modest. Pete's work on the history of the Soviet Union was a significant contribution to the debate on those issues WELL beyond the Austrian school. His work was original and powerful, and it contributed to both theory and history. I'm not going to list all the other contributions I think he's made, but that one seems to me to be unquestionable.

2. Pete's and Anthony Evans' comments about the Butler book apply equally to Huerta de Soto's recent primer-like book on AE. I have a review of that coming out in HOPE, I think in the next issue where I make this point. I've also make it in talks at FEE the last two years: "Austrian economics is not a liturgy to be learned but an analytical framework to be examined, explored, critiqued, expanded and permeated with new ideas and simultaneously one to be used to understand the world."

OK, Steve, I'll have to read those papers. I was primarily referring to your work on monetary/banking theory and the recent work re. the socialist calculation debate (the 2004 paper makes explicit attempts to bring in the Rothbardian framework of MES). Shouldn't you be worried, though, that these references here run afoul of the great Pete Leeson's strictures about worrying so much about subjectivism (to say nothing of the undefined subcategories of dynamic vs static subjectivism)?

"Having been attacked for years by Rothbardians as a hermeneutics-loving, Lachmann worshipping, inflationist-nihilist, I find it endlessly amusing that it's now being claimed that I was not influence by the very book normally pointed to as starting all that "poison.""

Not sure what exactly you're getting at here, but I would wager that most Rothbardians would blame Lachmann for any of this, not the ETI book, which again I have to say, has had little influence in this regard.

I have never claimed I was innocent of the Leeson vices. I think I've committed fewer as my career has gone on. I also don't necessarily agree with everything on his list, but I certainly agree with its spirit. And, frankly, my CV against Leeson's suggests that people should listen to him anyway!

Your second comment above betrays some real ignorance (no pun intended) over the history of Austrian economics in the 80s and 90s. ETI was slammed as nihilist, historicist etc - all the sins of Lachmann had come home to roost in two fine (then-)young Austrians writing a book that even Kirzner thought was historicist and damaging to AE. ETI was the fruit of the Lachmanian path in the eyes of the Rothbardians and others.

What one thought of Mario and Jerry's book was the best sign of where you stood on the future of Austrian economics and the whole Lachmann/Kirzner and hermeneutics debate.

Never mind that the whole discussion in ETI about Bergsonian time came right out of the first 100 pages of Human Action...

"And, frankly, my CV against Leeson's suggests that people should listen to him anyway!"

I'm mystified over what Leeson has achieved intellectually to make you prostrate yourself this way, but whatever, let's move on.

What really makes no sense to me here is that you acknowledge that even Kirzner had reservations about ETI, yet you talk of Rothbardian hostility towards a book that you consider exemplifying a "Lachmann/Kirzner" paradigm. And to claim pedigree for the Bergsonian themes in HA, well, this is certainly something reasonable people can debate.

Which comes back to what was the original point: maybe many Austrians simply didn't agree with the points made in ETI. To think of this whole thing as hidebound, closed-minded traditionalists vs. free-thinking reformers is just absurd.

"Having been attacked for years by Rothbardians as a hermeneutics-loving, Lachmann worshipping, inflationist-nihilist, I find it endlessly amusing that it's now being claimed that I was not influence by the very book normally pointed to as starting all that "poison."

I concur with the 'endlessly amusing' part of this sentence, for exactly the same reason.

ETI is like marihuana; because so many people talk bad about it, it's on the top of my list. The 2 or 3 chapters I read (from the second part) didn't feel that 'weird', to be honest. I also remember that David Gordon's review wasn't that bad as one might expect from a book that has comparable effects on some Austrians, as the satanic versions has on some Muslims. But then again; Gordon is a really smart guy.

I do however don't really agree with the point that 'not mentioning new stuff is a valid criticism of the Butler' book. (Sorry if this is a strawman, but that's how I construct it.) Do we consider a introduction to micro text book bad because it doesn't incorporate all the new stuff; but just sticks to supply/demand, cost, etc.? No, of course not; because students need the basics in order to advance. What the Butler book - as Gene Callahan's 'economics for real people' and Taylor 'introduction to austrian economics' - does, is giving people a first glance at 'what is this austrian school'? And it does a very good job at it. If people gain interest; the internet is there to serve their curiosity. If they don't; they still read a good introduction. Compare it to EWOT, for example. EWOT doesn't give all the new insights; but provides a general framework. (Of course, this one goes deeper than the Butler book, obviously.) Just today, I wrote a blogpost, in which I advised those 3 books as good introductions, advising to move on for intermediate level books as the austrian school (de soto), EWOT, Foundations of the Market Process (Shapiro) and Market Theory and the Price System (Kirzner) for intermediate level books who cover a big range of things. For people who really want to make the effort; HA, MES and Capitalism are the ones I advised.

But I digress: point being: how can you make sense of Microfoundations and macroeconomics, without a view on money, regression and the role of prices? How to read Calculation and coordination, without an (introductory) insight in the role of economic calculation? And for that; books like the Butler book are awesome.

Maybe I'm to much of a fanboy - who knows - but one cannot do or study Austrian Economics, without an insight in some of the keyelements. I think Butler (as do Callahan and Taylor) does an awesome job in selecting those key insights. Thàt's the value of that book; that's why we need books like that; even if they don't incorporate anything beyond Mises/Rothbard/Hayek/Kirzner. Maybe that's because we (sort of) got the foundations right and we are really moving on beyond.

The way to look at it, is sort of like a gatekeeper. You need certain ideas in order to open up the door to the marvelous world of (Austrian) Economics; that make sure you get the whole idea, even if you do more specific stuff. Whilst you can read Microfoundations and macroeconomics without knowing all that's going on in the recent 'what is entrepreneurship' and 'what is equilibrium'-literature; you can't when you have no idea of the general idea of entrepreneurship or the austrian way of looking at equilibrium. Any book that serves as a keymaker for those gates should be welcomed; criticizing for not giving a peek beyond the gate is justified, but not that important, I would say.

Maybe there is work for a book that covers the Austrian School since 1974 (or since 1980) intellectually? The thing is; who wants to burn his fingers? Or maybe Mario Rizzo should update and lengthen his paper 'Austrian Economics: Recent work", with an update on the stuff that's been produced out there.

(It shows that I'm looking for excuses not to work for school.)

Ok; rereading the review; it's more critical (of the first part) than I remembered.

Both I and a classmate are soon-to-be second year PhD students who read ETI early this summer, enjoyed it, and didn't find anything particularly surprising or controversial about it. My classmate said he thought it was just a modernized Human Action. I thought it was a bit more than that, in a good way... If nothing else, that just goes to show you how things have changed, however much it appears Austrians look backwards too much?

I googled a little bit looking for Kirzner's review, or whoever else's, freely available online. I found David Gordon's, which I thought was fairly evenhanded, and frankly I don't understand the philosophy behind his criticisms well enough to know if he is wrong for making them. "Historicist" doesn't appear once, and it puzzles me how someone can characterize ETI as historicist. The only definition of historicism that ETI seems classifiable under is "anything that isn't pure, deterministic, rationalistic, caricturized apriorism." Can anyone further clarify?

There's been many comments about the often anonymous, Austrian economics enthusiasts populating the Internet and being often completely oblivious to most issues, or being rude and intolerant. For me this is a big issue.

I sincerely think Mises is one of the most important economist of the 20th century, but it's getting to the point where when I see someone quoting or citing him or Rothbard I'm anticipating that he's going to be an idiot. It's not always the case, but that bias is there. Surely that can't be good for AE...

The obvious question, of course, is why not drop the word "Austrian"?

The very word points backward.

The very word speaks of a "school" tied to "founders".

It especially has all of the baggage of Mises' mistakes about the empirical nature of economic problems and the empirical / causal nature of economic explanations (e.g. non-designed, non-top down extended order [empirical problem] and learning in the context of changing prices [empirical cause]).

And the baggage of Rothbard's hyper partisan / ideological engagement of the economics profession.

Imagine if Driesch's teleological account of entelechy or Lamarch's account of the inheritance of acquired characteristics were the most prominent "founders" and representatives of something called "Continental biology" of which Charles Darwin and his work was just one other member.

Folks might be less interested in the sustenance and scientific advance of "Continental biology" than they would in the advance of Darwinian biology.

But right there is a puzzler. How many biological scientists work on getting Darwinian biology in working order (the global explanatory strategy has significant and well known pathologies).

Almost no one.

Darwinian biology is essentially complete (outside of its intractable pathologies) from the point of view of those working on special Darwin-related scientific puzzles that have little to do with getting the overall explanatory framework in order.

In other words -- the science at a global level is complete.

In part, economics suffers from the same problem.

What Bruce Caldwell calls "everyday economic explanation" (or some such) is largely complete and really isn't going anywhere.

But in economics the problem is a double one -- biology has many, many significant puzzles still to work on.

Economics -- no so much.

Which might help explain why there is so much make-work econometrics, and why fashions change so much decade to decade.

Don't get me wrong.

I do believe there is progress. Just not much of great earthshaking significance.

Don't forget too that there is an Austrian tradition of non-economists as well. Think of Michael Polanyi. He and Hayek are founders of spontaneous order thinking in the social sciences. This is something that needs considerable development, I think. For example, I'm applying it to understanding artistic/literary production. It is also applicable to the moral order -- which I think can be fruitfully pursued.

I would also argue that many recent developments in the sciences and even in math can and should be adopted by the Austrian school. Complex adaptive system theory, self-organization, chaos theory, bios theory, emergence, strange attractors, information theory, and game theory all have much to contribute -- and mostly confirm previous Austrian insights. Complex systems evolving out of far-from-equilibrium states certainly confirms the Austrian critique of equilibrium.

What Troy said! At least at the margin. I accordingly think that people like Rosser Jr, R. Koppl, A. Kirman, J. Miller & S. Page, etc. should play a (even) greater role in in AE. Even though somewhat controversial, I also like Mirowski's Markets Comes to Bits paper. Further, Peter (B.) correctly points out that Austrians should know what the cutting-edge of their field is doing in and out. The ideal case would be someone who has a masterly understanding of all the tools of modern economics, and is able to think beyond the given boundaries. I think Alan Kirman is an excellent example. I always like to mention Kenneth J. Arrow as well, since he combines so many great skills.

I think it should also be asked: is Prof Boettke concerned about AE's relevance as such, or its relevance within the economics profession? These are two very different things.

If you want to see how older Austrians perceived ETI when it came out, read Chuck Baird's review in the Rothbard-edited RAE: http://mises.org/journals/rae/pdf/rae1_1_11.pdf . His final paragraph:

"In conclusion, I cannot recommend this book to either neoclassical or Austrian readers. A neoclassical reader cannot attain a clear understanding of the basic principles of Austrian economics from it. An Austrian reader will be bewildered by the authors' apparent inability to settle their own position on the question of the possibility of equilibrium or even the tendency to coordination that is central to any viable economics. It is sadly ironic that the authors, who have done so much to foster the Austrian revival, may have, in
this atypical book, set it back. Austrians can take comfort in the knowledge that the damage is not irreparable."

What point are you making here, Steve? We know "older" Austrians didn't like the book. What seems to be under dispute is whether this was due to closed-minded hostility to new paradigms, or due to honest disagreement over whether the book succeeded in its objectives.


Read again my friend. I did NOT say ETI "exemplified a Lachmann/Kirzner paradigm." What I said was that where you stood on ETI was representative of where you stood in the "Lachmman/Kirzner and hermeneutics debate". Sorry if that wasn't clear enough, but, again, anyone who knows the history of that era would understand that the quoted material was reference to one whole constellation of issues that had Lachmann and hermeneutics on one side and Kirzner on the other. How else to make sense of my earlier comments about our equilibrium economics paper being "an attempt to defend Lachmann and the world-view of ETI against the older line Kirznerianism?"

And it's not, to me, about stubborn tranditionalists vs. free thinkers. It's about the substance. Were we or were we not going to open AE up to compatible ideas from the rest of the discipline? Were we or were we not going to continue to engage in near-hagiographic retellings of what the masters said?

And one last one for our GWAR friend:

You wrote: " And to claim pedigree for the Bergsonian themes in HA, well, this is certainly something reasonable people can debate. "

Actually, it really isn't up for debate. I suggest you take a look at Human Action some time. Henri Bergson is cited three times in the first 100 pages. One notes how knowledgeable Bergson was in general but yet ignorant of economics. One is about the role of "intuition" in understanding historical fact (more or less what Mises would eventually call "thymology"). And the third is in the section on "Past, Present, and Future," where he cites Bergson's notion of "la duree", which is exactly what Mario and Jerry pick up on in ETI's discussion of "real time."

So, frankly, I don't think there's much to debate here. If one were going to write a book on the role of time in Austrian economics, one might look at Mises's discussion of time in HA and see who he cites for his fundamental concepts and then try to expand on that. Why it's Henri Bergson, and that's exactly what ETI did.

You know who is cited twice in the first 100 pages, including the discussion of time? Alfred Schutz. You know who else cites him a lot? Jerry and Mario.

One of the things that drove us bonkers at GMU in the late 80s was the feeling that we were being criticized by self-proclaimed Misesians for following up the footnotes in Mises. It bothered us for two reasons:

1. It suggested that trying to understand the broader ideas that influenced Mises was somehow a bad thing to do, further suggesting "it was all in Mises."

2. Somehow doing so made us "anti-Misesians" even though what we were doing was trying to expand and deepen Mises's framework.

My own interpretation of ETI is something like: "What if we took the actor's problem situation as laid out in the first 100 pages of Human Action and really tried to deepen our understanding of the forces of time and ignorance that Mises idenitifies there? How would that affect our understanding of Austrian economic theory?"

ETI may have been wrong about things, but trying to claim that all of its stuff on subjective time is not in Human Action or is somehow non-Austrian or anti-Misesian or whatever, is just flatout nonsense.

Since I am one of those people who lived through and partly participated in those years of the Austrian revival, I would like to add a few observations.

I played a minor part in that "younger" Austrian evolution in the 1970s an 1980s with the attempt that Don Lavoie and I made to introduce the "Hermeneutic" dimension to our methodological and applied Austrian Subjectivist Approach. And I tried to extend this with my series of articles applying Schutzian "ideal types" as the basis for an Austrian theory of expectations formation (as a possible alternative to the then flying-high Rational Expectations theory).

I can say that both Rothbard and Kirzner (though Kirzner always as a gentleman) reacted unbelievably negatively to both the introduction of Hermeneutical and ideal type ideas as overlaps to and extensions of the, then, existing body of Austrian Economic theory. Don took the brunt of the attack from Rothbard (though in one instance, Rothbard indirectly referred to my articles as "bullshit" -- not very scholarly or dispassionate!)

The environment was extremely harsh. I wrote an article on 'Mises' Theory of Expectations and Expectations-Formation,' which first appeared in "Market Process," and which Peter Boettke and David Prychitko very kindly reprinted in their edited volume, "The Market Process: Essays on Contemporary Austrian Economics."

Well, that article was originally written and submitted for a festschrift in honor of Murray N. Rothbard. It was rejected for inclusion in that festschrift due to the fact that the last footnote in the piece referenced "The Economics of Time and Ignorance," and two of my pieces on Hermeneutics and its relevance to economics.

Those were difficult times. And I must confess that it dampened some of my enthusiasm to continue to focus on this "research program." The environment seemed so hostile within the Austrian camp, and obviously the mainstream wouldn't even consider it to be "real" economics.

It is one of the reasons I increasingly turned to writing on themes in Austrian economic thought, or applying the Austrian-free market perspective to more everyday "popular" economic policy and classical liberal issues.

But having said this, one of the frustrations and disappointments that I have experienced as the years have gone by is the sense that the later generations (1990s and 2000s) of those younger economists interested in the Austrian approach (and, I know, I am making an unfair generalization) do not seem to take with sufficient seriousness reading through and fully mastering the Austrian classics and the school's history of economic thought -- precisely as the prologue to working on "new directions" in Austrian Economics.

One such group (and, again, I know I am unfairly generalizing) presumes that it is "all" in Menger, Boehm-Bawerk, Mises, and Rothbard. And the reading of these earlier works are all to be read and interpreted within the "anarcho-capitalist" Rothbardian prism. Wieser, parts of Hayek, and Lachmann are rejected (it sometimes seems) out of hand, and are proudly said to have never been read!. (Yes, I've met young Austrian Economists working on graduate degrees, especially in Eastern Europe, who have proudly declared this to me.)

Another group seems to believe that the essence of what is relevant in Austrian Economics can all be found in Hayek's work relating to knowledge, the price system, competition as a "discovery procedure," and "spontaneous order." It is amazing how frequently there is created the impression that this other fellow, "von Mises," never existed. Oh, he is "dogmatic," "too harsh in his language," or "so, well, unacceptable in 'polite company.'"

The permutations go on-and-on.

All history, and I would argue especially intellectual history, is crucial in most disciplines, and particularly in the social sciences and the humanities. You cannot really know how you got to where you are and in what direction it might be leading, if you don't know where you've been and how the journey started.

To more successfully have such a perspective it is necessary to understand the nature, contributions, and status of economics in general before the "marginalist revolution." One has to have a knowledge of how the Austrian tradition unfolded out of the seminal work of Menger, and into its many variations and aspects before and after both World Wars. It has to be juxtaposed to the development of those other variations on the marginalist themes that has become what we standardly call "the Neo-Classical" approach.

The same applies to monetary and macroeconomic theory. And it is useful and wise to have at least some reasonable working knowledge of history in general over the last several centuries, the development of philosophy and the philosophy of science, the evolution of political philosophy and political science, and the nature and methods of the natural sciences. And this should be combined with knowledge of the ancient world and its intellectual contributions.

If this seems "extreme" and too "demanding," I would just quote Mises from "Ultimate Foundations of Economic Science":

"When I once expressed this opinion in a lecture, a young man in the audience objected. 'You asking too much of an economist,' he observed; 'nobody can force me to employ my time in studying all of these sciences.' My answer was, 'Nobody asks or forces you to become an economist.'"

When I think back to those years in the the 1970s and 1980s, and the people with whom I most frequently interacted at New York University and within a variety of other "Austrian" circles, my memory recalls the intensity with which many of those individuals viewed it as their required task to intensively master and know in great, great detail both Austrian and Neo-Classical Economics, and other related social science and methodological and philosophical traditions, as the prelude to, then, going about the business of developing and contributing to the next stage of the evolution of Austrian Economics.

The past was prologue, but that past had to be known in all its richness and detail.

Richard Ebeling

Thank you Richard. That is spot on.

@ Richard Ebeling:

Great post. But do you, at the margin of choice, really believe that deeper knowledge of the Austrian past will be worthwile the costs? It seems that your answer to Peter's suggestion to be more open and look forward is to be even more backward-looking! As a (West)European grad student, who started with high sympathies with the Austrian School and still believes that many Austrian insights are important, I think Colander (2007: 6) has it right:

"[A]ll too often [...] heterodox
students are sent out into an environment controlled by the mainstream that is hostile to
the heterodox tradition, and to the way in which they were trained. All too often these
heterodox students aren’t being equipped with the tools necessary to survive in that
environment outside of some protected heterodox niches, which are becoming smaller
generation by generation. Regardless of how bright these heterodox economists are, in
competition with the mainstream-trained young economists who have been primed to
exist in the existing environment, most of the young heterodox economists naturally lose
out. The reality is that effective “inside-the-mainstream” heterodoxy requires not only
solid technical skills, but rather superior technical skills. The only ones who are allowed
to break to the rules are those who have demonstrated a full command of them."


I believe that this is especially true for macro, money, general equilibrium, etc.

Dear Cuttlefish,

First, why adopt that name for your screen name? Don't you think it reveals something about how you enter these discussions?!

Second, it is my position - and I am saying this for young economists out there not necessarily for you -- that it is one of the biggest mistakes floating around the internet; that relevance in economics can measured separately from engagement with the economics profession (broadly conceived). This is just not true. Influential economists are influential _economists_. And the way you become an influential economists, is to be influential within the economics profession.

So if YOU want to be an influential economist, then you better become an economists, work in the field of economics, talk to other economists, publish works that other economists read and discuss, etc. etc. This means you become a PhD in economics, you become 9 out of 10 times a professor, you 9 out of 10 times become a professor that works in a PhD granting institution, and in more than 50% of the cases you strive to teach at the five PhD programs that really matter: Harvard, Princeton, Chicago, MIT and Stanford.

For those of us (like the Austrian inspired types) who are slightly out of sync, then we strive to carve out of niche for ourselves within the economics profession. We cannot do an end-run around the profession. University of Phoenix does a good job at what it does, it isn't going to surpass Harvard on the relevant margins. To claim that "Austrians" can do an end-run around the scientific establishment because of alternative media, and online discussion groups, is similar to pointing out that U of Phoenix now has the largest enrollment but failing to ask about who is enrolling, for what purpose are they enrolling, what sort of jobs are they going to get, and how they will be able to advance career wise down the road.

Please do not get me wrong --- I am in favor of the U of Phoenix, and I hope the economics professors involved with that educational endeavor teach the basic principles of economics as handed down to us from Smith to Say to Mises to Hayek, etc. Wouldn't that be amazing?! And I am in favor of the Mises Institute and others (such as FEE) making material freely available for students, and offering seminars, online discussion groups and even classes. I am a fan. Spread the word.

What I am disputing, is that these activities UNLESS they translate into individuals from within these programs becoming serious economists, making contributions to the science of economics and teaching high quality students, it will not translate into the "revolution" that you are postulating. The idea that has been allowed to propagate about Kuhnian revolution, is both (a) historically inaccurate, and (b) a mis-reading of Kuhn -- read the Essential Tension by Kuhn, and/or Polanyi's The Republic of Science, for a discussion of the way change takes place in science. And read Randall Collins's The Sociology of Philosophies to learn how movements kill themselves with deluded notions of what constitutes progress.

Within libertarian circles this has been a debate for a long time --- Nock's remnant strategy, or Pareto's circulation of the elites strategy. Various groups have erred on either side. The trick is to find out of the remnant those who are capable of circulating among the elite. In the _science_ of economics, that means to be an economist publishing in the journals and teaching in the leading universities and colleges. There is an important niche for those who "dare to be different" and for upstart programs to challenge the existing status quo; but there is not for those who say damn this I am not going to engage you. You have to "win the game" given their rules, but on your own terms. That is the challenging trick; that is what we are trying to pull off. But make no doubt about it, you have to play the game on their terms. This is the point of my sports analogy like MLB versus the whiffle ball league you play in; you might be the best whiffle ball player in the world, but that doesn't mean you are a MLB player. No, you are a whiffle ball champion who imitates MLB players.

Bottom line: there is no path to influential relevance as an economists except through making contributions as an economists to the science of economics. Absent that, and you are just playing whiffle ball.

To me that is a challenge that is inspiring, but one that demands hard-work and cannot be purchased cheaply by becoming the champion of the internet discussion group.


Just to be clear about your frustration with the youngest generation, I agree that both followers of Mises and Hayek fail for the reasons you mention. But let me point out who this is definitely NOT true about. And that is, as you know because you led him through an intense reading course of Human Action as a freshman in college, and that is Peter Leeson. Pete showed up at GMU so well trained by you as an Austrian economists that we became instant collaborators not really student-teacher. Peter Leeson knows Mises's work as well as anyone I have ever met (I reserve the top to you and Kirnzer). As he described in his Freeman appreciation of Mises last year, his work is inspired completely by Mises. The fact that so many so-called Misesians don't see it, is classic and an indication that perhaps they don't really understand Mises, and more seriously for many of them don't understand the challenge that Rothbard put forward to us in relation to the analytics of anarcho-capitalism. Moral philosophy is NOT economics; and economics must address social cooperation under the division of labor.

What is true of Pete, is also true of several of my other students such as Virgil Storr, or Ed Stringham, or Chris Coyne, or Adam Martin (and a bunch in-between). These individuals have really studied the Austrian tradition inside and out, and also study other strands of economics. They live and breathe economics, serious economics not superficial economics. If you want to talk fine points of Austrian theory, and its historical development, you cannot find better conversation partners -- well except perhaps you, Israel, Mario, Larry, Jerry, Roger, etc.

But I do agree with the points you raise in your post. It is, as always, excellent. Thank you for sharing your insight and wisdom.

Richard Ebeling post is the best thing written in this whole thread and is a much more accurate and worthwhile statement than Professor Boettke's (sorry, no offense, although your most recent post in response to cuttlefish was really good).

Professor Ebeling made some powerful critiques of the current crop of young scholars and I think these people need to take what he said very seriously.

As a side note, what he says about the guys from Eastern Europe seems untrue. I assume you mean, and correct me if I’m wrong, the Polish contingent of the Austrian school. Right now there is a serious revival going on in Poland and I know several of the best young economists there. And just the other day at a bar three of them said to me that they thought ETI was good and full of useful insights. Just yesterday one such Polish praxeologist highly recommended Lachman's Commodity Stocks in the Trade Cycle to me.

But what you say about the young Hayekian scholars is very true and very problematic for the future of the tradition. And we know exactly who is responsible for these kids growing up to think in this manner.

You professors fight viciously with each other and as a result you've had your students pick up your biases. Now whereas your biases were formed after serious consultation with the literature, these students of yours have their vision tainted and thus they misread, misunderstand, or simply ignore important work.

If you think that it is productive you guys should keep up your 20 years running debate, ( I personally just enjoy watching the bickering in between reading your serious scholarship). But do not let your partisan positions influence your students. Let them come to their own conclusions about the works inside and outside the tradition. How you do this is up to you, but it must be done.

Also historical research as Professor Ebeling argues is very conducive to the development of good theories. That is precisely what is implied in Professor Horwitz’s post about how Rizzo and O’Driscoll went about developing the Austrian approach to time and expectations by studying the works Mises referenced.

I think its high time to have some civility, which means no more calling stuff that Rothbard has written crap or dismissing Hayek out of hand. I think that the professors can say whatever they want about each other, you guys have earned that right. But not one of you has earned the right to simply dismiss any of our masters. If you want to write a serious critique of some Hayekian or Rothbardian idea it is welcome. But these drive by attacks on these towering figures only leads the younger guys to develop tasteless attitudes towards works and thinkers they don’t yet understand. The young scholars need to show a great deal more respect for their masters (e.g. Mises, Hayek, Rothbard, Kirzner, etc.), which does not mean worship, but it does mean you must take them and their ideas very seriously.

Also stop acting as if the scholars affiliated with the Mises Institute don’t exist. Are you going to tell me that Klein, Hoppe, Salerno and Hulsmann have not done anything to advance the discipline or at the very least are you telling me that they are not working on new ideas and challenging the work of the past. Klein and Salerno took on Kirzner in the 90s just as you guys did in the 80s. Hulsmann has put forth serious critiques of Mises on at least two issues (ERE and interest theory). Salerno took on a whole line of thinking when he started the de-homogenization debate and in the course of that debate he showed himself to be a masterful historian of economic thought.

Hoppe, for all his faults, has done a great deal in developing Rothbard’s work on socialism and Mises work on Praxeology. The very idea Professor Boettke identifies as Rothbard’s forgotten contribution is developed in Democracy the God that Failed. And do not act as if “Rothbardians” do not respect Public Choice economics. DiLorenzo has an article where he identifies Buchanan as an Austrian influenced subjectivist.

Additionally if you want progress then make it happen yourself. Push your students to do creative theoretical or empirical research; write papers only if it offers something new, even if its historical research; and finally do not give up doing cutting edge work, because someone does not like it, even if that person is Murray Rothbard. And rather than lamenting about the present state of Austrian economics throw out ideas as to what areas need to be worked on.

I am very optimistic about the future of Austrian economics. Despite their bad attitudes many of these young scholars are very creative and all of them seem very interested in making contributions and challenging the work of the past.

Also I tend to disagree with the very idea that not much progressive research is being done. But at the end of the day its an empirical issue so why don’t we settle it with a paper by Boettke and a paper by Salerno, which lays out the contributions Austrians have made to Economics over the past 20 years. And you guys should also look at identifying those papers that moved the tradition forward or have the potential to influence the development of the tradition, which would include the outstanding history of thought papers produced by scholars like Professor Salerno and Professor Boettke.

And Professor Boettke, you seem to be very much in favor of full disclosure of identities, so who are these so-called Misesians that you are referring to. Are you talking about idiots on the internet, young scholars or the senior scholars afiliated with the Mises Institute?

Are you claiming that any of the following are not Misesians or are not serious scholars:

Salerno, Herberner, Hoppe, Hulsmann, Klein, Jesus Huerta de Soto, etc.

I had a similar impression to Huerta's book as Steve, and mentioned as much in my RAE review. Though I'm not sure how to characterize this sin of omission. Pete's last post I think hits at something most relevant (but perhaps more relevant to the Huerta book than the other - I haven't read Butler's) - mainly the intention of the author or scholar to communicate to either the profession or the masses. Succeeding in the latter may fall short of the former.

Prof. Boettke, I know you disapprove of pseudonyms, but there is nothing malicious in my choice, I'm simply a GWAR fan. It's as if Steve posted under the name "Geddy Lee Roth."

Outstanding post by Jacob Roundtree. I would also add an important area that Huelsmann has critiqued Mises (and in this case, Rothbard by extension): business cycle theory. His fantastic biography of Mises is an obvious scholarly contribution.

I have to say, this notion (clearly implied by the GMU contingent) that Mises Institute-affiliated scholars are doing no more than restating Rothbard and Mises is obscene, quite frankly.

I also second the notion that Boettke and Salerno (or two other worthy representatives) take this out of the blogosphere and offer essays overviewing the present state of the school.

So Jacob pleas for and end to the bickering and then asks that people start giving their honest opinions about various other scholars in a public forum?

No sale, especially when you are engaged in the same behavior you are criticizing.

And I'll ask you in return: care to provide details about who YOU are referring to here?

"But do not let your partisan positions influence your students. Let them come to their own conclusions about the works inside and outside the tradition."

and here:

"But not one of you has earned the right to simply dismiss any of our masters."

or this:

"But these drive by attacks on these towering figures only leads the younger guys to develop tasteless attitudes towards works and thinkers they don’t yet understand."

and this:

"Despite their bad attitudes many of these young scholars are very creative and all of them seem very interested in making contributions and challenging the work of the past."

The place to engage in scholarly criticism of scholarly ideas is the scholarly journals, so let's see what is going on there with respect to one example mentioned.

If you'd like to know how a serious historian of economic thought sympathetic to Austrian econommics views it, I suggest folks read Bruce Caldwell's review of Hulsmann's biography of Mises in *History of Economics Ideas* 2008 v. 16 #3. I don't think it's online but with Bruce's permission I might be able to share it.

Here's one key snippet.

"For anyone who has studied the Austrian School [Hulsmann's] narrative seems untenable. If one focuses either on the economic theories that the various protagonists developed, or on their approaches to methodology, a clean line running from Menger and Böhm-Bawerk through Mises to Rothbard is difficult to discern. Menger and Böhm-Bawerk differed from each other on capital theory, and Mises was critical of both of them in that area. Menger was an Aristotelian essentialist in methodology, an approach that Mises rejected, and Rothbard and Mises differed on methodology, as well. Mises criticized both Menger and Böhm for being insufficiently subjectivist. Furthermore, as Hülsmann himself acknowledges, Mises had many debts to Wieser, having borrowed from both his approach to money and his use of simplifying abstractions (82-83, 772-773) – why not call him a Wieserian too? There was no ‘Gossen School’, and it is both anachronistic and false to label the fourth generation Austrians ‘neoclassicals’. Finally, neoliberalism is generally regarded as an alternative to planning, not as a variant of it. I have elsewhere criticized the larger narrative that had earlier been provided by Salerno (Caldwell 2002), and a number of scholars have argued against the “dualparadigm” approach to the calculation debate (see, e.g., Yeager 1994, Kirzner 1996, Boettke 1998). None of that is mentioned in the book – Hülsmann states in his preface that he will not deal with differing accounts that appear in the secondary literature. This is indeed unfortunate given that his story line is so idiosyncratic, and perhaps especially so in a book that will be read by students who may assume that they are reading about well-established and uncontroversial facts."

Bruce Caldwell is a major league pitcher with a really good curveball and great velocity on his fastball. If you want to step up to the plate in the scholarly major leagues, you better be able to hit his pitching and not just be waving your bat around.

We need to start at the start.

Austrian economics matters because it gets the explanatory strategy of the science of economics right -- while the "mainstream" does a spectacular FAIL right at the heart of the science.

And the history of economic thought matters because economics is VERY, VERY, VERY HARD, and much of it consists in assembling a million "reminders" in the correct pattern, while marking off all the million of false detours.

And especially when it comes to the hardest core problems of economics -- like getting the explanatory strategy right or getting production, interest and capital theory right, etc. a great many of the most significant "reminders" are to be found worked out in the past.

See, e.g. the work of Robert Murphy or Avi Cohen on interest, capital theory, money and production.

"All history, and I would argue especially intellectual history, is crucial in most disciplines, and particularly in the social sciences and the humanities. You cannot really know how you got to where you are and in what direction it might be leading, if you don't know where you've been and how the journey started."

Instead of priding themselves on being ignorant of history of thought, most younger Austrians I've met would seriously consider cutting off parts of their bodies to gain a fraction of Richard's knowledge. I know I would. In the event that someone did pride themselves on not reading certain thinkers, then yes that would seriously inhibit their ability to research and write effectively in the tradition - and Richard's points above are well taken. A few of those folks do exist, but I think its proportionate to youthful pretensions in general (see the recent NYT piece on 20 somethings).

To continue:

The problem "Austrians" have is that the people who control their professional institutions are interested only in professional track "normal science" math and statistical puzzles, and they have no interest in getting their their science put on a non-pathological track when it comes to the over-arching explanatory strategy of their science (e.g. of the sort that Darwin supplied for biology).

They simply have no interest in hard thinking about the heart of their "science" -- they want to do math and statistics and publish papers and advance their careers.

This is why the "mainstreamers" have put a spike through the heart of the history of economic thought -- they have no interest in a million reminders and sign posts assembled to work out a non-pathological science. They are happy cranking out endless math and statistical papers -- that is where there interest lies and that is where "advance" and publications happen.

What scientists interested in fixing the explanatory strategy of their science have to do is pursue a dual track career -- work on "normal science" puzzles of interest to their peers (perhaps exploiting neglected "Austrian" tools at the core of a non-pathological explanatory strategy in economics), while pursuing work on assembling the million reminders needed to work out the nuts and bolts of a coherent explanatory strategy for economics -- often referencing the history of ideas.

I have mentioned before in one or more exchanges on themes similar to this one, but it, perhaps, deserves repeating.

There was no uniform "party-line" Austrian School at any time in its, now, 140-year history.

Menger was, in many ways, "alone" for the first ten years after the appearance of his "Principles" in 1871.

But in the 1880s, his general approach began to generate a group of economists inspired by his new approach to the logic of individual decision-making and method for analyzing the emergence of markets and prices.

But if one reads carefully the writings of Wieser, Boehm-Bawerk, Emil Sax, Robert Zuckerkindl (who soon helped to produce the extensions and applications of Menger's ideas that resulted in Schmoller and other members of the German Historical School to disparagingly refer to them as the "Austrian" economists), they offered subtle and significantly different variations on the Mengerian themes -- while remaining consistent with his methodological individualism and subjectivism, his emphasis on invisible-hand explanations to social evolution, and a more process-oriented approach to price formation and competition.

The same divisions emerged among the interwar generation of Austrians of the 1920s and 1930s -- Mises, Hans Mayer, Leo Schonfeld-Illy, Richard Strigl, Alexander Mahr, Rosenstein-Rodan, Ewald Schams, Hayek, Machlup, Morgenstern, and Haberler, to name some of the more prominent members from this group.

And the same "divisions" applied among the "Austrians" during the "Vienna days" of the interwar period on issues of methodology and the philosophy of the social sciences. Here I would mention Mises, Morgenstern, Felix Kaufmann, Alfred Schutz, Robert Wald, and Machlup.

The apparent "uniformity" of an Austrian approach for part of the post-World War II period, especially in America where a conscious "Austrian" remnant continued to survive, was do to the fact that only Mises and Hayek continued to write on themes and in ways in that represented a fairly explicit attitude that they were still thinking and writing in the context of the earlier Austrian tradition(s). And their views (in spite of their distinctiveness from each other) were sufficiently parallel that it created the impression that there was "the" Austrian approach to economic and market analysis.

While, in fact, there had been had been several "houses" in the Austrian mansion -- that is, variations on the general Mengerian themes in the context of the history of the Austrian School over this nearly 150 years.

The emphasis that especially Mario Rizzo gives in some of the chapters that he wrote in "The Economics of Time and Ignorance" to the philosophical writings of Henri Bergson on the nature and human consciousness of time is an aspect of the subjectivist approach to which Mises in particular drew attention in "Human Action"and "Theory and History."

In some of my articles from the 1980s I drew attention to the applicability of European Continental Phenomenological philosophy, especially as developed by Edmund Husserl (and adapted by Alfred Schutz) for understanding some core aspects to theory formation in economics. And I was drawn to this due to Mises' observation in an article from the 1940s in which he said, " The importance of phenomenology for the solution of the epistemological problems of praxeology has not been noticed at all."

The focus that Don Lavoie and I gave to different aspects of Hermeneutics also was derived from Mises' heavy reliance on the concept of "meaningful action" in Max Weber, and, in turn, how Weber and Mises were influenced by Wilhelm Dilthey's "Hermeneutic" approach for interpreting and understanding the actions and objects resulting from human conduct.

It is this wider intellectual heritage that seemingly a number of other Austrians neither understood nor appreciated. And as a result, following these earlier "threads" as a basis for refining, developing, and extending Austrian Economics in the last decades of the 20th century was criticized and "condemned." And I consider, totally unjustifiably.

This is one of the reasons that a fairly wide and serious study of the history of ideas is so important. Without it, there can be grievous misunderstandings and under appreciation of "old avenues" leading to "new directions."

Richard Ebeling

This is a really fascinating discussion. Contributions by Richard Ebeling have been particularly good. For an interested layman, like myself, these anecdotes and frank assessments help fill the picture of Austrian economics, as an historical development, with colour and detail.

That said, I suspect most people here could use their time more profitably by progressing the Austrian-inspired research program that we all think so highly of!

What I sometimes get from Boettke is a sense of the "ghettoization" of economics into essentially independent sub-fields of the sort institutionalized by the reference system of the JEL.

One can do applied work, or one can do methodology, or one can do pure theory, or one can do history of economic thought, etc. -- independent "normal science" puzzle domains essentially self justified and independent from one another.

The problem is that the professional institutions and elites do not encourage or reward non-ghetto work of grand narrative / synthesization of the sort Bruce Caldwell or David Colander or Richard Ebeling have produced.

Boettke sometimes seems like he's sucked himself into seeing grand narrative only as a "secondary literature" endeavor with no other purpose but to provide assembled literary notes in the JEL ghetto section of "the history of economic thought" -- as if what people are attempting to do is publish or perish work of interest to no one in a self justifying sub-field which exists for its own sake.

Maybe some grand narrative is better that others.

But often it is living and breathing stuff -- of more significance that much of what piles up in the "top journals". Niall Ferguson, Gregory Clark, Bruce Caldwell, Richard Ebeling, etc. have done work of the first order.

Perhaps Butler's work doesn't belong there.

But I'm guessing his intended audience is somewhat different as well.

So you're saying Huelsmann's work is crap, Steve? That LvMI associated work can be safely ignored based on this snippet of Caldwell's review? What, exactly?

@Daniel J. D'Amico

nobody is priding himself on being ignorant. Since I read the WoN as a teenager, I have become increasingly engaged in the HET. So I know a bit. I even think that Austrians should engage more with HET, but outside Austrian boundaries (as many, like Richard Ebeling, actually do).

But the point is that AE should not be restrained to HET! At least this is how I understand Peter's many posts on this topic (and an article I once read; I cannot remember the title though). Just look at EJMR to see the mentality on the job market. Even though these guys are not representative, at least I hope so, invitations to make a living on Wieser, Mayer, or Mises will not win the young creative minds (only such as mine!).

I also do not understand, why Austrians should primarily(!) consult past Austrian literature to make progress in the future. To keep the spirit? As an updating rule this seems to be self-reassuring and to favor inbred results. There is so much out there that fits the Austrian spirit! Why not read that?

Of course, to read all literature would be preferable. But you'd commit the Nirvana fallacy if you ask for such a perfection: time is limited and the incentive system favors alternative strategies. Such if you have to choose, why not engage more with what the cutting-edge of mainstream is doing?

Actually, I am always surprised that even careful remarks about the opportunity costs of doing this instead of doing that gets so harsh responses on this blog. In asking Richard Ebeling about comparative(!) costs of ever increasing investments in the history of Austrian thought, one does not deny the absolute value of such endeavor.

Salerno has already dealt with Caldwell’s arguments and it seems that Hulsmann largely agrees with Salerno on these points:

“Finally, let me briefly deal with Caldwell’s assertion that Menger, Böhm-Bawerk, and Mises did not present a “seamless front” on any fundamental issue that distinguished them as a camp from the Wieser-Hayek camp. First, I never suggested that these economists representing three successive generations of the Austrian school presented a seamless front on any issue. To do so would be to imply that the tradition stagnated for the roughly eight decades between the publication of Menger’s Principles and Mises’s Human Action, when in fact it was characterized by intellectual ferment that yielded tremendous progress over this period. Second, in a number of my previous publications, I have attempted to show how this progress related to the development of the view of the market as a “social appraisement process.” In this process, entrepreneurs competing on factor and product markets establish a structure of real money prices for all orders of goods that enables them, in conjunction with individual forecasts of future product prices, to calculate and implement a pattern of resource allocation that, given prevailing and expected technical constraints, best serves anticipated consumer demand in a world of constantly changing data. The central analytical focus of Menger, Böhm-Bawerk, and Mises was therefore always the explanation of the actual prices used in monetary calculation and never unrealizable equilibrium prices or natural values”

Its Salerno’s last point that answers Caldwell’s question as to “why not call him(Mises) Wieserian too?” Because as Salerno demonstrates in the same article Wieser was a general equilibrium theorist who believed in things like natural values and equilibrium prices.

For Salerno’s fully developed interpretation of the relation between the ideas of Menger, Bahm-Bawerk and Mises see his paper: “The Place of Human Action in the Development of Modern Economic.” The Quarterly Journal of Austrian Economics 2 (Spring): 35-65.

On Caldwell’s point about neo-liberalism he is so clearly wrong that I will not explain why.

No one has successfully refuted Salerno’s dual-paradigm thesis a and everytime someone has challenged his interpretation Salerno has responded with an even stronger defense of his thesis. Hulsmann didn’t feel the need to rehash a debate he saw as settled, so what? He clearly has read all of the competing claims and has determined that the Salerno-Hulsmann interpretation is more accurate. Caldwell wrote his biography of Hayek without any serious treatment of Salerno’s interpretation of the relation between Hayek’s and Mises’ ideas. Why does Caldwell not apply the standards by which he judges Hulsmann to himself?

Hulsmann’s storyline is only idiosyncratic to one who does not agree with his interpretation of the facts. Among a great many Misesians the Salerno-Hulsmann interpretation of the development of the Austrian School is the best out there.

On a related note, Salerno’s claim that Wieser was a general equilibrium theorist is presented in his paper titled : “The General Equilibrium Tradition in Austrian Economics.” Can anybody inform me of a piece that challenges Salerno’s claims about Wieser.

I didn't ask for an end to the bickering. Please read my words, I said that I enjoy reading these heated "discussions". I also said for us to stop doing drive by attacks on towering figures like Mises, Hayek and Rothbard, because none of you have earned that right and none of these figures deserves such disrespectful treatment. Moreover, such behavior has a bad influence on young scholars.

Now there is a difference between me (a recent undergraduate) and Professor Boettke. If you notice Professor Horwitz I always refer to you guys as Professor and I try to be as respectful as I can be in such a forum. This is because I have sincere respect for you guys and so I will not come out in a public forum and point out which professors are guilty of inappropriate behavior.

Also there is a difference between commenting on people’s personal behavior and their professional work. So if Professor Boettke is going to claim that some scholars who call themselves Misesians do not understand Mises then he needs to back it up or not make the claim. Whereas, my point about students inheriting the older generation’s biases is obvious to all who are not blind and my point was only directed at those professors guilty of influencing their students in such a way.

If my criticism is not true of your relationship to your students or you have never experienced a student developing biases in this manner, then what I wrote should not concern you. But the question you have to answer is: if this treatment of the masters is having this effect and if professors are foisting their biases on their students do you think its a good thing or do you think something should be done to arrest such a development?

I did write a response to your question of who is guilty of doing drive by attacks on our masters, but I thought it would be too offensive, because again it refers to people’s character flaws and not to their professional work.

And as far as the young scholars who will take the tradition to new heights I will send you a personal email with a list that I’ve been compiling, but that remains quite incomplete.


I think you were the first person who told me to read Alfred Schutz. And you were right! Christian Knudsen has a nice paper showing how much Schutz (mostly through Machlup) influence post-war neoclassical orthodoxy:
Knudsen, Christian. 2004. Alfred Schutz, Austrian Economists and the Knowledge Problem. Rationality and Society, 16, 45-89.

My own experience in the Verstehenstreit was that I could and did go with Schutz, but not with the ontological turn of Heidegger. Virgil Storr has written a great paper coming out in RAE in which he pretty much says we should have stuck with Schutz and not worried about Heidegger and post-Heidegger. Right on, IMHO. I'm not sure I know what the old Austro-Gadamerians think of Gadamer vs Schutz now, but I think I have noticed less explicit attention to Gadamer himself. In any event, it is unambiguous that Mises -- and Hayek! -- were influenced by the lebensphilosophie of Bergson and Dilthey. I think many Hayekian will not like that claim about Hayek, but I think the evidence is there. Jerry, Mario, Richard, Don and others were completely on target to try to explore that stuff and reconnect AE to the (related) traditions of Bergson and Dilthey.

Also it would be impossible for me to be engaged in the same behavior I'm criticizing, because I'm not a professor, so I can't impose my biases on my non-existent students. Also I do not dismiss any of our masters, in fact I consider myself an intellectual hustler on the hunt for good insights wherever I can find them. I read Marx as charitably as I read Hayek or any other thinker. I am too young to have established clear opinions on the works of history's great thinkers, rather I am trying to learn as much as I can about all competing approaches to the study of the human condition.

"ETI was slammed as nihilist, historicist etc - all the sins of Lachmann had come home to roost in two fine (then-)young Austrians writing a book that even Kirzner thought was historicist and damaging to AE. ETI was the fruit of the Lachmanian path in the eyes of the Rothbardians and others.

What one thought of Mario and Jerry's book was the best sign of where you stood on the future of Austrian economics and the whole Lachmann/Kirzner and hermeneutics debate.

Never mind that the whole discussion in ETI about Bergsonian time came right out of the first 100 pages of Human Action..."

This, and all the rest of Steve's comments about the reaction to ETI in the Austrian community exemplifies what I was trying to get at above.

Why are people "protecting" Austrian economics from the "sins" of people (like Lachmann) who pushed the "boundaries" that were set by the earlier giants? Why is the usual response by "sinners" to defend themselves with holy bibles like Human Action (its all in the first 100 pages of HA he protested...)?

Anyone interested in "the pursuit of truth," as Pete puts it, should welcome Austrian-inspired contributions that do "sin" in this way--pushing boundaries, going beyond just following-up-on-footnotes-from-Human-Action and actually pushing, fraying, rearranging the boundaries of the framework we call Austrian.

Maybe contrary to the spirit of the post, apparently this has become a thread in history of thought. And a great thread indeed, especially thanks to prof. Ebeling's comments. I have a bibliographical hole in the Kirzner/Lachmann debate.

I don't feel, however, at ease with two comments.

Ransom: "But in economics the problem is a double one -- biology has many, many significant puzzles still to work on. Economics -- no so much."

I "measure" progress as the capability of understanding new issues, or the capability of better understanding old issues. I see both types of progress to be necessary in Austrian business cycle theory nowadays.

As an instance of the former type of progress, what's the role of derivatives and shadow banking and international capital flows? I know of very little in the Austrian literature which is enlightening on these issues (Muller 2001 is an exception). They were probably minor issues at the time of Mises, but they are not so today.

For what concerns the latter, I know of progress regarding the answer to Lachmann's challenge to Mises in 1943 ("why are entrepreneurs so fool?"). The most important progress, in my opinion, is Carilli and Dempster's 2001 paper, as the logic of the prisoner's dilemma is key in refuting the ratex argument. But is there an answer,, full-fledged, convincing in all its details, well microfounded, to the "ratex" objection (belief in ratex is not required)? I think that reading O'Driscoll, Garrison (more recently, also a paper by Evans and Baxindale) gives lots of good hints to find this "definite answer" I'm looking for. But I think I haven't found it yet, so, there's an old open problem.

In fewer words, are there questions waiting an answer (or even waiting to be asked)? I think the answer is yes. That's great, for those who love research.

Boettke: "it is one of the biggest mistakes floating around the internet; that relevance in economics can measured separately from engagement with the economics profession (broadly conceived)"

I think this is a minor point...

I agree with regard to the need to engage the profession as a whole instead of creating Austrian ghettos. I agree that there is really no alternative, besides being sure that there is a lot that can be learned by reading the mainstream (e.g., the credit channel literature, Reinhart and Rogoff's recent book on crises...)

But Boettke's argument is surely related to influence, but I don't think it is related to relevance. Relevance to me is something like having a significant link between theory and reality, it is not a sociological concept (regarding the relation with the profession at large), but an epistemological one. An idea can be relevant also if conceived on a desert island, although of course it can't be influential.

I would just remark in reference to Jacob Roundtree's question about Wieser, that it partly depends upon what you mean by a "general equilibrium theorist."

In formulating his conception of the "evenly rotating economy," Mises is presenting his notion of an interdependent equilibrium pattern of coordinated actions concerning supplies and demands, and savings, consumption and investment, and intertemporal choices in and through time.

He uses this conception tool -- this "mental experiment" -- as a "limiting condition" to explain that circumstance or condition in which entrepreneurship (as understood by Mises) will have completed his task of bringing the economy to a (moving) state of "balance", assuming no further "changes" to disrupt this coordinated pattern of interactions.

What is a hallmark of Mises' use of the "equilibrium" concept is to: (a) show to what situation a market economy would settle down to in a world of no further "exogenous" change; (b) as a foil to understand how and why profit and loss emerge from conditions of change and uncertainty, and how discrepancies between costs and prices may arise that set in motion entrepreneurial activity; and (c) the nature and origin of time preference and the "originary" rate of interest.

He uses his notion of a state of "general equilibrium" as that logical limiting condition and foil precisely to explain the market dynamics of a world in which change is occurring and actions are motivated to take advantages of discovered gains from trade that competitively would return the system to that imaginary and hypothetical patterned coordination through time.

Traditionally, the hallmark of most "Neo-Classical," or mainstream, general equilibrium theorizing is to define and discover, given the existing underlying "data" (preferences, endowments, technological knowledge, resource availabilities), whether such an equilibrium condition would "exist," be "stable," and would be "unique" (i.e., no multiple equilibrium states consistent with the underlying data).

The Austrians tend (following Mises) to focus on understanding and explaining the processes at work, and the direction in which it may be moving, given that one is not in such an equilibrium.

The Neo-Classicals tend to focus on that equilibrium state (and the conditions for it) and analyze what factors in the market are preventing it from existing. And why that equilibrium state is an "optimal" one, and why any and all deviations from it are "sub-optimal" and potential demonstrations of "market failure."

If we use this contrast in the meanings and roles of equilibrium analysis in the "Austrian" (Misesian) and Neo-Classical approaches, I would suggest that a fair and careful reading of Friedrich von Wieser will show that he is most assuredly more in such an "Austrian" camp.

This applies not only to his 1914 work, "Social Economics," but his earlier contribution on "Natural Value" (1889, ). In this earlier work he forcefully argues against the "Jevonian" mathematical equilibrium approach to marginal analysis (p. 15). And in "Social Economics" he argues that, “Rather than to economic equilibrium,” theory should turn to margins of use.” (p. 52)

I should also mention that Wieser was most assuredly Mengerian in his acceptance and use of the idea of institutions that are not the result of human design but of "spontaneous" social processes. (See, "Social Economics," p. 162; and his last major work, "The Law of Power," published in 1926.) And I might mention, in addition, that in "The Law of Power," Wieser has a clear and powerful exposition of the nature of entrepreneurship as the creative, innovative actor, and his special role in the social system of division of labor. (See, for example, "The Law of Power," pp. 347-248.)

Thus, the arguments made about Wieser are not as clear cut as some have suggested. And, by the way, I am not arguing that Wieser's analysis and use of these and other concepts is without problems. I am merely pointing out that it is not that "cut-and-dry."

Richard Ebeling

Pietro, I'm on the same page with you here.

I agree.

Pietro wrote,

"I "measure" progress as the capability of understanding new issues, or the capability of better understanding old issues. I see both types of progress to be necessary in Austrian business cycle theory nowadays.

As an instance of the former type of progress, what's the role of derivatives and shadow banking and international capital flows? I know of very little in the Austrian literature which is enlightening on these issues (Muller 2001 is an exception). They were probably minor issues at the time of Mises, but they are not so today."


I am not going to comment further except to say to you --- have you looked at the work of my students from Ed Stringham (chaired professor at Fayetteville State) to David Skarbek (assistant professor at Duke), and everyone in between. Please look at their record in publishing and teaching. Look at Stringham's essay on Kaldor-Hicks efficiency, and look at Skarbek's essay on the San Pedro prison just as a start. That is theory and history.

If you say ho-hum, which you very well may, then just chalk it up to us having different preferences. I picked essays that are available in "our" journal community, rather than inaccessible professional journals that you might not have access to. But if you are at a university, then perhaps you could do a search on EconLit or SSRN and see what people are doing research wise, etc.

Again, perhaps you think this is a waste of time to do such background checks before pontificating on the status of certain individuals in reference to the economics literature.

To Greg Ransom --

The belief that I want to chop up in JEL codes the contributions is absurd. Thank God the people at the JEL don't think like you on this; one of the individuals who works there read this post and emailed me to describe to me the circumstances why Austrian economics was listed as history of thought (B25) and why it was listed as current heterodox (B53). It is a fascinating story actually. But note that it puts the Austrian school in a weird light.

And to juxtapose me with Caldwell and Ebeling is absurd as well, since I am not in opposition to them but in line with their narrative and against others. Why do you, of all people, want to provide a distorted view of my position and infer motivates that are least charitable?

I want to zero in on some of the concrete issues raised by Pietro. Ratex is the most straightforward (which isn't to say it's easy).

Ratex clearly has origins in the work of Wicksell, Mises and Hayek. Lucas correctly acknowledges Hayek on point. In its most basic form, Ratex assumes agents make use of all available information, and markets always move toward equilibrium. That focuses the issue on what we can assume agents can know, which was Hayek's life's work.

If you push Ratex and come up with short-run monetary neutrality, you eliminate any need for money in the model (much less derivatives and shadow banking). That gets you to RBC and irrelevancy.

One associates the idea of the inherent instability of capitalism with Hy Minsky. Consider, however, this passage from Monetary Theory and the Trade Cycle, in which Hayek states that a monetary analysis of cycles shows "deductively the inevitability of fluctuation under the existing monetary system and, indeed, under almost any other which can be imagined" (47).

Now I would call this a pretty big unresolved issue. If economic fluctuations are inevitable under any conceivable monetary system, in what sense are free markets stable?

At TM, I commented extensively on Reinhart and Rogoff's This Time is Different. They detail eight centuries of financial crises. Those crises occuurred under the widest variety of monetary and banking arrangements. One does not come away from reading that book feeling that any fianncial system can preclude crises. Derivatives and shadow banking are interesting, but old-fashioned banking seems sufficient to muck up the system.

Laurence Kotlikoff has a solution for this in Jimmy Stewart is Dead. He wants to end fractional reserve banking, but to do so far more comprehensively than anyone else has proposed. Excess leverage is a problem, so he wants to abolish leverage. (Watch for my review in the Cato Journal.)

Something to think about.

If I may comment on "Arash's" remarks above.

You are certainly right. Time is a scarce resource, and one cannot do everything to satiation. That includes mastering the history of economic ideas or intellectual history of various sorts in general.

Here, too, the marginal principle applies, which must reflect "tastes and preferences" in terms of interests, goals, and purposes.

But as many who participate in (or listen into) the discussions on this and related blogs well know, the history of economic ideas has become almost defunct in the curriculum in economics departments.

Other than the passing references to the "famous" economists of the past, with maybe a "snippet" quote or two from a long died economist in a textbook or assigned article, neither undergraduate nor graduate economics students are required to take a history of economics course as part of their required study for a degree. And in many such departments, the history of economic thought it not even offered as an elective. (Pete, I know this does not apply to GMU, and more power to your department for this!)

Thus, students often leave their course of study, with their degrees in hand, having no sense of the relevance and importance of devoting some serious and intelligent time (at the margin!) to being conversant with the origin and evolution of the ideas that comprise the theories and approaches of their discipline.

So, it is precisely because of the neglect of this area of study that I hope you will understand a reason why I (perhaps, excessively) hammer away at this.

To often, people talk about things about which they know nothing or little about -- and frequently get it very wrong. And this applies to the history of economic ideas and the development and premises of their discipline's work (which are only really understood by reading the originators of those ideas who found it necessary to make explicit much that is ignored or inappropriately taken-for-granted today).

Plus, as Thomas Kuhn partly argued in his discussions about the nature and replacement of "paradigms" in science and scientific debate, a paradigm is often not proven "wrong" but superseded by another paradigm for a variety of reasons. And the superseded paradigm may very well contain valuable and useful insights that may have even been "forgotten" after a later paradigm took its place. "Rediscovering" older paradigms can, therefore, often offer "hints" or useful theoretical tools for dealing with current problems.

But having said all this, obviously, one can not be an "expert" in any field without "sacrifices" at other margins. And the marginal rates of substitution remain a "subjective" matter.

Richard Ebeling

@ Richard Ebeling.

Thanks. Nice response (BTW, my name is indeed Arash; a weird Iranian name ;))

I have great sympathies with your view. May I draw the obvious conclusion that mainstream is cleary underinvested in HET, whilst some Austrians (not GMU, Horwitz, etc) are overinvested in HET?


We're gonna get blunt, let's get blunt:

If Salerno's views on Wieser and GET and Austrian economics and his response to Caldwell are so devastating, why are they not submitted to and published in a refereed journal *in the history of economic thought* and not Mises Institute in-house publications?

Bruce Caldwell submits his work to the examination of his peers in the history of economic thought who know that literature and its context inside and out. At the end of the day, I will take Bruce's judgment over Joe's on these matters.

This might also explain why Bruce chose not to deal with the dual paradigm stuff as well. When it's published in a refereed journal in the history of economic thought, I'm sure that it will get taken with the appropriate seriousness by historians of economic thought.

One of my own criticisms of Joe's dual paradigm stuff did, in fact, appear in HOPE, albeit as a side point in a larger paper where I also cite Salerno's work positively.

If you want to make a contribution to the history of economic thought, which is what Joe's work is attempting to do, and you want historians of economic thought like Caldwell to take it seriously, then you better submit it to the HET journals.

To criticize Bruce for not taking Joe's work into account when people like Joe seem to pride themselves on not submitting to mainstream journals is hilarious. You can't have it both ways: if you don't want to play the disciplinary game, you can't complain when people in the discipline ignore your work.

The HOPE paper in question is here: http://myslu.stlawu.edu/~shorwitz/Papers/Mises_HOPE_1998.pdf p. 439ff especially.

Jacob wrote:

"I am too young to have established clear opinions on the works of history's great thinkers, rather I am trying to learn as much as I can about all competing approaches to the study of the human condition."

Yet you know that Caldwell's views have been crushed by Salerno and the dual paradigm thesis has yet to be refuted?

" So if Professor Boettke is going to claim that some scholars who call themselves Misesians do not understand Mises then he needs to back it up or not make the claim. "

Doesn't Caldwell's review of Hulsmann suggest exactly that? There's some evidence for you. You can deny it if you want, that's fine. Of course the best way to deny it is to try to publish your own account of Mises's work in a refereed journal in the history of economic thought. I'm still waiting to see the dual paradigm argument or the Wieser-GET stuff there. HOPE and JHET publish Austrian stuff all the time. Submit away and let's see if the HET scholars think you or anyone else has something.

One final thought before I eat dinner:

If we want to play by Jacob's rules (where peer-review in HET doesn't matter), then I would argue that my 2004 SDAE presidential address published in the RAE, in which I criticize the dual paradigm argument stands "unrefuted" as no one on the other side of that debate has systematically responded to it that I'm aware of. Last one standing wins, right?


How this has exploded. I cannot say that I have read all of the comments above. However, I should just like to reply to Peter Klein and those who may agree with him. OF COURSE, neither Kirzner nor Rothbard ever said in print that they did not like The Economics of Time and Ignorance because it was too innovative or anything to that effect. OF COURSE, they picked out what they disagreed with. (Perhaps they were not fully conscious of their deep-seated motivation -- I do not know.)

But in conversation it was clear. Kirzner told me many times in his office that he viewed the The Economics of Time and Ignorance as a "catastrophe" for Austrian economics. Furthermore, he said that it would "confuse" the students. He also said that "our" obligation was to teach the students the traditional Austrian doctrines.

As to Rothbard, he ceased his personal friendship with me for three reasons: (1) I supported the "Crane machine" candidate for the LIbertarian Party presidential nomination; (2) I went to the University of Chicago for graduate school; (3) I wrote the ETI and introduced fuzzy and nutty (Henri) Bergonianism into Austrian economics (check out Mises citing Bergson in Human Action, btw).

Instead, if I might appear arrogant for a moment, Rothbard and Kirzner should have praised Jerry and me for our efforts to extend the reach of Austrian economics. How else should a school of economics that seeks to grow and prosper treat two 30-something economists, among its best and brightest at the time, who are trying to carry on the tradition? And we were not just any guys -- we had studied and absorbed the tradition since we were in college -- more than 15 years before.

The *absence* of congratulatory notes from the elder statement is damning evidence.

This is just about as much fun as the debate on evolutionary epistemology that Gene Callahan started!

Economic Wisdom
Sunday, August 22, 2010

Who Can Assess Original Contributions To Economic Science?

Is there any dishonor in being an economic historian? Are there economic historians who do not want to be considered economic historians and who would rather be known as economists? Is the difference between an economic historian and an economist specifically related to original contributions to economic science rather than commentary on the contributions of others?

These are the issues being pondered. Who is the judge to decide what is original? Is there a built-in snobbery among academic economists where the same hoops of fire that they must jump through - because of their institutional requirements - are made the criteria for assessing 'original?'

Well, I guess I will rock your world then! Divine economy theory is an original contribution to economic science and it stands ready and able for any and all scrutiny!!! Who among you dares to examine it?

Above, it is stated over and over that the science of economics has to advance and cannot just look back. OK let's see if those who say that really believe it.

I stand by my original comment re. Bergsonian ties to AE. First, we're talking about TWO citations in the first 100 pages of HA (the first one of the three mentioned here is just a commentary on Bergson's lack of economic knowledge); is that really so compelling a lead to follow? Those two quotes strike me as no more than an acknowledgement by Mises of (possibly) related work carried out by a well-known contemporary. Again, maybe there's fruitful connections between his work and AE; but I hardly understand the source of resentment towards "old-timers" who would disagree.

And Steve: are you seriously saying you don't feel the need to account for a prominent Austrian like Salerno, based simply on where this piece was or was not published? That would really be shocking.

The principle of charitable interpretation is getting violated right there.

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