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« Why I do, and Why I find it frustrating | Main | Advanced Austrian Summer Seminar at FEE »


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Some organization theorists proclaim "the end of entrepreneurship studies":

Why do we read the history of economics? To learn good economics.

I commend the second chapter of Allan Meltzer's History of the Fed, Vol. 1. He reviews the development of the theory of money and central banking. He credits Henry Thornton with getting the theory right; and with making all the important distinctions between long- and short-run, and statics and dynamics.

Meltzer then chronicles how central banking theory degenerated through the 19th century. Ricardo's proclivity to translate dynamic propositions into comparative statics played a major role. So, too, did the disdain of central bankers for theory.

What passes for central banking theory today is a product of the degenerated theory of the 19th century rather than building on Thornton's original statement. Though Meltzer doesn't note this, -- and aside from himself -- the closest modern monetary theory to Thornton is Hayek and the Austrians.

This post is why I read this blog - Mr. Boettke's passion and enthusiasm for ideas and the multi-disciplinary content. Love it!!

What role did John Law and the "banking" school, or real bills doctrine, play in ruining central banking?

This is ironic. The Institute for New Thinking in Economics was funded by George Soros to destroy free market economics!


The banking school and the real bills doctrine were very important.

Props to Bruce for all that he's done over the years.

I would like to second (or third?) the praise for Bruce Caldwell.

Not only is he a fine scholar on history of economic thought themes, and done an important job in setting up this Center for the Study of Political Economy.

His measured, thoughtful, and always dispassionate analysis of F. A. Hayek's contributions to economic theory and social analysis have greatly helped in making many in the mainstream aware of Hayek's (and the Austrian's) approach to economic theory and policy, and raised his (and their) respectability in the eyes of many in the profession.

To the extent that Hayek and Austrian School ideas are taken more seriously today within at least some part of the economics profession, Bruce deserves significant credit for helping to bring this about.

Richard Ebeling

I am happy that Greg Mankiw also mentioned the summer program.


Congratulations to Bruce for the material on the Austrians in Beyond Positivism, what a shame he had to spend so much time on the positivists, but that is where mainstream economics is still bogged down.

What a good thing he is still young enough to do more useful work despite wasting some of the best years of his life!

He has an excellent colleague in Malachi Hacohen but Malachi has a lot of work to do on Hayek and the Austrians to catch up. Maybe Bruce can design a remedial course:)

"Students today get many of these resources for free online, but I am not sure they cherish them since they are acquired for free rather than acquired with earned money as a matter of choice."

David Mamet argues the same thing for theater:


"We" need a summer seminar on the history of economic thought for the faculty of the top ten departments.

Mario's suggestion is, of course, completely correct.

But I fear that many of such faculty members would not be able to read much of the material in such a history of economic thought course.

Most of it is written in plan English, and, therefore, might be unintelligible to them since that is a "foreign language" for them in terms of the math in which think and do their economics.

They may, first, need a remedial course in thinking and conceptualizing in a "natural" language before they could master successfully the reading and understanding of Adam Smith, David Ricardo, Jean-Baptiste Say, Nassau Senior, James and John Stuart Mill, Carl Menger, Philip Wicksteed, Edwin Cannan, Lionel Robbins . . .

Because if try to teach the ideas of these older economists in "math-ese," as we know, something gets "lost in translation."

Richard Ebeling

Brilliant minds, I get interested more and more with economics as I had read you posts about it. Say, I would like to extend my congratulations to Mr. Steve Horwitz. Keep it up. You are all a great team.

The Summer Institute Programs seem fantastic!! Thanks for posting this -- I will definitely be applying!

Richard Ebeling is correct, literally. I have met otherwise smart people who will stare at me with incomprehension when I talk about the "old" economists.

"Mathematicians are a kind of Frenchman: whatever you say to them they translate into their own language, and right away it is something entirely different." -- Johann Wolfgang von Goethe, Maxims and Reflections

Imagine when you have to deal with French mathematicians...

Because if try to teach the ideas of these older economists in "math-ese," as we know, something gets "lost in translation."

Yeah, but . . . you can do a lot with computability theory IMHO, as I repeat endlessly in this forum. My article in the Dec. 2010 JEBO is an example, but it does not exhaust the possibilities. Markose's 2005 EJ paper nicely links Hayek to such math.

One should always be very wary about accepting dirty money. George Soros is a dedicated enemy of individual liberty, limited government, private property rights, and the rule of law. Of course, there is no reason why a student of the history of economic thought should believe in such ideals. But those who do should not accept the Devil's shilling. Paying one's own way to the conference is the principled response to such temptation.

I think the problem runs deeper than just translation. As Koppl wrote, Hayek's and Mises ideas can be translated into math with little difficulty.

The problem is paradigms. Friedman called Hayek's "Pure Theory of Capital" incomprehensible. I doubt Friedman had trouble translating Hayek's ideas into math. I would guess that he had trouble fitting Hayek's economics in with his own. He wasn't about to consider anything that he already knew to be wrong; there was no questioning it. And since Hayek's ideas didn't fit, he considered Hayek to be wrong.

When people are welded to their paradigms, as all older economists are, cracking that paradigm requires a near death personal experience for them that shakes their confidence in their paradigm. I doubt Austrians can provide such an experience for them.

After all, the stagflation of the 1970's and the recent depression had almost no effect on the older economists.

I don't care for piety. Nor do I like it when people are quick to judge the morals of others. Remove the beam from thine own eye before mote in thy neighbor's eye.

At the risk of being a bit too scrupulous or something, I don't think I said that "Hayek's and Mises ideas can be translated into math with little difficulty." Some of them can be conveyed with this or that bit of math, or with the *aid* of this or that bit of math. But the JEBO paper I referred to argues that you cannot avoid "literary methods" and "Verstehen" in economics.

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