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The Austrian School of Economics has been one of the most original and insightful approaches to economic understanding over the last century and a half. The Austrian School is also widely identified with the classical liberal ideal of individual liberty and free markets. Indeed, several of the Austrian economists have been considered to be among the most consistent and persuasive defenders of personal and economic freedom.
It is of note, therefore, when a book appears that is devoted to tracing out the history of these Austrian economists and their ideas from the founding of the School in 1871 to the present time. Janek Wasserman, a professor at the University of Alabama, undertakes this task in his recent work, The Marginal Revolutionaries: How the Austrian Economists Fought the War of Ideas (Yale University Press, 2019).
The author attempts to blend brief intellectual biographies of several of these Austrian economists with an interpretation of the social, political and economic times in which they lived, as well as a critical analysis of how their ideas influenced both the economics profession and the wider society.
This is clearly a tall order, and all done within less than 300 pages. Professor Wasserman demonstrates a mastery of a wide range of the relevant literature in both German and English. He also tells his tale with clarity and conciseness. For anyone interested in this subject, and you should be, this is a fascinating and erudite book that reveals aspects of this important history that are generally not known.
Through it all, however, the author conveys an underlying message. Though the “Austrians” declared that theirs were value-free theoretical investigations into the logic and reality of human choice and market processes, never far from view were active political and economic policy agendas meant to advance a set of ideas associated with free market capitalism and liberal policy goals.
The author also wants to draw a series of pictures that distinguishes between earlier and intellectually more honorable proponents of a set of “Austrian” economic ideas and policies in the Europe before the Second World War, and a later “Austrian” generation that emerged in America following that war, which have harbored socially questionable purposes and harmful, if not immoral, policy prescriptions.
There are sufficiently documented grains of truth running throughout Professor Wasserman’s narrative that all seems to hang together, unless, that is, one looks a bit more closely at the actual ideas espoused by many of these Austrian economists in the periods during which they developed them, and from which they drew various policy conclusions.
Every Narrative Contains an Implicit Interpretative Schema
Every author approaches his subject with a series of prior beliefs and presumptions about how the world works; what might be better or worse social and economic directions that the world had, has, or might be moving; and where the historical actors the writer is dealing with all fit within the focused-upon maelstrom of human affairs.
Professor Wasserman does not agree with many if not most of the policy views of the Austrian economists that are at the center of his story. They have been mostly political and economic liberals. Though he never says so, the reader does not have to read too much between the lines to understand that the author’s sympathies are more in the direction of European social democracy and American New Deal-type interventionism and welfare statism. I do not in any way criticize or challenge the author for having particular political views and values. We all have them, and they are almost inescapably a part of the background canvas upon we draw portraits of men, events, and policies that we explain to others and ourselves.
I have mine just as much as Professor Wasserman’s has his. But it is better to know where an author is “coming from,” not because of any implied deception or dishonesty, but because it clarifies for the reader the interpretive “colors” within which the historian is painting his picture of human events.
For instance, when I published not too long ago my own book on, Austrian Economics and Public Policy (2016), I made it very clear in the introduction to the volume the classical liberal perspective in the context of which the chapters that followed were offered to the reader. But I also hoped that whatever I presented as the theoretical and policy ideas of the “Austrian” economists who I discussed were accurate to their own words and intentions, and that the policy perspective was derived from an economic analysis of causes and effects that stood independently of any policy prescriptions I may have drawn on their basis.
That is, the “is” concerning how human decision-making and market processes work stood, in principle, separately from any “ought” that I may have offered to the reader.
The Normative vs. the Positive in Menger and Mises
This is a view concerning the distinction between scientific analysis and policy prescriptions that has run all the way through the history of the Austrian School. For instance, Carl Menger (1840-1921), the founder of the Austrian School, made a point of emphasizing in his article, “Toward a Systematic Classification of the Economic Sciences” (1889), that, “It is the task of science to be concerned with fact, and not with value. Science has to teach us what has been, what is, and how what is has come to be; but not, what ought to be.” (p. 20).
This was said by Ludwig von Mises (1881-1973), as well, in his own way, during the Great Depression in an analysis of “Interventionism as the Cause of the Economic Crisis” (1932): “I am an economist, not a preacher of morality who wishes to judge, avenge, and punish. I do not look for guilty parties but for causal connections. And if I speak of interventionism, I am not making accusations against the ‘state’ or against ‘labor.’ I only attempt to point out to what consequences a system, a policy, an ideology must necessarily lead.” (p. 201).
Professor Wasserman correctly points out that an essential starting point of the Austrian School that is found in Carl Menger’s Principles of Economics (1871) was the idea that value is not an objective and measurable quantity inherent in a produced good, as the classical economists and Karl Marx believed, in the form of the quantity of labor that had been expended in the manufacture of that good.
Rather, any value assigned to a good is a reflection of a potential user’s subjective (or personal) evaluation and judgement as to the degree of usefulness a unit of that good is considered to have in attaining or satisfying some end, want or desire. Since each additional unit of a similar good acquired would be assigned to a purpose ranked less important (in the mind of the user) than any previous unit obtained, as an individual’s supply of any good increases each additional unit bears a diminishing marginal utility (or incremental usefulness). Where a supply of a good is in such an abundance relative to the possible uses for it that no possible purpose goes unserved, then the (marginal) value of any unit of that supply is zero for as long as this supply and demand relationship remains the case.
For the Austrians, the theory of marginal utility was not a normative prescription meant to suggest or tell people how to make more “rational” choices. Instead, they argued what the theory was bringing to a more conscious and formal understanding is the inescapable logic by which each of us facing a condition of scarcity – a situation in which the available means to attain a variety of desired ends are insufficient to fully achieve all the purposes in mind – evaluate ends and allocate means among their alternative and desired uses.
It was for this reason, for instance, that Menger’s follower, Eugen von Böhm-Bawerk (1851-1914), concluded his own exposition of the logic of marginal decision-making by pointing out:
“[Economic] Science was misled by confusing utility with value, and so it declared goods like air and water to be things of the greatest use value . . . For centuries, long before science set up the doctrine of marginal utility, the common man was accustomed to seek things and abandon things, not in accordance with the highest utility that they are by nature capable of delivering, but in accordance with the increase or decrease in concrete utility that depends on each given good. In other words, he practiced the doctrine of marginal utility before economic theory discovered it.” (The Positive Theory of Capital [(1914)] 1959], 203-204).
Austrian Economics as a Descriptive Science of the Reality of Human Action
Thus, for these Austrians, the starting point of their theory is “descriptive” of the reality of human conduct, and not prescriptive of how individuals should evaluate and use the means at their disposal for the achievement of ends. From whence comes the degree of confidence possessed by the Austrians concerning the correctness of this description of the logic of people’s decision-making. While Ludwig von Mises is often credited with an emphasis on the use and value of the “introspective glance” for insight into the logic of human choice and action, it was very clearly stated much earlier by the other of Menger’s prominent first followers, Friedrich von Wieser (1851-1926).
Wieser distinguished between the sources of knowledge possessed by the natural scientist versus the social scientist. We are not able to know “why” the physical world has the properties and characteristics it does, or why “nature” does what it does. As Wieser expressed it, the natural scientist can only “observe” and “measure” and then hypothesize and conjecture based on his observations and measurements about the “reasons” for nature “doing” the things it does. He can only “watch” from the outside, and never get “inside” the physical world whose “laws” he is trying to understand.
But the advantage of a social scientist like the economist, as Wieser pointed out in Social Economics (1914), is that he is able to “observe” his subject-matter from the “inside” as well as from the outside:
“The object of investigation is man in a condition of activity. Hence our mind ratifies every accurate description of the processes of his consciousness by the affirmative declaration that such is the case, and by the compelling feeling that it must be so necessarily . . . In these cases, we, each of us, hear the law pronounced by an unmistakable inner voice. What unequalled advantage to the naturalist, could he, too, appeal to the voices of nature for their confirmation of the laws prevailing in the organic and inorganic world. Where the natural scientist can only offer proof, the theory of economics can persuade; it can enlist the unqualified inner consent of readers.” (pp. 8-9).
It is not that the actor or analyst’s reasoning might not be faulty about what his own mind “says” about itself, or what is implied about the minds of others. Or that others when queried might not lie, deceive, or misrepresent the explanation of their own actions. But it remains the case that in interacting with any others we assume that the logical structure of their minds are basically the same as ours; indeed, if this could not and was not in virtually all instances the taken-for-granted “working hypothesis,” on what basis might we presume to understand the words and deeds of others, or they of us?
Even in the physical sciences, the natural scientist presumes this no less than the economist, sociologist, anthropologist, or philosopher, when he conveys ideas to his colleagues in, say, physics, chemistry, or biology, in his attempt to explain his theories and experiments for their understanding of what he is and has been doing. And how could they challenge or question his reported results, if it was not taken for granted that the logical thought processes were the same for all the human participants?
The Logic of Action as a Template of All Human Doings
Another confusion concerning this “Austrian” approach to theory-formation and its application to the “real world” is the assertion that at least some of the Austrian economists, and most particularly Mises, make the claim that all of economics can be deduced from the simple assumption that “man acts.”
The formal logic of choice and action, in its most general and abstract elements are “a priori,” in that if humans are conscious beings, if they have goals and purposes, if they find that various means considered essential or useful to attain some of those ends are scarce in quantities and/or qualities, then certain things logically follow: that ends will have to be ranked in an implied order of importance to the decision-maker; that he will have to compare alternatives “at the margin” in evaluating on how best to use the limited means; that this will involve a weighing of the costs and benefits of one incremental choice compared to another; that virtually all of these evaluations will require a consideration that everything to be done occurs in time and through time. And the realization that all decision-making occurs in a setting of degrees of uncertainty from the actor’s point-of-view, since, otherwise, there would be no purpose behind the making of a choice and attempting to influence the shape of things to come through the actions to be undertaken.
This is, in essence, what Mises, for instance, meant by the universal and inescapable praxeological categories and relationships true for any man and, therefore, for all men. It does not imply what ends any individual or group of individuals imagine and desire to try to attain. Nor does it imply what means (and their perceived properties) will be seen and selected as appropriate tools to pursue any desired ends. And, neither does it imply that it can be “a priori” known the rankings of ends, or the weighing of the costs and benefits, or the plans of action possibly to be undertaken.
Theory and the Facts in Austrian Economics
These are all the equally inescapable “empirical” content of applied economics. Following Max Weber’s conception of “understanding” (as Mises and some other “Austrians” have done), the applied economist, as well as the historian in general can only know these things from the “facts” of history and the contemporary circumstances of the real-world actors, including from their social and economic interactions with others. This includes, for instance, the degree of risk-aversion, or time preference, or the nicety or roughness of “the margin” that any individual takes notice of and gives his time to consider within a choice.
Whenever an economist, or anyone else, says that “there are no free lunches,” that everything has its “cost,” or that almost anything wanted has attached to it a “price to be paid” to try to get it, they are using colloquial phrases for the logical categories and relationships that Mises said were the “a priori” elements to any and all men “acting.” The formal praxeological categories and relationships form the conceptual template in the context of which all the goings on by conscious and intentional human beings can be given a generalized interpretive rationality and intelligibility.
If one appreciates that the marginal worth of any good or service diminishes as the quantity available and applied increases, and that the use of any additional use of means for one purpose requires less of those means to be readily available for some competing uses for which they can also be used, then the cost tends to rise as more of it is drawn out of the other uses from which it is or would be taken, since the margin of satisfaction in those alternative uses will have been reduced .
It does not take much to then deduce that this implies that demand curves are downward sloping and supply curves are upward sloping, but with no, a priori, presumption concerning the actual shape or position of either one, other than this most general conclusion from our insight into the nature and logic of marginal benefits and costs. Given the actual “data” of the market, the relevant demand and supply curves may be more to “the left” or “the right,” and they may be, respectively, more steep (more inelastic) or more shallow (more elastic).
But the point of Weiser and Mises’s emphasis on the introspective source of knowledge about man in a “condition of activity” is that without it human movements would be nothing more than observed positions in “space” about which no “understanding” could be assigned the way we all do about the observed actions of others around us, and about which the social and economic analyst tries to offer ordered intelligibility and a degree of (highly qualitative) predictability.
From the Logic of Action to the Laws of Economics
Why have I taken the time to articulate these starting aspects of Austrian economics, as I understand them? Because if these are in front of us, they enable us to better see why many of the Austrians have made certain policy statements about markets and prices versus socialism and interventionism, in spite of the number of links in the chain that separates these starting premises from far more concrete and particular issues concerning the social institutional order and what the impact of various government policies may or may not be.
Thus, as an example, Böhm-Bawerk’s last significant contribution before his untimely death in the summer of 1914 was a monograph on “Control or Economic Law.” The question he addressed is to what extent the “laws” of supply and demand determined workers’ wages as opposed to the “power” of organized labor unions attempting to impose wage rates above that level at which a competitive market would establish them. The answer, Böhm-Bawerk argued, depended upon how employers or employees could influence the demand for labor relative to the supply of workers that unions tried to control within particular markets.
But regardless of the level to which trade unions might restrict or inhibit or control employee entry and availability into a particular sector of the market, a worker cannot be made more valuable to the employer than the value of his (discounted) marginal product in assisting in the manufacture of a good estimated to be saleable to members of the buying public at a selling price anticipated by the employing private enterpriser. Impose a wage rate above this, and the union only succeeds in making some members of the workforce unemployed who would otherwise have jobs, or it drives some employers into the non- or less unionized sectors of the economy to escape the “power” of the union, or possibly pushes an employer into the loss column with a threat of eventual bankruptcy.
Nowhere in this monograph does Böhm-Bawerk say that trade unions are “good” or “bad.” Nor does he say that increases in workers’ wages and standards of living are undesirable goals. What he does say is that, if his analysis of the logic of supply and demand is correct, and if this is the way that wages tend to be established on competitive markets, then any attempt to push wages above those competitive levels may bring about a reduction in the number of workers employed who are subject to such union-imposed or influenced wages, with certain other effects on employment opportunities looking to the longer run, as well. That is, Böhm-Bawerk offers a set of “if this, then that,” statements concerning “cause and effect.”
If the policy maker and various market participants do not want these types of effects, then there should not be concerted attempts to set wages above those consistent with the underlying and existing supply and demand conditions prevailing in the labor market. Or as Böhm-Bawerk said near the end of his analysis:
“It [union power] can never affect anything in contradiction to the economic laws of value, price, and distribution, it must always be in conformity with these; it cannot invalidate them; it can merely confirm and fulfill them. And this, I think, is the most important, and the most certain conclusion of the foregoing inquiry.” (p. 54-55).
Of course, some other economist or social analyst might argue that Böhm-Bawerk’s expositions of how wages are set in competitive markets is incorrect, and that the impact of wages fixed at levels different than market-determined ones are or can be different than the consequences suggested in Böhm-Bawerk’s theory. But for this to be more than simply wishful thinking or mere assertion, the critic would have to formulate and trace out an alternative theory of value, prices, wages, and resource uses including the employment of labor. And it would have to meet the same standards of logical criticism and factual validity in the same way Böhm-Bawerk’s theory might be challenged.
The “Is” and the “Ought” in Economic Analysis
Otherwise, it is just normative value judgments of “my opinion versus yours.” But those who hold differing political views and values; that is socialists versus (classical) liberals, political and economic collectivists versus individualists, all insist that there is some “order” to the world that can be discerned and delineated precisely to explain “how the world works” and (given values held) what policies might move that world in preferred directions.
So it is really and ultimately about the determination of the “is” on the basis of which various “ought’s” may be offered concerning what seems to be possible, and which may be introduced into the reality of the “is” to make it more like the desired “ought.”
Now this does not dispel the fact that an economist or any other social analyst may have “ulterior motives;” that is, he may be interested in designing an argument to rationalize an advantage or benefit for himself or some selected others, which might be difficult to justify without a sufficiently persuasive rationalization in a wider social setting. And I’m sure many of us can point to instances of individuals and arguments that seem to us to fit just such a deception.
While no one can read what is in another person’s mind or heart with certainty of what is presumed to be there, one of the tasks that historians sometimes have taken on is to unmask such motives and intellectual maneuvers. For instance, in the 1890s the German Iron Chancellor, Otto von Bismarck (1815-1898), told British journalist William H. Dawson (1860-1948), that when he introduced various welfare state legislations beginning in the 1880s, “My idea was to bribe the working classes, or shall I say, win them over, to regard the state as a social institution existing for their sake and interested in their welfare,” as a way of co-opting the growing parliamentary support for the Social Democrats. In spite of any “public interest” rhetoric used by Bismarck, a central motivation for welfare state legislation was to win back support for the ruling conservative parties and undermine any chance for socialism’s coming to power through the ballot box (p. 119).
Wasserman Wishes to Focus on the Policy Influences of the Austrian School
Professor Wasserman approaches the Austrian School less from an interest, per se, of offering an exposition of their ideas on various facets of economic theory or methodology, and more on attempting to demonstrate how, on the basis of those ideas, the Austrian economists succeeded in influencing the economics profession and then the arena of domestic and international economic and political policy.
Thus, for instance, he correctly points out that while Menger’s Principles of Economics may be considered groundbreaking in offering the foundation of what became the “Austrian” School, it was Menger’s two followers, Böhm-Bawerk and Wieser, who brought about a wider and international notice and notoriety for the approach initiated by Menger. Menger may have served as the tutor for Prince Rudolf, the heir-apparent to the Hapsburg Empire, who tragically committed suicide in 1889, and he may have participated in the deliberations of the Austrian Currency Commission that partly placed Austria-Hungary on a gold standard after 1892, but it would be an exaggeration to say that Menger had much political sway over the course of Austrian governmental events. (See my article, “Carl Menger and the Foundations of Austrian Economics”.)
Böhm-Bawerk did serve in the Austrian Finance Ministry from 1889 to 1904, three times serving as acting finance minister, the longest time from 1900-1904, during which he attempted to follow a policy of “fiscal conservatism” with a balanced budget and restraint on spending. Also, during his time with the Finance Ministry, he drafted tax reforms that improved investment incentives.
But any reading of the political and economic histories of the Austro-Hungarian Empire during the last decades of the 19th century and the first decade of the 20th century leaves little doubt that his presence in the Austrian government left no really noticeable permanent mark. In fact, in early 1914 he published a lengthy analysis of the direction of Austrian fiscal policy in a leading Vienna newspaper that suggested that government spending and debt were anything but a liberal policy one.
The generally civil and social liberal constitutional order of the Hapsburg reign of Franz Joseph dated from 1867, when the Austro-Hungarian Empire was reconstituted as a “dual monarchy,” all of which predated any existence or influence by the Austrian economists. And the entire history of that country from the 1870s onwards is a tale of nationalist and socialist political pressures all working against the existing liberal institutions and the sustainability of the Empire as a unified entity.
The Austrian Influence on Economic Theory
Where the Austrians did have influence was in academic circles wider than Austria itself. Wasserman points out that both Böhm-Bawerk and Wieser were active proselytizers for Menger’s and their own ideas built on his. They published in British and American economics journals, and Böhm-Bawerk especially was a willing and effective debater and defender of the “Austrian” approach in the face of challenges and criticisms by other economists. It sometimes seems that no criticism or challenge, particularly to his theory of capital and interest, was allowed to pass without a vigorous detailed response from Böhm-Bawerk’s pen. (See my article, “Böhm-Bawerk: Austrian Economist Who Said, ‘No,’ to Big Government.”
A look at Friedrich von Wieser’s writings show that on policy matters he was mostly a liberal on social issues, but on economic policy he was open to domestic government interventions of various sorts, considered some protectionist policies to be compatible with a market-oriented economy, and clearly considered it an important contribution of his to have seemingly demonstrated the justification of a graduated income tax on the basis of marginal utility theory. And while I think some analysts have read too much into certain sections of Wieser’s last book, The Law of Power (1926), where he has been accused of fascist-like tendencies due to his emphasis on a “leadership principle” in the realm of politics, he was very clearly far from being a classical liberal adherent of laissez-faire economics and strictly limited government.
But in the realm of economic theory, the influence and acceptance of core “Austrian” ideas on value, cost, and price by many economists by the early years of the 20th century resulted in Carl Menger telling the American sociologist, Albion Small, in 1903, that, “It is entirely indifferent to me whether the name Austrian School is preserved. The important thing is that every economist worthy of the name has now virtually adopted every essential thing that I stood for.” (See, Albion Small, The Origins of Sociology , p. 173).
Ludwig von Mises’s Claimed Ideological Impositions
The real issue of a seeming political and ideological focus within the Austrian School, according to Wasserman, emerges in the 1920s, 1930s, and 1940s, in the aftermath of the First World War and into the Second World War. Not surprisingly, Ludwig von Mises is a primary target of Wasserman’s analysis at this point. He says that during the interwar years in Vienna, “Mises’s [private seminar that he organized and held every other week at his Chamber of Commerce office from October to June] had a narrower focus and a clearer ideological program” in which any challenge to Mises’s critique of socialist central planning was “verboten” and “if you were not a marginalist, you were not a true liberal.” (p. 122).
The fact is, among Mises’s “lost papers” that were retrieved from a formerly Soviet secret archive in Moscow, are lists of topics addressed in many of the meetings of Mises’s private seminar during some of the years from 1920 to 1934. A wide variety of economic and sociological subjects were discussed that strongly suggest that little if anything was “off the table” or closed for debate.
The same applies to Mises’s seminars at the University of Vienna, where he taught as an unsalaried lecturer from 1913 to 1934. Again, among his “lost papers” are the course syllabi for almost every term during those years. The topics covered a wide array of themes in economic theory and policy, monetary economics, and methodology of the social sciences. The assigned and suggested readings in the syllabi in no way suggest that any point-of-view or perspective was ignored or not considered worthy of serious discussion. There are some student summaries of Mises’s lectures among these papers from his university courses, and it is evident that, for instance, when presenting his criticisms of the Marxian theory of imperialism under capitalism, he expected the students to be fully conversant with the original arguments he was challenging. (See my article, “Mises’s Lost Papers: Plundered by the Nazis, Buried by the Soviets, Rediscovered by Me”.)
Wasserman clearly implies that Mises was consciously introducing his political views and ideological prejudices into his supposedly “value-free” analysis, say, in his critique of socialist planning. Throughout his writings from this period, Mises over and over again returns to an insistence on the importance of Max Weber’s strictures on the importance of separating “fact” from “value,” logical and formal analysis from normative preferences.
It is true that at times Mises introduces sarcasm into his statements about socialist presumptions about, man, society and the economy. But this was a literary style much taken for granted in the German-speaking world at this time, even in scholarly writings. For instance, one of the University of Vienna professors of this time, Othmar Spann (1878-1950), known for his corporative fascist ideals, felt little hesitation in assuring his readers, including in his volume on the history of economic ideas, that marginal utility theory had been “vanquished” and rejected in the “Teutonic” world, and in another work that all forms of individualism were the “dragon seed of evil.”
And Werner Sombart (1863-1941), one of the most internationally renowned German economists and social philosophers before and after the First World War, insisted in a 1934 book offering a serious explanation and defense of German Nationalist Socialism, that since “the Germans are a people who are not politically minded . . . a strong state [was] an unavoidable necessity,” with the German people needing a “supreme will of a leader who receives his directions, not as an inferior from a superior leader, but only from God, the supreme ‘Leader’ of the world.” (p. 194). Hitler, in other words, was presented by Sombart as the intermediary voice between God and the German people!
In an intellectual environment such as this, Mises’s occasional sarcasms on the social fantasies of some exponents of socialist ideas seem tame in comparison to these and a good number of others by proponents of the various competing forms of political and economic collectivism during this time.
Mises’s Clearly Value-Free Analysis Central Planning under Socialism
But the substance of Mises’s critiques of socialist central planning and various forms of government intervention are clear exposition of logical reasoning and analyses of the institutional presuppositions and workings of market, planned and regulated economic societies. There is nothing normative or ideological in asking and analyzing how a centrally planned economy would succeed in determining the most highly valued uses and cost-efficient methods of organizing and applying the means of production in the service of the material well-being of the citizens of such a socialist society.
There is nothing value-laden in explaining how an economically rational allocation of the scarce means among competing lines of production is determined under a competitive market economy through the emergence of market-based prices that facilitate economic calculation through the common denominator of a medium of exchange.
And there is nothing serving “bourgeois” interests or prejudices in specifying how the abolition of private ownership of the means of production, and therefore elimination of markets upon which prices for the factors of production might otherwise be formed through competitive forces on the supply-side of the market, precludes the possibility for any rational economic calculation matching that under competitive capitalism.
The same applies to Mises’s analysis of the dynamics of price controls as a form of government intervention, in his explanation of how such price controls introduced in one corner of the market prevents coordination of supplies and demands and can generate imbalances in related and interdependent markets that place the government intervenor in the position of either repealing his earlier price control or extending them to other sectors of the economy in an attempt to counteract the distortions the earlier intervention had created.
The analyses are either correct or incorrect on logical and factual grounds. If the analysis is found to be cogent and persuasive, and if the general policy perspective by advocates of socialism is that their purpose is to improve the standard and quality of life of the citizens of a socialist society, then they must either demonstrate why and how Mises’s analysis is invalid and wrong, or admit that comprehensive socialist central planning cannot match the economic efficiency and adaptability to changing circumstances in the same way that a functioning market economy can.
This serves no agenda other than determining the institutional workings of alternative social and economic systems and evaluating which one has the greater ability to attain the ends declared to be the ones wanted to be achieved. If someone says that they want to drive from New York to San Francisco in the shortest and most cost-efficient way, and if they start driving on Interstate Highway 95 that will take them south to Miami, after telling them that the best route would be to take Interstate Highway 80 west, you are not being ideological, “value-laden,” or prejudiced against the goal in mind when you insist that based on the traveler’s own stated purpose, he has chosen the wrong means to his desired end. That is what Mises’s critique of socialist central planning is all about. A wrong institutional means (socialist planning) is being chosen to achieve the end in mind (the economic and social betterment of the members of society).
Presumed “Class Interests” Among the Austrians
But rather than deal with Mises’s arguments in these terms, Professor Wasserman insists that, “Men like Wieser, [Joseph] Schumpeter and Mises had much to lose during the heady days of 1918 and 1919, and they engaged in public affairs with urgency. Self-identifying with German culture, hailing from prosperous, well-connected families, and holding coveted jobs within the academic and bureaucratic establishments, these men were deeply invested in the status quo. They spoke out to defend their state and values . . .” (p. 97).
Here, in between the lines, is a variation of the old Marxian theme that “class interests” determine and define the views and values of people in society. Not being members of the “working class” who do not possess such “well-connected families” and “coveted jobs,” Wieser, Schumpeter and Mises offered ideas and theories all meant to rationalize and justify “the status quo.” Why simply present Mises’s critique of socialism seriously on its own grounds, when you can suggest that it’s only a ruse to resist those who are on the “right side” of history, the advocates of socialism?
For Professor Wasserman, Mises’s concern about an imminent Soviet-style socialist revolution was just “an ideological cudgel and bogeyman” to justify and defend liberal and conservative presumptions and institutional arrangements (p. 103). Instead, Professor Wasserman says that many of the Austrian socialists just wanted “democratic socialism,” not a socialism of the Bolshevik sort. And, presumably, once socialism is conceived as “democratic” rather than dictatorial, the problems that Mises raised all fall away in their intensity (p. 104).
First, historical context matters. Living in the reality of 1918 and 1919, it did not seem that the danger of Soviet-style revolutions were mere cudgels and bogeyman. There were Soviet-inspired takeovers in Bavaria and Hungary in 1919 that in retrospect we know were brief and unsuccessful; there were communist coup attempts in Germany, and in 1920, there was a Soviet invasion of Poland that advanced as far as Warsaw. Bolshevism sweeping over more of Europe did not seem to be a fantasy in that immediate period after the end of the war. Should we, likewise, pooh-pooh the concerns about Nazi aggression in Europe that were voiced in 1940 and 1941 because we now know that Germany lost the Second World War? What’s the phrase? It’s always easy to be a Monday morning quarterback.
But, second, this also ignores the question as to whether a socialist society, regardless of the wishes of its proponents, can preserve its “democratic” characteristics the more comprehensive becomes the nationalization and the more centralized the planning of the society’s economic affairs. What is known from the experiences of the 20th century is that any society that has experienced wide nationalization of the means of production and extensive socialist central planning has also seen a radical diminishment in personal freedom and democratic choice.
Professor Wasserman tries to diminish Mises’s criticisms of socialism by mentioning a number of notable and respected liberal-oriented economists of the time who did not fully accept his argument on the unworkability of a socialist economy (pp. 106-107). It is worth recalling that his core criticism that without a price system possessing a monetary common denominator any form of rational economic calculation is “impossible” was, in fact, accepted by many respected socialists. This included the Polish economist, Oskar Lange, who wittily suggested that a statue of Mises should stand at the entrance to a future socialist planning agency as homage to his reminder on the importance of prices even in a planned economy. It is a separate matter whether a “market socialism” could perform successfully compared to a competitive private enterprise market economy, to which Professor Wasserman also draws attention (pp. 151-153). (See my article, “Socialism and the Green New Deal are Economically Impossible”.)
Claim that Sharing Mises’s Politics Led to His Help Finding Employment
Another swipe that Professor Wasserman makes is to say that, in return for” ideological and intellectual reliability, Mises helped “his [private] seminar colleagues find employment,” with the presumption that if there were any of those younger economists not loyal to Mises’s political views they could not count on his support in finding work. (p. 122). Again, Mises’s “lost papers” from Moscow covering this period of his life in Vienna shows, in his correspondence, letters of recommendation for young economists to receive Rockefeller Foundation grants to travel to the United States who did not necessarily share Mises’s political or methodological views. He actively worked to assist a wide circle of scholars to find employment out of an increasingly Nazi-threatened central Europe, with little presumption of the type of litmus test that Professor Wasserman suggests.
The same type of “class conflict” viewpoint is conveyed by him when he says that the Austrian Institute for Business Cycle Research, which was founded in 1927 with Mises’s guiding support and with a young F. A. Hayek as the first director, “demonstrated the convergence of liberal ideas and capital.” (p. 123). Here, once more, is an undertone of typical Marxian-style “conspiracy theory:” there is the common interest of “capital” (that is, the “capitalist class” desperate to preserve its control over society) subsidizing front organizations that will rationalize and propagandize the preservation of the capitalist system, upon which their profits and power are dependent. The financial conduit for this purpose was the Rockefeller Foundation, which did financially support the Austrian Institute almost from its inception to the Nazi takeover of Austria, when all funding was terminated.
And if not for the capitalist class, through their financial spigot, the Rockefeller Foundation, many of those Austrian economists of the interwar period, like Fritz Machlup, or Gottfried Haberler, or Oskar Morgenstern, or Mises, himself, might not have made it safely to the United States as the war clouds were darkening over Europe in the 1930s. “Capital” had to protect its intellectual propaganda tools! The fact is the Rockefeller Foundation sponsored many scholars in many different academic fields in the interwar period, and they did not all meet some political loyalty test in the service of a cadre of supposed capitalist masters.
At the same time, in the 1930s, “the members of the Austrian School [had] reestablished a distinctive corporate identity and featured prominently in European policy debates.” (pp. 138-139). Notice the choice of words, and the imagery of these Austrian economists as implicit “shareholders” in an intellectual corporation to commonly influence the direction of public policy. They are in it together and they have a common purpose, why, maybe they even have a “central plan” to save liberalism from socialism!
The Austrians and John Maynard Keynes
If we turn, briefly, to Professor Wasserman’s analysis of the Austrian School in the context of the debates over the causes and cures of the Great Depression, not surprisingly he discusses the arguments of and the debate between Friedrich A. Hayek and John Maynard Keynes. He points out that Hayek’s was the most detailed critique of Keynes’s 1930 work, A Treatise on Money, and how scathing Hayek was in his criticisms. But the fact is, almost all the reviews by other well-known economists of that time who were not members of the Austrian School also were strongly critical and disappointed with much of Keynes’s analysis in the book.
Indeed, after all the criticisms, and not only by Hayek, Keynes set aside much of the theoretical apparatus in his Treatise on Money and ended up writing an entirely different book, his famous, The General Theory of Employment, Interest, and Money (1936), which was the basis for the postwar “Keynesian” revolution in economics. It was very far from being just Austrians who questioned Keynes’s general approach to understanding economy-wide fluctuations in this work, also. A look through the reviews and commentaries written after The General Theory appeared shows the same devastating criticisms from economists such as Frank Knight, Jacob Viner, Dennis Robertson, Arthur C. Pigou, and Arthur W. Marget, for instance. Indeed, combining their respective criticisms leaves little of Keynes’s conceptual framework intact in this later book, as well.
If there were to be a sociological and ideological analysis to explain the success and triumph of an abstract and difficult work on economic theory and policy, it should be of Keynes’s General Theory, because its argument truly can be said to have served many of the political prejudices and biases of the day in wanting a rationalization for deficit spending and more intrusive government without challenging the power of special interests like the trade unions of that time.
Austrian Connections and The Road to Serfdom
When Professor Wasserman turns to the period during and after the Second World War, when many members of the Austrian School had migrated and were taking up new roots in the United States, he wants to focus on disputes and differences between them, while trying to still knit them together as a distinctive “Austrian” group.
So, what bound them, still, together? In some cases, in my view, Professor Wasserman makes connections where there are few, and some of the participants would have questioned putting them in the same camp. For instance, he wants to tie Joseph Schumpeter (1883-1950) to the Austrian School. It is very easy to find lingering elements throughout Schumpeter’s writings that are legacies of his “Austrian” training in the years before the First World War. His theory of entrepreneurship and dynamic competition all fit within an Austrian lineage, especially, though not exclusively, from Wieser.
But Schumpeter rejected the notion or desirability of “schools of thought” and certainly did nothing to foster one to carry on his own unique contributions. His methodological proclivities were far from his Austrian teachers, and his own detailed if difficult business cycle theory has qualities distinct from what is usually considered the “Austrian” theory of economic fluctuations. His sociological sympathies for Marx had no parallel with any of the others usually considered part of the Austrian School. Schumpeter also had more confidence in the possibility for socialist planning “in theory” if not in realistic practice than, say, Mises or Hayek.
Indeed, this became clear in Hayek’s Road to Serfdom (1944), which focuses not only on the unworkability of socialism but its dangers to the preservation of a free society. But how does Professor Wasserman portray Hayek’s views in this work? He says, “Hayek advocated a return to liberalism grounded in the defense of private property and ‘laissez-faire’ economics, one that relegated civil liberties and political rights to secondary status.” (pp. 182-183). Just a look through the table of contents of the Road to Serfdom shows how very far Professor Wasserman’s statement is from the truth.
Among Hayek’s chapter titles in the book are, “Planning and Democracy,” “Planning and the Rule of Law,” and “Economic Control and Totalitarianism.” It is fair game for any critic to question the reasoning and conclusions that an author offers and reaches. But it is not fair game to create a false impression in the reader’s mind. Central to Hayek’s argument throughout The Road to Serfdom is that central planning of an economy threatens and is essentially incompatible with the preservation of personal freedom, civil liberties, and democratic government as generally understood in Western liberal societies.
Government central planning leaves little or no autonomy or private arenas for alternative choices for the individuals of a socialist society. The government is the monopoly allocator of resources and producer of goods. It is the single employer for all those looking for work. It is the controller of all means and methods of communication and exchange of ideas. It requires the goals and purposes of the individual to be made subservient to those in “the plan,” and coercively if needed. Nor can new democratic choices be allowed to constantly challenge and change the coherence and implementation of “the plan” without causing societal instability.
Professor Wasserman highlights that The Road to Serfdom made an unexpected sensation in the United States, leading to Hayek going on a lecture tour around the country in the first half of 1945, which he refers to as a “grandstanding book tour, professionally managed by a promotional agency.” And that he drew the attention of a variety of “pro-business” groups and non-profit organizations excited to offer Hayek support in various ways, clearly due to those groups and organizations seeing Hayek and his book as ways to serve their interests in propping up the capitalist system (pp. 186-187).
The impression is that Hayek’s trip was somehow a publicity propaganda con-job, to hype a book that could be a useful tool for businessmen feeling under the gun of threats from big government or even socialism. One wonders if it ever enters Professor Wasserman’s mind that there may be businessmen who actually consider a competitive enterprise system to be good for all the members of society, not just a tool for their own exploitative ways, as he clearly views private enterprisers. Or that there might be salaried workers who valued a private enterprise-based society as explained by Hayek precisely because they did not want to live in a world in which government planning and jobs were the only game in town.
Austrians and Their Asserted “Class” Biases
Everything in Professor Wasserman’s world is driven for political power and policy influence. Hayek helped organize the Mont Pelerin Society after the Second World War because he and others were concerned about the future of free and open societies in the face of the seemingly growing influence of socialist and interventionist ideas that threatened to stifle and repress the liberal freedoms taken for granted by too many in the world they were living in. Like-minded people in Europe and the United States came together because they were concerned with the future of liberty. But in Professor Wasserman’s mind, it’s just the best known and articulated “elite network” connecting liberals in various countries (p. 197).
Austrian economists were central to this elite, says Professor Wasserman, “They felt obligated to defend the order that had produced the wealth and prosperity from which they had benefited so richly. This elitism informed their defense of so-called universal civilizational values.” To do so, “the Austrians built intellectual and ideological empires.” (pp. 198-199). Oh, let’s not forget to throw in identity politics accusations of implicit racism and sexism: “Of course, these intrepid individuals were all of European origin, white, and male, which fit the idea of ‘universal’ civilization espoused by most mid-century transatlantic social scientists.” (p. 201).
The entire history of the world until modern times was based on slavery and servitude, with usually male domination of family and societal affairs, and often racist attitudes by groups all around the globe. Where did this history of mankind first get challenged? Among Europeans who first formulated the ideas and ideals of individual rights and liberty, equality before an impartial rule of law, and freedom of association and contract. This led to the end of slavery; civil rights for growing numbers of men and women, and different religious and ethnic groups; and the abolition of systems of privilege and economic favoritism that were replaced with wider economic opportunity on competitive markets.
These ideas and practices, then, slowly but surely began to spread from their places of origin in Europe to all the other parts of the world. These were and are among the (classical) liberal ideals that Professor Wasserman constantly implies are just “fronts” for the domination of “capital” over “the workers.” Oh, by the way, and in what areas of the world did an increasingly democratic enfranchisement of voters become a goal and practice? The (classical) liberal West. It is so unfortunate that facts and history keep getting in the way of some of Professor Wasserman’s presumptions.
And, by the way, as a member of the Mont Pelerin Society, and one who periodically makes it to the annual meetings, I can testify to the sexual and ethnic diversity and inclusiveness of the Society. Sorry, Professor Wasserman, it is not a closed “white men’s only club,” no matter how much that does not fit the fantasy world you want to believe in.
Diverging Austrians, Each Going Their Own Way
Professor Wasserman is closer to the truth when he points out the differences and disputes among the Austrians. Oskar Morgenstern’s belittling of Hayek’s contributions, Gottfried Haberler dismissing Mises’s importance in economic theory after the 1930s, and differences of views that developed between Mises and Fritz Machlup in the postwar period. Each of them went their own way in the new academic and intellectual environment of the United States. There really was, among them, no longer a cohesive and conscious “Austrian” research agenda as had implicitly existed to a greater extent in the Vienna before the war. They were personally bound together by a common personal and intellectual past, but not a shared future of collaborative views or interests.
This also means that, again contrary to the story that Professor Wasserman wants to tell, the postwar “neo-liberal” world was not and is not an “Austrian” creation. Fritz Machlup and Gottfried Haberler were most certainly internationally respected economists considered knowledgeable and informed on matters of international trade and exchange. And they certainly participated in and influenced the direction of some of the debates and possible policies during the period after 1945. But economists from many other nations and “schools” of economic thought also participated and impacted the proposals offered to governments and international organizations. They were not the “central planners” of the supposed neo-liberal international order that Professor Wasserman is critical of.
In fact, a reading of many of the domestic and international policy critiques offered by both Haberler and Machlup make it very clear that they did not consider the world to be a “liberal” policy heaven of their own making. Let’s use Gottfried Haberler as an example. He certainly believed that the more open and freer economic policies followed in the developed countries in the postwar period were far better than what was experienced in the interwar period with its protectionism and economic nationalism as false solutions to the problems of the Great Depression. And he considered that there were significant economic gains in a variety of lesser development nations to the extent to which they introduced more market-oriented reforms.
But Haberler certainly did not consider the postwar period to be a “free market” or limited government world. For instance, in 1982, he penned an essay offering, “An Overview of Economic Policy: ‘A Positive Program for a Benevolent and Enlightened Dictator’.” (And, no, Haberler was not calling for a “dictatorship” to undemocratically impose economic policies. It was a mental experiment that asked, suppose, special interest groups could not prevent a more consistent and thorough liberal market agenda, what might be its ingredients?)
The “benevolent dictator” would limit monetary expansion to an annual rate matching potential long-run real GDP. There would be fiscal restraint with a modest budget surplus to pay down the national debt and shift scarce savings and resources into productive private sector uses. This would include tax reform to make the tax system less progressive and more fostering of capital formation for longer-term growth. There would be noticeable government expenditure cuts to, again, allow more private market opportunity and competitiveness. Politically fostered rigidities in wages and prices would be eliminated to make the price and wage structures more flexible and adaptive to continuous changes in supply and demand. And there would be the widest possible freedom of trade with reduction or repeal of both tariff and non-tariff barriers to international commerce and investment.
The policy changes that Haberler proposed also offered a picture of all the things that governments (including the U.S. government) were doing that clearly were not “liberal” in their character and consequences, and which needed liberal reforming. This suggests that the world in which Gottfried Haberler was living was very far from what he would have considered a “liberal” one. So much for a presumed “neo-liberal” world created by “Austrians” that people were being forced to reside within.
The Postwar Revival of the Austrian School in the 1970s
Finally, we turn to Professor Wasserman’s view of the Austrian School in America after the Second World War, especially as influenced by Ludwig von Mises. In the eyes of some who considered themselves as “Austrians,” the School was reaching its end in the 1950s and 1960s. For instance, Ludwig M. Lachmann said a number of times that he thought that he was to be one of the last of the “Austrian” economists. Hayek had shifted to political and social philosophy starting in the 1940s. Mises was still actively teaching at New York University, but he had no seeming influence on economists in the mainstream of the profession, and he too, had turned mostly to broader questions concerning the methodology of the social sciences. Economists like Machlup, Haberler or, Morgenstern were all their own independent thinkers, partly influenced by ideas they had learned during the old Vienna days, but none thought of themselves as “Austrians” nor espoused an explicit “Austrian” conception of economic theory or policy.
A rebirth of the Austrian School has usually been dated from June 1974 with a weeklong conference on Austrian Economics sponsored by the Institute for Humane Studies that was held in South Royalton, Vermont. Lectures were delivered by Israel M. Kirzner, Ludwig Lachmann, and Murray N. Rothbard, lectures that were published in 1976 under the title, Modern Foundations of Austrian Economics. It brought together a few dozen mostly younger economists, some still working on their graduate or even undergraduate degrees, who had independently discovered the writings of the earlier Austrians, and especially the works of Mises and Hayek.
Many of the participants had never met each other before that conference. They had been found out in one way or another by IHS and invited to attend. A good number of them became leading contributors to the new Austrian tradition beginning in the 1980s and 1990s, and into the 21st century. I was one of the fortunate ones to be found out and who participated in this conference. (See my article, “Austrian Economics on the 45th Anniversary of Its Rebirth”.)
So upon whom had fallen the inspiration for and economic development of a postwar, reborn Austrian School? Professor Wasserman correctly identifies more than any others Israel Kirzner and Murray Rothbard. Kirzner had written his dissertation under Mises’s supervision at New York University, and Rothbard, while earning his doctoral degree at Columbia University, had attended Mises’s NYU seminars for a good number of years.
A Radically Different Austrian School in America
If the older Austrians from Austria represented a distinguished tradition that was passing from the scene in the last decades of the 20th century, the new generation was radically different in Professor Wasserman’s eyes. Kirzner generally shied away from mixing economic theory and policy; that is, he remained primarily “value-free” in his economic analysis, we are told. While Rothbard “made a necessary connection between libertarianism and Austrian School theory. In his work, the school’s most radical tendencies congealed in a volatile blend of ideas and ideology, politics and polemics.” (p. 255).
Kirzner mostly passes from view in Professor Wasserman’s exposition at this point. Scholarly, dispassionate, reluctant to introduce normative inferences into his “Austrian” analysis, Kirzner does not fit into the interpretative schema that Professor Wasserman wishes to present. But while Kirzner has chosen to be less outspoken and polemical than Rothbard, he has not been hesitant to deliberately deduce policy and institutional conclusions from his analyses of market competition and the role of the entrepreneur. (See my article, “Israel Kirzner: the Economist Who Should have Received the Nobel Prize”.)
In Professor Wasserman’s tale, Rothbard has used Austrian Economics as a tool to advance his anarchistic political agenda. He has fostered an “alt-right” movement of racists and bigots, or at the least made room for “a small faction of Alt-Right extremists” who pledge “fealty to Mises, Rothbard, and Austrian ideas. . .” (p. 272). What Professor Wasserman has touched upon is part of a division in the modern Austrian School, one that has generated a great deal of tension and heated words for a good number of years.
First of all, personal and theoretical and policy conflicts have existed in the Austrian School practically from the beginning. This was certainly the case of Menger, Böhm-Bawerk and Wieser. In the interwar period, it centered around Mises and Hans Mayer, who had been Wieser’s protégé and replaced Wieser at the University of Vienna when the Wieser retired in the mid-1920s. Mises and Mayer were rivals for leadership of the Austrian School and ended up in political conflict. When Austria was annexed into the German Reich in March 1938, Hans Mayer actively collaborated with the Nazi authorities and expelled all Jewish members from the Austrian Economics Society (including Mises), and publicly spoke on the need for Austrian Economics to serve the new order of National Socialism. Many of the other Austrians who had gone into exile from their native land permanently viewed Mayer as an intellectual as well as a political traitor.
Wasserman’s Conclusion that the Austrians Take Us to Fascism
Likewise, among the modern-day American “Austrian” economists there are those who view that segment of the Austrian School linked with Rothbard’s legacy and political views as an embarrassment and a threat to the intellectual integrity and respectability of the broader Austrian tradition. Those Austrians inspired by Murray Rothbard consider their critics in the School to be “compromisers” watering down and soft-pedaling the Austrian” perspective in an attempt to gain legitimacy and acceptance within the mainstream of the economics profession. Heated words and occasional insults have been known to pass between members of the two groups.
This dispute among modern members of the Austrian School serves as the hook for Professor Wasserman to argue that all this has reduced too many in the Austrian tradition to be political hacks serving as cover for fascist and racist types on the political “right.” This leads him to reference historian Tony Judt, as saying that economists like Mises, or Schumpeter, or Hayek had “glimpsed the origins of our age, with its fixation on individual liberty as the supreme human value and free markets as the guarantor of freedom. Judt deplored these ideological developments, arguing that the Austrians learned false lessons from their historical experience.” And he quotes political theorist Corey Robins, in referring to Hayek as “the theoretician of contemporary [political] reaction.” (p. 286).
As he concludes his analysis of the Austrian School, Professor Wasserman sees nothing but apologists and cultivators of reactionary and near fascist-type ideas and policies. Clearly, in his eyes, the Austrian economists show their real colors as collaborators and cultivators of all the worst political and economic trends. Here is the dead end of the “neo-liberalism” created by the Austrians, the older members of the School and now the current crop. Their neo-liberal ideas lead to one conclusion: anti-democratic populism and fascism.
Here, too, we find the old lexicon of Marxist categories that developed in the 1920s and 1930s. How do you explain the rise of the competing collectivism of fascism other than that it is the last stage of a gasping capitalism showing its true nature in trying to stay in power? All those Austrians who spoke so much about liberty, rule of law, economic opportunity. We now see their real nature: anti-democratic apologists for closed-minded nationalism, and neo-fascist enemies of people’s ability to fight against capitalist exploitation and inequality.
What conclusion would we like to offer? First, Austrian Economics is, in its theoretical formulations, a value-free analysis of man, society and the human institutional order. This has been emphasized and demonstrated in most of the expositions of the ideas of the School since its beginning with Carl Menger.
Second, the reason most of us attempt to understand why things are the way they are is because we wonder if the human condition might be made better if we comprehend the way the social and economic world works. Most Austrian economists have held generally “liberal” outlooks on many if not most social and economic policy questions. Professor Wasserman may refer to Tony Judt’s conclusion that the Austrians suffered from a misplaced “fixation” on individual liberty as a supreme human value. But I would ask, if not human liberty, then what?
If the answer is “social justice” or greater material equality, then does it mean that you are saying that human beings are to be denied individual liberty to live their own lives the way they peacefully wish to in voluntary association and cooperative collaboration with others? Then at least be honest. You will be forcefully stripped of income you have honestly earned when those in political authority conclude you have “too much.” You will be compelled to live and act in ways that those in political authority consider “politically correct” and there will be compulsory consequences if you attempt to act outside of these constraints. You will be coerced to serve the decisions that “progressive” or “democratic socialist” majorities have voted on, which you may not agree with.
Or as Ludwig von Mise once concisely expressed it:
But it is important to remember that government interference always means either violent action or the threat of such action. Government is, in the last resort, the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.
Let us not make any ethical or normative presumption that such compulsion and coercion is “good” or “bad.” But let us at least, in a dispassionate, “value-free” manner, say whether such policies, not based on a “fixation” with individual liberty, do or do not imply a widening of the circle in which political force and its threat restrains personal freedom of choice and action. Then let each member of society, as one of its citizens, make his own value-based judgment about whether they want a society of more or less use of force in the everyday affairs of mankind.
It’s thrilling that the Austrians are getting long-overdue attention from historians of ideas. Wasserman’s book is a case in point, among several, and it contains much in the way of biographical detail that make a contribution to our understanding. The problem is the priors. If you approach the topic with a presumption that the Austrians were shilling for capital as understood in a Marxian-style dialectic, you miss the entire point of the school of thought and its contribution. The Austrians sought the general good through analytics informed by the best of pre-Keynesian modern economic theory. Their legacy lives today among those concerned that we learn from the past and from the best theory in order to better understand and change our world.
[Originally Published at AIER]