Who Loves the Austrian School of Economics

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I subscribed to the Mises Institute emails a while ago, when I learned that from time to time they post articles written by my first Political Science mentor, the Late, Dr. David Osterfeld.

https://mailchi.mp/mises.org/thank-you-for-joining-us-950656?e=50bb36af5f

 

I don't. But hey, good for them to make these resources available for those so inclined.

 

Doesn’t George Mason University have a relatively friendly approach to the Austrian School?

 

Indeed, it does. GMU's Economics Department is renown.

As a Public University located in northern Virginia, George Mason, as a whole, is pretty conservative. I'm a proud father of a recent GMU graduate. Several years ago I enjoyed a good bit interaction with people affiliated with the Peace Operations and Peace Studies Programs.

 

Not me. I started in a PhD program in history (economic history) in the same year that two of my close friends started PhD programs in economics. All of us would have described ourselves as libertarian/libertarian leaning and we were all interested in Austrian Economics. One of my friends attended GMU and had a fellowship tied to their subject area in Austrian Economics. By the time out first years were completed at three different universities, we had all abandoned Austrian Economics and libertarianism. While I did not finish my PhD, my friends did; one of them is an economist with the Federal Reserve and the other teaches economics at a university that offers a masters' degree in economics.

We all came to more or less the same conclusion, namely that Austrian Economics is not much more than a philosophy. As an academic exercise that could, in any way shape or form, be considered a science/social science, it fails. Indeed, the mathematical turn in economics of the mid-twentieth century has been all but totally rejected by the Austrian Economists.

My historical interest was in agricultural economics and national-level agricultural policy during and prior to the 1950s, e.g., before the mathematical turn in agricultural economics and the discipline more broadly. As an economically minded historian, it was fascinating to me how much of the conventional wisdom in agricultural economics and policy was really driven by inaccurate observation, inductive reasoning, and a sort of received wisdom/folk wisdom about the working of the agricultural economy. This was in mainstream economics, mind you. I would argue that Austrian Economics is still largely driven by that same pattern of inaccurate observation, inductive reasoning, and received/folk wisdom. Well, not just me. Keynes said of Hayek's work that "It is an extraordinary example of how, starting with a mistake, a remorseless logician can end in Bedlam." Indeed.

 

Sure, Hayek won a Nobel Prize. He shared it with Gunnar Myrdal. Hayek was more a political philosopher than an economist and Gunnar Myrdal was more a sociologist than an economist, at least this was true for them by the time they won their Nobel. The fact that the two of them shared the prize and, indeed, the Nobel Committee's announcement, really speak to the fact that they weren't necessarily agreeing with Hayek, so much as acknowledging that his theories had been popular and had sparked a lot of conversation. Hayek had also written extensively against the social safety net, something elemental and fundamental to Myrdal. But again, this is Hayek not so much as economist than as moral and political philosopher. Anybody who has taken a 100-level class in political theory or comparative politics understands that these political systems like democracy, socialism, and communism, are never pure. There is divergence from the pure manifestation and there is convergence with other systems. So, sure, the social welfare system could lead to serfdom. But I don't think (and I don't think Hayek proves) that there is some deterministic inevitability that a social safety net leads to socialism any more than I believe in the Marxian determinism of the inevitability of socialism.

Hayek was insightful, though I think it we are being totally honest, much of what is lauded as insightful on his part might well have been that he was a popularizer of ideas of trade theory and related conceptions in the English speaking world, concepts that had been dealt with for better than a generation in Germany and particularly Austria. Personally, and again this is from a former acolyte, I think his most important insights in "Money Theory and the Trade Cycle" (the thing that made him widely known and something specifically referenced in the Nobel announcement) were regarding market knowledge and the ability to manipulate markets that comes from the inherent differences in knowledge of different market participants based on their positions (as consumers, products, financiers, government, etc.). But then, Mises wrote about it before Hayek. And Mill had taught us all about the economic man. Don't get me wrong, I get that virtually all economic research is, at least to some degree, derivative. We stand on the shoulders of giants, right?

Hayek advocated for strict adherence to the gold standard in the 1920s and his star rose further and became much more widely known outside of government and academic circles in the early 1930s. He wrote, for instance, that the "quantity of money should remain invariable". That is a pretty easy opinion to have in 1931 when the world has totally fallen apart and never before asked questions are being asked about the nature and efficacy of capitalism. But, you know, Monday morning quarterbacks don't actually win games, for all the talk. Hayek himself admitted that his seemingly unflappable commitment to a rigidly operated gold standard (and with it an inherently inflexible money supply) had wavered, noting his "belief has been somewhat rudely shaken by the crisis of 1929". I think a lot of that candor is due to his inability to reconcile that which he largely took on faith with that which he witnessed in the collapsing of economies in the West.

 

I Second That Emotion. (Smokey Robinson and the Miracles.)

 

The Mises Institute also offers its own unaccredited, state-licensed (hmm), online Master of Arts in Austrian Economics.

 

I actually considered applying for this just for personal interest but they require reference letters, which was more work than I wanted to put in for an unaccredited degree at a school of unknown quality in a fringe part of a discipline I have only passing interest in.

 

"The Mises Graduate School is not currently accepting applications."

The school had been on DEAC's Institutions to be Considered list, but now is no longer on the list nor is it accredited.

 

Ah, the Gold Standard, that "relic of barbarism" according to Keynes. The speed with which an economy emerged from the worldwide banking collapse in 1932-33 was closely correlated to how quickly a country abandoned the gold standard according to Galbraith. In a world of a growing population and a growing economy the gold standard is intrinsically deflationary. The Euro Zone is finding that out; having a national currency that isn't controlled by the national government looks a lot like a quasi gold standard with the same rigid inability to respond to economic crises.

Ah, but now that the global population is set to decline, and decline rapidly after about 2100, who can say?

 

Well, Switzerland did marvellously - and they were the LAST country to abandon the gold standard, in 1936. I don't remember the Swiss as having to recover from any collapse. "Collapse - what's that?" In fact. in 2014, Switzerland was preparing to hoist the gold standard again - a provision that at least 20% of the Swiss National Bank's assets be in gold. That provision was, however, defeated.

All I know is - I bought some Swiss francs in the 80s - I got three for a Canadian Dollar, then. I get less than one, now. 2/3 of a Swiss Franc for one Canadian Loonie. Thy're doing OK.

"Money isn't real until it's in Switzerland." Not sure who said that. Someone in Organized Crime, probably. I've read a LOT of books on that. It's very interesting - and quite instructive.If you're into economics and finance, I recommend studying Suchljanowski. You probably know him as Meyer Lansky.

 

Sorry. That should be Maier Suchowljansky. Oy, di zkhrun geyt. (Oy, the memory is going...)