Friday, January 3, 2014

Is the Austrian School of Economics a Cult?

In a letter to Peter Boettke, Walter Block writes:
[Nobel prize winners Gary] Becker and [James] Buchanan have publicly stated we [Austrian school economists] are cultists, and surely this is but the tip of the iceberg; if two such high profile mainstreamers believe this, I imagine most neo classical economists believe it.
I consider this a particularly nasty charge by mainstream economists. To be sure, the word cult has many meanings. A cult film, for example, is a film that has a hardcore following of film goers who have seen a specific "cult film" many times. To be associated with such a cult does not carry with it a negative connotation. However, as we all know, the word cult also carries with it much more negative connotation.

It just so happens that the Austrian economist Murray Rothbard identified the key characteristics of this type of cult:
In the America of the 1970s we are all too familiar with the religious cult, which has been proliferating in the last decade. Characteristic of the cult (from Hare Krishna to the “Moonies” to EST to Scientology to the Manson Family) is the dominance of the guru, or Maximum Leader, who is also the creator and ultimate interpreter of a given creed to which the acolyte must be unswervingly loyal. The major if not the only qualification for membership and advancement in the cult is absolute loyalty to and adoration of the guru, and absolute and unquestioning obedience to his commands. The lives of the members are dominated by the guru's influence and presence[...]The goals of the cult leadership are money and power. Power is achieved over the minds of the disciples through inducing them to accept without question the guru and his creed. This devotion is enforced through psychological sanctions. For once the acolyte is imbued with the view that approval of, and communication with, the guru are essential to his life, then the implicit and explicit threat of excommunication – of removal from the direct or indirect presence of the guru – creates a powerful psychological sanction for the “enforcement” of loyalty and obedience. Money flows upward from the members through the hierarchy, either in the form of volunteer labor service contributed by the members, or through cash payments[...]Since every cult is grounded on a faith in the infallibility of the guru, it becomes necessary to keep its disciples in ignorance of contradictory infidel writings which may wean cult members away from the fold.
The type of cult described by Rothbard here is the type of cult Becker and Buchanan most certainly had in mind when calling ASE a cult. But does the nasty charge hold?

There is no evidence that Austrian school economists hold anyone in such high regard that that person's words are taken as gospel. Indeed, the leading ASE institution, the Mises Institute, has a web site where all sorts of debates are going on all sorts of topics. Cults don't have debates, about anything. If a cult leader like Charles Manson says, "Lets go in this house and kill some people,"  followers do so, they don't debate. If Jim Jones says, "Let's drink this Kool Aid," well then everyone drinks the Kool Aid--no debate.

ASE is about rigorous thinking about economics from a deductive perspective. That's about as far from a cult as you can get.

What explains the cult charge made by mainstream economists? One explanation may be that they truly sense and know that Austrians do view the science of economics differently from them and they just don't know how to properly characterize the difference.

All of us, all the time, run into people who wear clothing different from us and people who act different than us. We know the differences, we see the differences and we may think the differences make the other people strange. But these are not necessarily people who belong to cults, but rather may only be people who belong to different subcultures. I may find it strange behavior when I see dudes from the hood walking around with their pants falling down and that strange hulking walk they have, but they see me walking in a blazer and loafers as strange and different. But, neither my behavior nor the dudes from the hood are displaying cult behavior.

Thus, the charitable interpretation of what mainstream economists are up to is that they sense a difference and fail to recognize the difference properly for what it is. They improperly classify the difference as cultism. It is a school of thought. Just like the school of thought that says the earth revolves around the sun--a one time controversial position. Those, who believe that the earth revolves around the sun, may agree with Nicolaus Copernicus and Galileo Galilei, but not because C and G have followers and close off debate, but because the logic of their argument makes sense. Mainstream economists have such figures in, for example, John Maynard Keynes, though his arguments appear incorrect to Austrians. Appreciating the theoretical argument of a person does not make one a cultist.

There is, of course, another possibility as to why mainstream economists call ASE a cult and that is that there are some mainstream economists who are sellouts. They know their theories are wrong but because they have become weak crony economists, they call names instead of debate. They are afraid of debate.

I have no idea where Becker and Buchanan fall on the spectrum of these two end pole possibilities, but if they are calling ASE a cult, something isn't right.


  1. Great article. However, take Rothbard's "characteristics of a cult" description and substitute the word "government" for the word "cult" and any of the words "president", "governor"," senator", etc. for the word "guru". Is this not an accurate description of modern America?

    1. Great Point Anonymous!! Just to add a bit, it seems to me that cult members exhibit a sort of cognitive dissidence and believe the most incredible things like; we can spend out way to prosperity, raising the debt limit will not raise the debt, we have to abandon capitalism to save it, you solve the problem of excessive credit expansion by expanding credit, etc, etc. Sound familiar?

  2. John R. Hicks also once described Austrians in cult-like manner, albeit with some sympathy. He said that in England there were two sorts of Baptists, Particular Baptists and Open Baptists. Particular Baptists thought that only they would get to Heaven. However, Open Baptists believed that all Baptists would get to Heaven, but the Particular Baptists would be put into a litter corner with a curtain around it so that they would believe that they were the only ones there. He used this religious analogy to describe the difference between Particular Austrians and Neo-Austrians.

    I take it that at the time he believed that mainstream economics had already incorporated everything that was useful in Austrian economics. I believe that he later changed his view somewhat and admitted that he did not properly appreciate the contributions of the Austrian school and their implications with respect to the mainstream view.

  3. Wenzel takes Rothbards words as gospel

    1. every person on EPJ and will fight to defend Ron Paul's honor.

    2. Daniel, start THINKING. It's not hard. Trust me.

    3. Daniel... Please point out inconsistencies or contradictions or, even, absurdities, in Rothbard.

    4. Yes, Daniel- we never question or add nuance to Rothbard, or question Mises, or disagree with Ron Paul or Walter Block...STFU.


  4. Could you fucking morons please spare me the 'cult" accusations shit? It's OLD. It's like hearing some feminist throw out the sexist card or some minority throwing out the race card. When I hear crap like that it means the accuser has ZERO arguments.

  5. Another difference between a religion and a cult, I say wryly, is the number of adherents.

  6. I work in sales and the behavior of the mainstream economist tells me that they're in sales, too.

    Imagine that you're selling a product. If you are the market leader (by a huge margin) and have a new competitor, how much time are you going to spend learning about that competitor?

    The answer is not much. You're going to zero in on anything that's strange or inconvenient or that seems incorrect about the new product.

    They do a wonderful job of this with the Austrian School of Economics:

    1) They love to point out that it's not mathematically rigorous (mission accomplished: now we don't have to argue with ANY aspect of the conclusions made by ASE because they didn't use math and therefore can't possibly be correct). Even when a correct prediction is made by ASE, people just use the broken clock cliche.

    2) The lack of ASE in mainstream academic literature is a large blow as well (brought on by the lack of math). It can't be useful if it's not in the literature, right?

    3) Dismissing those who study ASE as cultists. I don't think much thought goes into the cult charge, other than to make those who study ASE as a bunch of weirdos (you don't want to be a weirdo, do you?).

  7. Have you read the teachings of our master Guru Keynes? By the way, would you like to buy some incense?

  8. The implicit charge of labeling ASE a "cult" is that those believing in the validity of the viewpoints associated with it are "impervious" to logic.

    It is an interesting charge in that I find those subscribing to the Keynesian line of thinking mostly guilty of that very thing.

    RW is right, it amounts to nothing more than name calling. It is the lowest order of argumentation fallacy, ad hominem.

    The idea that yet anothe Nobel Prize winner has shown himself capable of so low a thought process shows what a joke the Nobel really has become anymore.

    You can throw them on the dung heap of other "deserving" winners, like the the drone strike king Obama, Kissinger, Begin, Arafat, & Krugman.

  9. Why not ask them? It would be very helpful to find out WHY mainstream economists view the Austrian school as a cult. I would take the charge seriously, then offer a serious counter-argument.