A Conversation With Jeff Deist About the Austrian School

Jeff Deist, president of the Mises Institute, recently spoke with The Free Market about his introduction to the Austrian School and his work with Ron Paul.

Mises Institute: How did you become interested in Austrian economics?

Jeff Deist: My journey with Austrian economics and the Mises Institute began in 1992. I was fortunate to have a good friend, Joe Becker, studying in the graduate economics program at University of Nevada, Las Vegas. Joe was a burgeoning Austrian scholar, and of course had chosen the program strictly because Murray Rothbard was on the faculty. At the time a small group of Austro-libertarian students had assembled in Las Vegas to study under Murray. With the addition of Hans Hoppe, UNLV clearly had become the top economics program in the US for graduate students interested in Austrian training. I was able to attend a few of Murray’s course lectures, which not surprisingly (to those familiar with his lifestyle) were held in the evening! Needless to say the lectures were fast-paced and filled with references beyond the mainstream, giving only a hint of Murray’s vast range of knowledge. Encouraged by Joe and his excitement for Rothbard’s teaching, I decided to explore further.

At the time I was already a committed libertarian, but lacked any real intellectual framework to integrate free market economics with ethics, philosophy, law, and political liberty.

Remember that much of what passed for free-market or libertarian thought at the time remained mired in 1980s Reaganite clichés. Supply-side economics was still the focus of the Right, with many otherwise sensible people talking about the Laffer Curve and maximizing tax revenue! Quasi-utilitarian arguments flourished in the economics mainstream, ceding the intellectual high ground in favor of arguments that free markets merely “worked” better. “Law and economics” theories were trendy, with strict liability tort models offered as the supposed remedy to judicial overreach and externalities. Tax cuts and enterprise zones typified the weak-tea fiscal policy ideas coming from the political class, even as Clinton outfoxed the elder Bush by co-opting limited government rhetoric. Of course both Alan Greenspan and the Fed were wildly popular across the political spectrum, with some pundits promising not only an end to poverty (through monetary policy) but an end to history itself. Democracy, so we were told, had triumphed.

Against this backdrop Austrian economics opened up a whole new world for me. It became clear that antipathy toward government and support for free markets was not enough: it was necessary to understand and explain the harm caused by all kinds of government intervention in economic terms, which is to say, human terms. Reading breezy libertarian books and articles could never substitute for more rigorous academic self-study.

MI: Describe how your interest in Austrian economics evolved.

JD: Like so many before me, I began reading the great works of Mises, Hayek, and Hazlitt. These works demolished, point by point, the case for communism and socialism, while warning against the abandonment of the old liberal order. They also effectively predicted the failure of social democracy models that had replaced monarchies in Europe and constitutionalism in America. Once one understood and accepted Austrian teaching regarding the fundamental choice between laissez-faire and statism, the conclusion became clear: there was no “third way.”

Traditional Austrian explanations of capital, interest, and time preference refuted the tired yet sometimes subtle fallacies and class arguments underpinning not only Marx and Keynes, but even most neoclassical schools. The subjective theory of value showed that consumers, not intrinsic material or labor components, determined value. Austrian business cycle theory explained not only particular booms and busts (such as the S&L bust), but also the broader need for commodity money and the inherently destructive effects of central banks. Meanwhile, Austrian methodology taught that markets are not mysterious, anonymous, or inhuman: on the contrary, they simply reflect human action, however imperfect, in economic terms.

Perhaps most importantly, the Austrian School helped me understand the impossibility of socialism as an economic system. By demonstrating the critical need for price signals and profit/loss feedback among business owners, Austrians demolished the entire range of modern arguments for state economic planning.

Reading Murray Rothbard took my Austrian education to another level. He literally laid out the ethics of liberty, explaining the legal and political conclusions necessarily flowing from self-ownership, the natural rights tradition, and the principle of nonaggression. He made the clear case for property rights as the foundation of a free society, applying the same standards to government and private actors. The state, Rothbard argued, is virtually always an aggressor. Only the willing blindness and inertia of individuals in society allow the state to mask this aggression as benevolence, and tax us for the privilege.

Of course Rothbard also produced a staggering array of books and articles on the topics of money and banking, the Great Depression, history, philosophy, law, and anarcho-capitalism, just to name a few. Yet his work was always highly accessible to me as a layperson, and readable in a way earlier Austrians sometimes were not.

In short, Austrian economics provided the exposition and defense of capitalism I had been looking for. Austrianism transcended individual vs. utilitarian arguments, explaining the destructive nature of state intervention for the whole of society. It provided the intellectual and conceptual foundation for a consistent defense of freedom, a foundation that seemed lacking among so many conservatives and libertarians.

MI: How did you end up working with Ron Paul?

JD: In the early 2000s, I joined Ron Paul’s congressional staff in Washington,rdd4 DC. Ron had been involved with the Mises Institute since its founding, and in fact made his initial decision in the 1970s to run for Congress largely based on his interest in the Austrian School. Ron had the opportunity to see Mises speak in 1972, and of course later he became well acquainted with Murray Rothbard and Henry Hazlitt, among others. Lew Rockwell had been an early supporter and confidant, serving as Ron’s first congressional chief of staff.

Many of Ron’s staff at the time already were dedicated Austrians, and at his urging we all attended Mises Institute events in Auburn. All of us shared Ron’s view that his role was to educate people, and the Austrian message played a central part in that mission.

MI: How did this work lead you to the Mises Institute?

JD: Mises.org became an invaluable resource for us, and we made a concerted effort to add Austrian content to Ron’s speeches, statements, and articles. As a result, C-SPAN viewers sometimes were amazed to hear Ron quoting Mises, Rothbard, Rockwell, or Tom Woods in the middle of otherwise laughably nonintellectual congressional debates! We also developed great relationships with many of the academics associated with the Mises Institute, often inviting them to provide testimony before the monetary policy subcommittee Ron chaired. In many ways the Institute served as the intellectual home for Ron’s congressional office.

Through Ron’s growing popularity, thousands of Americans, especially young Americans, were exposed to the great scholarship of Mises, Hayek, Hazlitt, and Rothbard. Equally important, the Austrian School gave Ron the intellectual ammunition to explain the great calamities of those years: Greenspan’s tech stock bust; the Enron accounting scandal; the terrible folly of a Fed-financed war in Iraq; the enormous malinvestment in the housing market; and ultimately the global crash of 2008/2009. In all of these instances Ron Paul laid down historical markers, using the principles of the Austrian School. For this the world owes him a debt of gratitude.

On a personal level, working for Ron Paul enabled me to develop friendships far and wide with libertarians around the world. It was through Ron that I became acquainted with Lew Rockwell, and it is because of Ron that I now find myself joining the Mises Institute at a time when the Austrian School is growing rapidly. I am deeply humbled and honored to work with the Institute’s staff, donors, and supporters as we take the Austrian vision of a truly free society forward in 2014.