Saturday, March 8, 2014

Peter Boettke: Embrace the Current Failures in MSM Economics

Peter writes:
My point, in the end, is really simple --- either you compete in "The Republic of Science" or you aren't doing "science".  It may be that the science is currently wrongheaded --- you might even believe it is confused and corrupted --- but if you want to advance a scientific agenda in a discipline the only way to do that is to join that discipline, embrace its professional standards of success/failure, and fight from within to correct what you see as error. 

Here's a different take from Gary North:
Ludwig von Mises

The Austrian School of economics in the twentieth century was dominated by Ludwig von Mises. He died in 1973. His followers have divided into two main camps: the Rothbardians and the Lachmannites. They have adopted rival philosophies and rival strategies. 
 The main strategy of the Lachmannites is to get tenure at a university. The main strategy of the Rothbardians is to persuade the general public of the truth of economic liberty.

A college teacher who is granted tenure need not publish anything ever again. He will be paid for merely showing up to class. The number of classes that he teaches declines. He is immune from dismissal. This is the bureaucrat's dream come true.

The quest for tenure emasculates people. It turns them into intellectual geldings. They must please the tenured bureaucrats who hand out The Prize. The goal of every academic department is mediocrity within the department. The screeners do not want to hire anyone who will show them up, making them look second-rate at best. They also do not want to bring in anyone so incompetent that the university's administration may intervene to investigate. The requirement for tenure is clear: Don't rock the boat....

The first group of the followers of Mises were those who were converted out of socialism in the 1920s. These included F. A. Hayek
, Wilhelm Roepke
, and Lionel Robbins
. The second wave -- more like a ripple -- was Rothbard's generation, which began in the early 1950s. It included Hans Sennholz
and Israel Kirzner
. The third wave was my generation. We came together at a meeting held in South Royalton, Vermont, in 1974.


At the meeting in Vermont, the division became visible. It was a division between Murray Rothbard
, who attended the meeting, and a member of the first generation, Ludwig Lachmann
, a somewhat obscure economics professor from South Africa. He had written a few articles in the 1930s and 40s, but he had never written a book of significance. He was a believer in almost total economic chaos as the basis of economic theory. I am not exaggerating. He called this kaleidic perception. His example of economic entrepreneurship was based on a kaleidoscope, which children look through, turn the base, and see ever-changing but meaningless patterns. He really did believe that this is the basis of entrepreneurship. He was also the worst lecturer I ever heard, and I have heard many terrible lecturers.

Rothbard believed that economic theory should be based on a series of axioms and corollaries. This was the original view of Mises. Rothbard was faithful to this position. He believed in economic rationality as the basis of comprehension of real-world actions. He then applied Mises's comprehensive theory of human action to the economy and politics. He did not believe that you could use economic facts to refute theory, but he surely believed that you could use economic facts to illustrate theory in action. That made him unique in the camp of the followers of Mises, because he was relentless in his application of Mises's categories of human action with respect to politics, academia, foreign-policy, wars, and the work of conspiracies to gain control of political power in order to further their ends. Therefore, he believed in conspiracies.

For modern academia, a conspiracy theory has much the same effect that a crucifix had on Bela Lugosi's Dracula.

Because of Rothbard's commitment to the application of Mises's theory to virtually every area of modern politics, he has earned the respect of intelligent people who are outside of academia, and who see through the delusions of both grandeur and independence that tend to afflict those who are inside academia. In contrast, those Lachmannian followers of Mises who are inside academia, and who gain their sense of importance from their peers in academia, regard Rothbard as the turd in the punch bowl. If Rothbard was right, then almost everything they are doing is either irrelevant or worse...

To the extent that Rothbard was considered a spokesman for the Austrian School of economics, the Austrian School economists who were on the payroll of the American academic Establishment desperately wanted to separate him from themselves. If it was suspected by the academic community that somebody like Rothbard represented the Austrian School, they might not be able to get their articles published in third-tier academic journals any longer.

Not one of them ever got onto the faculty of a top-tier university, meaning an Ivy League school or similar institution. To get into one of these schools, you must privately renounce your commitment to Mises. That was set as unofficial policy of economics departments in the late 1940s and 1950s. The two main figures who got into high-level positions, Fritz Machlup
and Gottfried Haberler
, had both abandoned their early commitment to Austrian School economics. That was the quid pro quo. They paid it. In the United Kingdom, Lionel Robbins got into the London School Economics in the 1930s, as did Hayek, but after Keynes' revolution, he publicly renounced his book, The Great Depression , which was explicitly written in terms of Austrian economic principles. Hayek was blackballed by the economics department at Chicago. He did not meet their ever so rigorous, ever so neutral academic standards. He taught for free in the obscure Committee on Social Thought. His salary was paid for by the Volker Fund.

This is how the academic game is played at the top, and the Lachmannians know it. They must seek tenure in lower-tier schools. But the money is good, so they play along. They may occasionally mention Mises in their footnotes, but they rarely invoke Mises's original writings in defending their positions. They do not cite him as authoritative. They come with new approaches -- approaches that are more methodologically acceptable, or at least aesthetically acceptable, to the Keynesian editors of third-tier academic journals. They either ignore Rothbard or else dismiss him. They do not cite his writings.

They have this in common: almost no one has heard of any of them. Inside Keynesian academia, they are barely known. Inside free market academic economics, which is dominated by Chicago School economists, they may be patted on the head and invited to serve on a panel at an academic conference. They are allowed to say a few words in response to the main speaker at one of the less significant sessions. But they remain invisible to their peers most of the time.

This annoys them. What annoys them even more is the fact that the Mises Institute and are Rothbardian. These two sites are highly ranked on the various website-ranking sites. These sites get enormous traffic. The Austrian School is known to the general public only through Rothbard-influenced sites...

Mises had utter contempt for the academic game. He, too, labored in a third-tier university as an unpaid "visiting" professor for almost a quarter century. He was regarded as a crank by his colleagues. The Volker Fund and other donors paid his salary. No one in academia or the public knew who his departmental colleagues were. They left no trace. He has.

In 1962, Mises recommended Man, Economy, and State. Simultaneously, he dismissed the economists' academic game as an exercise in intellectual futility.

Most of the Lachmanites are too young to have read the New Individualist Review, which was a student publication at the University of Chicago from 1961 to 1968. I subscribed from issue number one. The Liberty Fund has published a hardback of all the issues. Its articles are online.

In the Autumn issue, 1962, Mises wrote a book review of  Man, Economy, and State, which was published that fall. Here is what Mises wrote:

The economic writings of the last decades provide a pitiful story of progressing deterioration and degradation. Even a comparison of the recent publications of many older authors with their previous writings, shows an advancing decline. The few, very few, good contributions that came out in our age were smeared as old-fashioned and reactionary by the government economists, boycotted by the universities, the academic magazines and the newspapers, and ignored by the public.

Let us hope that the fate of Murray N. Rothbard's book Man, Economy, and State
(Princeton: D. Van Nostrand, 1962) will be different.

For those in the anti-Rothbard camp, this is a bitter pill. It got even more bitter.

In every chapter of his treatise, Dr. Rothbard, adopting the best of the teachings of his predecessors, and adding to them highly important observations, not only develops the correct theory but is no less anxious to refute all objections ever raised against these doctrines. He exposes the fallacies and contradictions of the popular interpretation of economic affairs. . . .
Then Mises did the unpardonable. He dismissed academic economists as a collection of charlatans -- charlatans who are best ignored. "The fact that the majority of our contemporaries, the masses of semi-barbarians led by self-styled intellectuals, entirely ignore everything that economics has brought forward, is the main political problem of our age." Then what is the best strategy? Do what they refuse to do: take these ideas to the people.

If we want to avoid the destruction of Western civilization and the relapse into primitive wretchedness, we must change the mentality of our fellow citizens. We must make them realize what they owe to the much vilified "economic freedom," the system of free enterprise and capitalism. The intellectuals and those who call themselves educated must use their superior cognitive faculties and power of reasoning for the refutation of erroneous ideas about social, political and economic problems and for the dissemination of a correct grasp of the operation of the market economy. They must start by familiarizing themselves with all the issues involved in order to teach those who are blinded by ignorance and emotions. They must learn in order to acquire the ability to enlighten the misguided many.

It is a fateful error on the part of our most valuable contemporaries to believe that economics can be left to specialists in the same way in which various fields of technology can be safely left to those who have chosen to make any one of them their vocation. The issues of society's economic organization are every citizen's business. To master them to the best of one's ability is the duty of everyone.

Now such a book as Man, Economy, and State offers to every intelligent man an opportunity to obtain reliable information concerning the great controversies and conflicts of our age. It is certainly not easy reading and asks for the utmost exertion of one's attention. But there are no shortcuts to wisdom.

Mises clearly recommended that his disciples avoid what became the career strategy of Lachmann's disciples: to regard academia as important in the struggle for liberty. Rothbard took this advice. He never again published in an academic journal after 1962. He wrote newsletters and readable books instead. This strategy has paid off in a spectacular way because of the Web.

In stark contrast, Lachmann's disciples are unknown to the Web surfers who have come across and The Mises Institute has at least six times the traffic of the website of the American Economic Review, the senior academic publication in the field. The only influence that these professors can plausibly pretend to have is inside the halls of ivy. But the economists who dwell in these halls are far more committed today to central banking and federal deficits than they were in 1962. In short, the Lachmannites have no influence. They have never had any influence.

Rothbard's influence is growing. Even inside the fringes of academia, his influence is growing far more rapidly than the reputations of the Lachmannites. He wrote clearly and persuasively. He wrote in English. He wrote on a wide variety of subjects of major relevance. He did not write for the tenure-granters. He wrote for the audience that Mises said economists should write for: intelligent voters.

Meanwhile, the Lachmannites sit quietly, staring into their kaleidescopes, twirling, twirling in the hope of coming up with just one important idea that re-shapes academia. So far, nothing.

But the pay is good.

NoFgrrth's full article is here.


  1. Boettke: “…but if you want to advance a scientific agenda in a discipline…”

    This is one objective; not a very meaningful one when it comes to a politicized field like economics, but it is an objective.

    “…the only way to do that is to join that discipline, embrace its professional standards of success/failure, and fight from within to correct what you see as error.”

    This is the same logic used by so-called libertarian politicians – if I join them and play by their rules, I will be able to beat them.


  2. This describes George selgin completely!