Wednesday, August 8, 2018

The Austrian School Versus The Chicago School: Should We End the War?

Walter Block writes:

As a result of this interchange (, I received the following missive from W (there are 6 letters in this conversation):
Letter 1
From: W
Sent: Sunday, August 05, 2018 9:30 PM
To: Walter Block
Subject: Re:
L said this: “I am unaware of Stigler clarifying his change of heart regarding anti-trust legislation in his later writings.” That does not mean that it does not exist. Stigler was surely never bashful about expressing his views. Since he came to believe that long-term market forces worked better than anti-trust legislation to mitigate against monopoly, I strongly suspect that it can be found among his writings.
Finally, I have always been the optimist — SR pessimist, LR optimist! I have given several talks to graduates and university audiences to that effect. Given my faith in the persistence, efficiency, and rewards of our market system compared to any current political regime, I have consistently argued that at worst we would “muddle through” and at best experience incredible growth and rising standards of living. On the other hand, it is currently my sense that never in my 50-year career has freedom, the market, and our Republican government been under greater threat. Progressives are coming out from under every rock. Socialism rather than being found only in historic dustbins is something openly espoused by major political figures and the young.
If I am correct, I strongly believe the 60-year-old battle between the Austrians and the Chicago School is a battle we can ill afford to continue waging against each other. Combined, at this time we likely do not represent more than 10 percent of the economics profession. We have a terrible important battle to fight; for the first time, I have my doubts that we can win. Fighting among ourselves will only weaken our cause. Yours truly, W
Letter 2
On Mon, Aug 6, 2018 at 1:09 AM, Walter Block wrote
Dear W:
Can’t we Austrians fight a two front war? One, of course, against the commie, progressive, pinko, liberal left. But, another against the wicked Chicagoites, pushing their fed, their voucher systems, their negative income taxes, their malevolent universal basic income plans? In a sense, they are even worse than our friends from the left: they really should know better, whereas who can expect any modicum of sense from the left on economic issues?
More reading for you, from Sherwin Rosen, see below; this shows that the Chicagoites attack us Austrians, not only the other way around. Also, the Chicagoites teach at Chicago, UCLA, and many other prestigious places. Where do the Austrians hold faculty positions at? To ask this is to answer it. How about them being nice to us? When’s the last time they hired an Austrian? Never, that’s when. Friedman and Stigler blackballed Hayek from the Chicago econ dept. He taught there, but only at the committee of social thought. Did any of them ever they ever hire Rothbard? Mises?
If you can show me a publication of Stigler’s that opposed antitrust law, root and branch, not just because (borrowing a leaf from Friedman) it might cost more than its gains in reducing or eliminating the so called dead weight loss of market monopoly, I’ll eat my hat. Well, publicly apologize to Stigler.
Nor is “…to believe that long-term market forces worked better than anti-trust legislation to mitigate against monopoly,” good enough to ward off the intellectual war I propose to continue fighting against the Chicagoans (while of course continuing to give them credit on issues where they are good: free trade, rent control, minimum wage, etc).
This bespeaks a misunderstanding of the correct Austrian view. “Market forces” are totally impotent to get rid of monopoly, for that is necessarily based on a grant of government privilege, and thus impervious to the marketplace. The free enterprise system cannot “mitigate” against crony capitalist monopoly. What about large sized firms with gigantic Herfendahl indices? They are not monopolies, provided they attained their position through means compatible with libertarianism; e.g., no crony capitalism.
Here is Sherwin Rosen’s attack on Austrians:
Rosen, Sherwin. 1997. Austrian and Neoclassical Economics: Any Gains from Trade?, Journal of Economic Perspectives, Vol. 11, No. 4, Fall, pp. 139-152;
Here is my reply to him:
Block, Walter E., Christopher Westley and Alex Padilla. 2008. “Internal vs. external explanations: a new perspective on the history of economic thought,” Procesos De Mercado: Revista Europea De Economia Politica; issue 2, pp. 35-132;
Dear Walter:
Letter 3:
At least Sherwin Rosen took the Austrians seriously, which has been one of their valid complaints.
Letter 4:
On Mon, Aug 6, 2018 at 10:49 AM, Walter Block wrote:
Dear W:
Took us seriously? Consider how Rosen trashed Austrians; he said, in effect, that Chicagoans were correct (where they disagreed, he admitted an overlap) and Austrians incorrect, since there were more of the former than the latter. But, at one time, the flat earthers outnumbered the round earthers. At one time, those who believed the sun revolved around the earth were in the majority. You can’t infer truth by a nose count, as does Rosen.
I suggest you reread the first of these, and then the second:
Rosen, Sherwin. 1997. Austrian and Neoclassical Economics: Any Gains from Trade?, Journal of Economic Perspectives, Vol. 11, No. 4, Fall, pp. 139-152;
Block, Walter E. 2000. Austrian Journals: A Critique of Rosen, Yeager, Laband and Tollison and Vedder and Gallaway,” Quarterly Journal of Austrian Economics, Vol. 3, No. 2, Summer, pp. 45-61;
I regard the latter as a total obliteration of the former.
Letter 5:
From: W
Sent: Tuesday, August 07, 2018 2:11 PM
To: Walter Block
Subject: Re: Larry Wimmer contact info
To Walter:
You are correct, Sherwin’s article was largely critical of Austrian Economics. When I said that at least he took Austrian Economics seriously, isn’t a critical article in a prestigious, widely read journal better than being ignored? I suspect that his article caused some contemplation and searching that might not have occurred otherwise. Along with many others, I believe Sherwin was on track for a Nobel Prize. He took time out of busy professional schedule to write a piece in the Journal of Economic Perspectives that was quite far afield from his professional emphasis. And you received a chance to write an a rejoinder that likely had a wider audience.
Letter 6:
Dear W: You are correct. I’ll let you have the last (substantive) word on this conversation. Best regards, Walter

The above originally appeared at


  1. There are certainly differences between the Chicago School and the Austrian School but both are for the free market- one more so than the other but with rise of democratic socialism and Trumpism (a version of right wing collectivism)they should focus on the 90% they agree on and less on the 10% they don't. As the late Gary Becker explained to Walter Block- a good deal of Austrian economics has gone mainstream.


  2. The Chicago school definitely has some interesting things to say, but I hate the argument from “W” that “oh, things are soo bad right now that we don’t have time to examine our errors.” It’s such a dangerous line of thought. At any given time, there’s always some supposed crisis that can be invoked to excuse trading your principles for expediency. People who value truth and reason should always be fighting that tendency, not encouraging it!

  3. The Chicago School is a f'ing joke. I've read Milton Friedman many years ago. Anyway, funny that the free market can't provide different alternatives to money and we need an all powerful central bank to devalue the currency.