Austrian School Cat Fight!
Professor Peter Boettke of George Mason University.
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By Dr. Pitchfork
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Last week, the Wall St. Journal published a glowing profile of George Mason University economics professor, Peter Boettke (pronounced "bet'-key"). Boettke is one of the leading academic economists working in the Austrian tradition and he writes frequently for Coordination Problem (formerly known as The Austrian Economists blog). The WSJ article notes that "as the economy flounders, debt mounts and growth—revised downward Friday—flags, Mr. Hayek and his Austrian-school adherents like Mr. Boettke are resurgent as their views resonate with more people." On bailouts and "stimulus," the article quotes Boettke as saying:
What I'm really worried about is an endless cycle of deficits, debt, and debasement of currency. What we've done is engage in a set of policies that's turned a market correction into an economy-wide crisis.
For Daily Bail regulars, he's preaching to the choir, but the profile of Boettke, which includes quotes like this one, is an encouraging sign that our side of the argument on bailouts, Keynesian "stimulus," deficits and debt, is finally getting a hearing.
Still, that didn't stop some free-market, Austrian-leaning folks from using the occasion to stir up a good old-fashioned cat fight. David Kramer, writing on the Lew Rockwell blog about the Boettke piece, sputtered:
Yet, “somehow,” one of the biggest One World Government propaganda rags—the War Street Journal—wrote a puff piece on Prof. Boettke of George Mason University who (according to this rag) “is emerging as the intellectual standard-bearer for the Austrian school of economic.” Perhaps in the minds of Peter Boettke and the folks at the War Street Journal. Now why in the world would the WSJ print such a baldfaced lie when Boettke could not even shine the shoes of the greatest living Austrian economists in the world today—Hans Hoppe, Walter Block, David Gordon, Joseph Salerno, Guido Hülsmann (I could go on)? Hmmm…could it be…could it be…could it be because Prof. Boettke is still a believer in one of the biggest scams ever perpetrated on human civilization [i.e. the Fed]?
If you didn't know already, the world of Austrian economics is bitterly divided into two, more or less distinct camps. The Austrians associated with George Mason see themeselves as the right-thinking, cosmopolitan standard-bearers of the tradition of Mises, Hayek, Kirzner and Rothbard. They view the Austrians associated with the Mises Institute and Lew Rockwell.com (generally speaking) as cultish, gold-bug conspiracy theorists whose understanding of Austrian economics is obsolete, and whose politics give aid and comfort to neo-confederates and racists. By the same token, the Mises Institute/Lew Rockwell crowd (generally speaking) regards the GMU Austrians as sellouts who would rather be cosmopolitan than libertarian, and respectable rather than radical. Besides, the GMU Austrians aren't "real" libertarians at all, they're "Beltway" libertarians.
The recriminations from either side have more than a grain of truth in them, but for Pete's sake! Does it really make sense to rehash petty squabbles (that almost no one gives a crap about) when people like Ben Bernanke and Tim Geithner are still on the loose, and wreaking all manner of havoc with the economy our children will inherit? Even worse than being a waste of time and energy, some of the things Kramer claims about Boettke aren't even true. He claims that Boettke is "a believer" in the Fed (aka "one of the biggest scams ever perpetrated on human civilization"). He also suggests that Boettke (like all those other "Beltway" libertarians), would rather praise the moderately pro-state Hayek than the more radical Mises, who many people regard as a crackpot. Kramer writes:
And guess who is the only Austrian (albeit barely) economist that the rag [i.e. the Wall St. Journal] mentions in conjunction with Boettke and the Austrian school of economics? Friedrich Hayek. You know, the “Austrian” economist who once stated that the welfare state works.... I guess that’s why the Socialist members of the Nobel Price committee gave Hayek the Nobel Prize in “Economics” rather than the exponentially superior Ludwig von Mises (the number one Austrian economist—and, for that matter, economist—in history)
To which, I can only say: You Cannot Be Serious!
Responding to a David Frum attack on Ron Paul's views on monetary policy, Boettke once wrote:
Mises was not a crackpot, but perhaps the most insightful economic thinker in the world at a time when the world itself was upside down. He was an anti-socialist when the world looked upon socialism with hope, and he was an anti-Keynesian when the discipline of economics all moved in the Keynesian direction. Subsequently we learned that socialism led not to hope but to political tyranny and economic deprivation, and Keynesianism was logically flawed in lacking microfoundations, and practically flawed in leading to world-wide inflation and economic stagnation. In other words, Mises was right! In fact, I think one could make a reasonable argument that Mises was right on every single controversial position he held --- from methodology to public policy.
That's right, this is the same Peter Boettke who Kramer accuses of treating Mises as some kind of crazy uncle you try not to mention by name.
And what does Boettke think of central banking (i.e. the Fed)? Like any good Austrian, he rejects the notion that a central banker has the requisite knowledge to set interest rates or manage the money supply. And like Peter Schiff, he has grown fond of pointing out how the Fed continually throws the economy out of whack with artificially low interest rates -- or, what Boettke calls "the crazy juice." So, let's get this straight. Peter Boettke says the Fed cannot possibly do the job it is tasked with doing, refers to Ben Bernanke as a purveyor of "crazy juice," and David Kramer wants to believe that Boettke is just another Fed apologist? Good grief. It seems Kramer must be the one drinking the crazy juice.
Personally, I read Lew Rockwell.com every day. I think people like Tom Woods, Robert Murphy and Walter Block -- to say nothing of Rockwell himself -- have done great work over the years advancing the causes of liberty and sound economics. And within the field of economic science, so have academics like Boettke and GMU alum, Steve Horwitz, who runs Coordination Problem/The Austrian Economists blog. But the cat-fighting that goes on on these occasions is just stupid. In a saner moment, even David Kramer would have to agree that it's a waste of time and energy and it needs to stop. Especially when you consider that these central-planning geniuses are still in power:
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Aug 31, 2010 at 10:49 PM
Reader Comments (26)
I saw your comment. I thought it was pretty rude. What's your beef with Boettke? I've never understood why some LRC-ers get all worked up over what Boettke or Horwitz or doing -- and I suspect it isn't even about them, but some of the, um, personalities who inhabit their part of the Austrian universe.
I deleted your comment at CP. Remarks about the waistlines of your hosts or other commenters are out of bounds. Have a substantive disagreement? Post it. Have an insult? Nuked. There's plenty of disagreement on CP, as even reading for 5 minutes would indicate. What we don't tolerate is insulting behavior.
Add that to that the fact that there's only about 10 different names posting under your IP, and you might understand why you were sent to the penalty box. Come back to CP when you can interact like an adult.
Check out the comments section:
http://www.economicpolicyjournal.com/2010/08/kelly-evans-again.html
From Boettke: "I have also repeatedly claimed that I do not want to get involved in internet wars..." Maybe this is why they jumped on me - am I the only person from GMU (a lowly grad student just starting his second year) to even respond to the attacks on Boettke? Ignoring crackpots who think you're part of a conspiracy of the power elite when you is probably the best policy, but calling the GMU Austrians "the Uptights" is just so childish and ridiculous that my annoyance got the better of me.
To paraphrase DiLorenzo - how boorish can you get! Labeling a great economist from your own school of thought an "Uptight" because of extraordinarily childish jealousy over a WSJ article!
Look, I understand giving the government or the Fed or the war both barrels, but fellow Austrian School economists? Is the LRC crowd completely incapable of moderating their tone? It makes me think of Stalinists screeching about Trotskyite wreckers whenever they bring up the whole Koch thing. I've been reading LRC since my undergrad days but I feel like I've been purged.
What area(s) do you plan to study, by the way? You're pretty lucky to be at GMU -- this is an exciting time to be an economics student and an especially exciting time to be an Austrian.
I think I'd want to study history of thought if I thought there to be more call for it in the profession. I studied under a professor named James Ahiakpor back at Cal State Hayward who turned me on to a lot of classical economic thought, and studied Austrian ideas more or less independently through Mises.org (which is why it really irks me that I've been singled out by them as a "Beltway libertarian" along with one of my most radical professors...I'm an anarchist, for the love of the Flying Spaghetti Monster, and guess whose arguments converted me? Hans-Hermann Hoppe). I feel like having a classical AND Austrian background helps me fit a few extra pieces into the puzzle.
I took the Austrian economics sequence at GMU in my first year (instead of taking stuff like econometrics I was supposed to take in my first year) and I'd really like to take all that knowledge and put it toward the development field...critiquing foreign aid practices and state-led development planning schemes through an Austrian lens sounds like the work of a couple of lifetimes to me. The lack of progress of various developing countries worldwide is of much concern to me - imagine the untold human suffering that comes from economic blunders in places like Zimbabwe and you can't help but feel sick to your stomach.
I know I don't want to make a career of vicious arguments with people who essentially believe the same things I believe over why Professor Boettke changed the name of his blog, that's for certain.
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As one who has been banished himself by Horwitz, I am certainly inclined to be sympathetic to anyone else who has suffered that fate. But Rachel got what she deserved. She was way out of line.
But that doesn't change the fact that you can still be banished by Steve Horwitz just for winning the argument with him.
In fairness, he's certainly not the only one like that. Many years ago, Lew Rockwell threw me out of Mises University for challenging Rothbard, and I have since been banished from his Mises Economics blog and Mario Rizzo's ThinkMarkets, for the same transgression, winning the argument.
I am happy to report that I have the run of the house at Cafe Hayek, whose operators, Roberts and Boudreaux, apparently have the confidence in themselves and dedication to economics lacking elsewhere, and, are, for my money, the real leaders of the Austrian School today.
By the way, that discussion over at Coordination Problem now about the disagreement between Kirzner and Lachmann is really over equilibrium, with Kirzner saying the market tended toward it and Lachmann saying that we couldn't be sure of that.
You wouldn't know that from all the learned mumbo jumbo over there, but that's what it's really all about
DG Lesvic
the bad boy of economics and terror of the Austrian School
the bad boy of economics and terror of the Austrian School
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LOL Rest assured, the ban (which I was unaware of) was NOT for "winning the argument."
I float far on the outside of the Austrian School and enter briefly when I need a smackdown for some Krugman Keynesian witch-doctoring madness...if you search the site, you'll find several Austrian takedowns of Krug...
Any time you might wish to contribute anything to the site, send it my way by email....
Mr. Lesvic, in fact, is a warped kind of cyber-stalker.
Congratulations to the best teacher of economics in the world today, Prof. Ebeling, for that wonderful exposition of the scientific method in economics.
But, if this discussion and economics itself is to have any impact beyond academic, esoteric circles, we need to take it back down to earth.
It all begins with the housewives shopping for the evening dinner and finding more meat but not as many potatoes as they wanted. They would bid up the price of the potatoes and downward that of the meat, thereby sending a signal to the farmers, less meat and more potatoes. And to maximize their sales and profit, the farmers and all of the other producers must respond to the signals and wishes of the consumers, and until there were no more relative oversupplies and undersupplies, but equilibrium between the supply of and demand for meat and potatoes, and everything else.
It was this spontaneous tendency toward equilibrium, driven by the profit motive, and guided by the signals of price, that Adam Smith called the Invisible Hand.
Since it, briefly, explains how the market coordinates its separate efforts, without a central, socialist dictator telling everyone what to do, and is the only thing that does so, it is essential to the case for a free market, and, conversely, discrediting it is equally essential to the case for socialism.
Prof Lachmann’s role in the debate was this. An otherwise stalwart defender of the free market, he questioned the conception on which it most depended, the Invisible Hand, or tendency toward equilibrium. Since the market actors were prone to error, there was disequilibrating as well as equilibrating action in the market; and, as Lachmann saw it, no way of knowing whether the equilibrating would outweigh the disequilibrating, and the market actually tend toward equilibrium or disequilibrium
But, we know this much. The market tends toward a final state of rest, and could never rest at disequilibrium.
The housewives could not rest with more meat but not as many potatoes as they wanted, nor the farmers with more meat but not as many potatoes as they could sell
To maximize their satisfaction, both consumers and suppliers must take the actions which, in the absence of any further action, would bring about equilibrium, which, if they didn’t actually attain it, tended toward it.
Entrepreneurial error doesn’t change the fact that the market tends to correct it, and interference with the market is interference with the correction.
The possibility of market failure is immaterial. Economics is not a science of possibilities, for anything is possible, nor of certainties, for nothing is certain. It is a science of practical and reasonable assumptions, and the futility of human action is not one of them. The possibility of getting hit by a truck if we get out of bed in the morning doesn’t mean we shouldn’t get out of bed. To live, we must act, to act, presume success, and, to analyze our action, a universe conducive to it, tending not toward disequilibrium and chaos, but equilibrium and order.
DG Lesvic
If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter.
George Washington
Ah, the bully pulpit, be careful with all that power.
You wrote,
"the "tendency toward equilibrium is a red herring."
To Mises, it was an essential tool of analysis, “which economic thought cannot do without.”
Notes and Recollections, P 36
You wrote,
"markets are always in a dynamic state of dis-equilibrium."
That's right.
You wrote,
"Equilibrium, general or otherwise, is just a textbook fantasy."
That's right.
Finally, you said that whatever heuristic value it might have, "it's almost better not to talk about it at all."
Why wouldn't you want to talk about something that had "heuristic" or explanatory value?
Rothbard explained its value:
The final equilibrium position is “like the mechanical rabbit being chased by the dog. It is never reached in practice and is always changing, but it explains the direction in which the dog is moving.”
Man, Economy, and State, P 276
That's what economics is all about, explaining the direction in which action upon the market moves it.
Did you really mean to say that it was better not to talk about economics at all?
But, keep pitchin’ that manure.
Prof. Horwitz complained that I was a “warped kind of cyber-stalker.” What he was really complaining about was that, in this new age of the Internet, the profession can still run from the science but no longer hide from it.
Was I “insufferably rude,” as he charged? I hope so, for while the elite would limit economics to a mutual admiration society, exposing learned pretension is an economist’s job.
Why not a Scientific as well as Public Choice Economics, exposing the motives of economists as well as officials? It is not economics but the profession that could not stand the scrutiny, and, as should be apparent by now, economics can not stand the lack of it.
DG Lesvic
Here's why:
You wrote:
'You wrote,
"the "tendency toward equilibrium is a red herring."
To Mises, it was an essential tool of analysis, “which economic thought cannot do without.”
Notes and Recollections, P 36'
Mises goes on to say in the very next sentence: "But [Austrian economics] is always aware of the purely instrumental nature of such an idea, and similar aids." Instrumental, heuristic...Yes, I do believe Mises and I are on the same page on this one.
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You wrote:
'Finally, you said that whatever heuristic value it might have, "it's almost better not to talk about it at all."
Why wouldn't you want to talk about something that had "heuristic" or explanatory value?'
This was a nice turn of phrase on my part. It's a shame it was lost on you. But even in interpreting my statement literally, you've simply misread what's actually there. The key word here is "almost." It is "almost" better not to talk about states of equilibrium. Surely the world of economics would be better off if SOME people altogether stopped talking about equilibrium, no?
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Then you wrote:
'Rothbard explained its value:
The final equilibrium position is “like the mechanical rabbit being chased by the dog. It is never reached in practice and is always changing, but it explains the direction in which the dog is moving.”
Man, Economy, and State, P 276'
Red herring, mechanical rabbit... If markets can chase mechanical rabbits, then I say economists can get distracted by red herrings. Mises agrees with me in any case (see above).
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Finally, you wrote:
'That's what economics is all about, explaining the direction in which action upon the market moves it.
Did you really mean to say that it was better not to talk about economics at all?'
"[E]xplaining the direction in which action upon the market moves it" is just one of many aspects of the problem of scarcity and how human organization deals with that problem. But your question is a complete non sequitur. Are you really suggesting that economics should treat equilibrium as something OTHER THAN a "purely instrumental" concept, as Mises would have it (or a "heuristic" one, as I have termed it)? I ask because I am entirely in agreement with Mises and Rothbard and have presented the issue in much the same terms. You have simply mis-read what I wrote, presumably to show what a "bad boy" you are. (Are you joking?)
Anyhow, thanks for playing.
Congratulations. You won the argument.