What Is Austrian Economics?

November 23, 2009

by Mario Rizzo

Many years ago (around 1982, I think) Jerry O’Driscoll and I wrote a paper that was the basis of an American Economic Association session. The paper was called “What is Austrian Economics?” The paper gradually evolved into our book, The Economics of Time and Ignorance.

The purpose of this book was to present Austrian economics in an updated fashion. To do this we needed to do two things: (1) uncover many of the fundamental ideas implicit in the tradition but not, as of then, sufficiently elaborated or made explicit; and (2) confront Austrian ideas with recent developments in economics, both mainstream and outside of the mainstream.

We faced many initial negative criticisms of the book. I will say that I was very disappointed by some of the old-guard reaction to the book. But do not confuse “old guard” with age because some of the greatest encouragement we received was from Professor Ludwig Lachmann who well understood the necessity of going beyond what the previous generation of Austrians had bequeathed us.

Remember that for many years Austrian economics was in the wilderness and the simple preservation of the Mises-Hayek tradition was a service of tremendous value. Many of those who were would-be Austrians in the 1970s and early 1980s really knew little of the tradition. They had to learn before they could make progress within the tradition.

But this resistance was more than loyalty to a tradition. It was symptom of the discomfort many felt in going from a stagnant research program to one that is growing, stretching, evolving and making errors. The true spirit of science, as Karl Popper continually taught, is to recognize that from errors we make some of our most important discoveries. Obviously, it is not that we strive to make errors. But bold thinking will, ex post, often reveal that the scientist was wrong. But we go on.

I do remember that some commentators made fun of us and the title of the book by saying things like “ignorance of economics” or “ignorant economists.” Some of these were outside of the Austrian camp and some were inside.

I also remember my friend Peter Boettke saying some years later that Ludwig von Mises was not afraid to criticize the great Eugen von Boehm-Bawerk. So neither should we fear to criticize previous Austrians.

This is history – much of which may not be known to younger generations of Austrians.

The history has a current purpose, however. We need now to refocus on the question: Just what is Austrian economics?

I raise this question because it came up at a recent colloquium at NYU during which my forthcoming New Palgrave article, “Austrian Economics: Recent Work” was discussed.

A comment was made that I did not tell the reader what Austrian economics is beyond the listing of some themes. The highly interrelated themes I listed are:

(1) the subjective, yet socially embedded, quality of human decision making; (2) the individual’s perception of the passage of time (‘real time’); (3) the radical uncertainty of expectations; (4) the decentralization of explicit and tacit knowledge in society; (5) the dynamic market processes generated by individual action, especially entrepreneurship; (6) the function of the price system in transmitting knowledge; (7) the supplementary role of cultural norms and other cultural products (‘institutions’) in conveying knowledge; and (8) the spontaneous – that is, not centrally directed – evolution of social institutions.

A list of themes is not definition. But to define a school of thought in precise terms is really inappropriate – almost a category mistake, I should think.

A framework for scientific thinking must be a loosely defined structure. It cannot predetermine what will be learned within that structure. It must give guidance but not rigid guidance. Its principles must be open to change but, of course, not all at once — and not in just any direction.  Yet nothing is sacred. Those looking for intellectual comfort must look elsewhere.

Even the distinction among schools is a temporary – perhaps a disequilibrium phenomenon. An objection was raised during the colloquium discussion that other schools of thought would subscribe to some or many of the themes. Yes, that was one of the messages of The Economics of Time and Ignorance. In the time that has passed since the first publication of the book (1985) some of the overlap has widened across more “schools” while some distinctions among approaches have grown sharper.

The issues that separated Austrians from other schools of thought in previous decades cannot be the same today. Neoclassical economics has developed. It has attempted to capture with its ambit many of the previously uniquely Austrian themes. What separates approaches needs to be continually reassessed. No intellectual approach is standing still. The best work in Austrian economics during the past thirty-five years or so should be a surprise to any Rip van Winkle who fell asleep at the beginning of the Austrian revival.

So a viable Austrian economics must be only loosely conceived or else it will cease to function as a vehicle for the growth of knowledge.

Postscript: My article will be posted at the New Palgrave Online site soon. Here are the final page proofs Austrian Economics: Recent Work

35 Responses to “What Is Austrian Economics?”


  1. I strongly endorse what Mario has written in both substance and style. I recall we wrote the paper in 1980 and presented it at the AEA meetings in Denver. It was a heavily attended session, including by Lord Robbins.

    We wanted to send it to the JEL and, I believe, it would have been received well by Mark Perlman. But he was on his way out as editor.

    When we decided to turn it into a book for Basil Blackwell, we received tremendous encouragement from Rene Olivieri, the editor. We realized that we could not simply “restate” Austrian economics. There were divirgent views within the tradition; new devlopemnts outside the tradition that enhanced our understanding of it; and new issues and institutions not considered by the great figures.

    I remember the reviews as being more positive than not. I’d left NYU by the time the book was published, so Mario had to bear the brunt of negative reactions from some members of the “old guard.” Ludwig Lachmann was an inspiration and supporter even when we disagreed with him.

    “Neoclassical economics has developed.” I have been trying to craft something to exlain why Austrians and monetarists have moved closer as the result of the financial crisis. It’s happened, but I haven’t come up with a satisfactory explanation.


  2. [...] What Is Austrian Economics? by Mario Rizzo [...]


  3. [...] même Mario Rizzo présente sur thinkmarkets l’école d’économie [...]

  4. koppl Says:

    Great post, Mario. I look forward to reading the article. A school of thought is engaged in a dialogue with other schools and traditions. If it’s a real dialogue, then the thinking within the school will change as you note. Also, the thinking of other schools and tradition will change, which fact alone should cause one’s own interactions with those schools to change. I think most of us doing credible intellectual work know that at least intuitively. And yet it’s a point some people seem reluctant to acknowledge. I never could quite understand such reluctance.

  5. Pietro M. Says:

    I almost completely agree. I would only add that important Austrian themes are also the importance of capital structure and heterogeneity and the non-neutrality of money through effects arising during the investment process in capital goods markets. These may not be foundational issues (in some sense maybe they are derived from points 1-8), but they are important in understanding the difference in perspectives between Austrians and non-Austrians.


  6. Nice post. I didn’t know there was online access to Palgrave. Can’t wait to see the paper!

  7. Mario Rizzo Says:

    I agree with Pietro. The first substantive section of the piece is about that,

  8. Lee Kelly Says:

    Good post!

  9. Charles N. Steele Says:

    I certainly look forward to the paper. The themes of Mario’s post are close to what we cover in our Austrian course here; I will likely add the paper to the reading list.

    (Can we get it before the semester is over???)

  10. Richard Ebeling Says:

    If I may offer an historical perspective in support of Mario’s argument.

    The earlier generations of the Austrian School were neither dogmatic nor closed-minded in their approach or attitude toward the proponents of other schools of economic thought.

    The Austrian School developed through debate and differences of views. After all Wieser and Bohm-Bawerk disputed the basis of evaluating marginal utility. And Menger had no hesitancy in offer harsh criticisms of Bohm-Bawerk’s theory of capital. Franz Cuhel, one of Bohm-Bawerk’s students, had no hesitation of taking his master to task over the issue of cardinal or ordinal utility.

    At the same time, these early Austrians were quite willing to enter into discussions with proponents of alternative approaches. Wieser and especially Bohm-Bawerk enthusiastically debated in the journals with opponents of marginal utility theory. And Bohm-Bawerk seemed to relish his exchanges with Francis Edgeworth over the use of mathematics in utility theory, and with John Bates Clark over the nature and economic significance of capital and capital goods.

    Think of the grand debate over socialism and a planned economy in the 1920s and 1930s. It is hard to image how either Mises or Hayek would have developed and refined their ideas if not for their taking the arguments of the socialists seriously and rethinking their understanding of the workings of the market.

    Some have drawn attention to a distinction between an earlier Hayek who thought in terms of a Walrasian general equilibrium approach and a later Hayek who came to emphasize the market as a decentralized dynamic process.

    It was surely the challenge of the refiners of perfect competition and monopolistic competition theory and forms of market socialism that lead Hayek to think more deeply about “The Meaning of Competition” and “The Use of Knowledge in Society.”

    Or take the case of Mises, who is often viewed as closed-minded and intolerant of any set of ideas other than his own. Yet, read through his essays on the methodology of the social sciences in “Epistemological Problems of Economics.” Mises is widely read in all the writings of the historicists and positivists who are his contemporaries. And developing his own views on the questions of methodology he is knowledgeable about all the “cutting edge” European philosophers of his time: Henri Bergson, Edmund Husserl, Ernst Cassirer, and many of the Americans as well such as John Dewey and the philosophy of pragmatism. And he is informed and sympathetic to the “new wave” of Freudian psychology. He is not a rigid thinker who is stuck the ideas of the 19th century.

    His articles on these methodological subjects appeared in the leading German-language journals of the period. And his opponents take him seriously precisely because he is taking them seriously, regardless of how harsh his writing style appears at times.

    And in “Human Action” it is clear that Mises has been keeping up with the leading literature in the methods and philosophy of the natural sciences, including Heisenberg, and juxtaposing it to his own ideas and rethinking them.

    To use the more modern jargon, both Mises and Hayek viewed their methods and approaches as “progressive research programs,” not “closed systems.”

    This should be the example of two leading 20th century members of the Austrian School to inspire the 21st century generations of Austrian Economists.

    May we hope that in 2071, when the two hundredth anniversary of the founding of the Austrian School is celebrated, the Austrians of that time can look back at the marvelous growth and new directions of the School near the close of their century that we marvel at when we see what the Austrians of the 20th century have left us as a creative legacy to build on.

    Richard Ebeling

  11. Mario Rizzo Says:

    I have linked the final page proofs at the end of the post above.

  12. Mario Rizzo Says:

    Richard,

    Thanks for your comment. How interesting.


  13. Thanks Mario. My students now have the link.

  14. Jule Herbert Says:

    Please bring me up to date. I have — and read — The Economics of Time and Ignorance. As a layman, I liked what I already understood and tried to follow what was new. Some time later I read Charles Baird’s critique in Rothbard’s journal. Your (Mario’s) reference to the positive value of “making errors” raises issues that I don’t recall were made available at the time. Did the authors respond to the various critiques — and is that material available today?

  15. Mario Rizzo Says:

    Charles Baird later retracted his criticisms.

  16. Peter Klein Says:

    Mario, I don’t want to stir up trouble, particularly on Thanksgiving, but could you be a little more specific about the reaction to Economics of Time and Ignorance? You write that the resistance of the “old guard” to the book’s ideas “was symptom of the discomfort many felt in going from a stagnant research program to one that is growing, stretching, evolving and making errors.” I may have missed some of the book reviews and commentaries, but I don’t recall any objecting to the very idea of making Austrian economics a “progressive research program” rather than an “closed system” (as Richard puts it). Rather, they rejected some of your and Jerry’s specific arguments. Do you have some examples of critics who rejected the idea of challenging the Austrian orthodoxy per se? Or, to put it differently, why do you think Austrian economics in the 1970s was a closed system? Kirzner’s approach to the entrepreneur certainly went well beyond Mises and Hayek; Rothbard rejected Mises’s treatment of monopoly, his Kantian epistemology; and so on.

    To state the obvious, one can reject a particular criticism of a theory, approach, school of thought, etc. without rejecting the idea of criticism more generally. I wouldn’t want students or other newcomers reading this discussion getting the idea that Austrian economics is divided into “progressives” and “conservatives” who argue primarily about the value of novelty and criticism per se, rather than arguing about specific novel ideas or criticisms.

  17. koppl Says:

    Peter,

    Naturally, I’ll let Mario decide how many details to provide. I doubt he’ll be interested in pointing fingers. But I was there and I can tell you that Mario is not exaggerating.

    I don’t think Mario said there were “critics who rejected the idea of challenging the Austrian orthodoxy per se.” Everybody expresses support for “progress” and “improvement.” You can sincerely express such sentiments while concretely resisting any possible change. I mean, come on, that’s what people are like that.

    Conservatives in any school of thought argue “about specific novel ideas or criticisms” and rarely or never “the value of novelty and criticism per se.” That rather banal fact about how conservatives really argue hardly negates the fact that conservatives resist change! And, as I said, I was there and I can tell you Mario is not exaggerating. I remember, indeed, what a huge life-giving breakthrough the book was for those of us who valued the tradition but felt stultified by its exaggerated conservatism back then. It was tangible and undeniable for those of us who were there in the discussions and events of the day.

  18. Mario Rizzo Says:

    Roger is exactly right. I am not going to elaborate because I don’t want to bring up conflicts among specific individuals. I know this is unsatisfying. But I will say that NO ONE says that he is against a progressive research program (in the general sense of the term)per se but actions over a long period of time reveal that information.

    To paraphrase Mill in On Liberty. Sometimes there is no advantage in thinking differently unless in so doing one thinks better. But in *that* age, “the mere example of non-conformity, the mere refusal to bend the knee to custom, is itself a service.”

    Of course, I do think that we thought better as well.

  19. Peter Klein Says:

    Roger, I don’t doubt what you say about how it felt at the time. But I was talking about something different. (I certainly wasn’t fishing for gossip.)

    As Richard so ably explained, the Austrian tradition has always been “progressive.” Everyone knows about the Methodenstreit, the calculation debate, the capital controversies, and so on, but the internal controversies are often forgotten. Mario’s remarks imply that Austrian tradition was once a vibrant, dynamic, growing, tradition but had become stale, ossified, “closed” by 1980 or so. I don’t see this in the historical record.

    I certainly agree that by World War II, the Austrian _movement_ was in poor shape. There were certainly relatively few scholars working in the Austrian tradition, no organizations, conferences, etc. But look at the literature. Lachmann’s Capital and its Structure (1956), Rothbard’s Man, Economy, and State (1962) and America’s Great Depression (1963), Kirzner’s Essay on Capital (1966) and Competition and Entrepreneurship (1973), and Hayek’s Tiger By the Tail (1972) and Law, Legislation, and Liberty (1973), were, in their own ways, highly “progressive” and challenging works, just as radical as The Economics of Time and Ignorance or any of the major Austrian works published in the last couple of decades. Can you document the “exaggerated conservatism” you ascribe to the Austrian tradition before 1985?

    BTW, terms like “progressive” and “conservative” — I’ve been putting them in scare quotes — probably aren’t very helpful in these kinds of discussions. Progressivism is in the eye of the beholder. Karen Vaughn, after all, dismisses Menger’s price theory as conservative, backward-looking. If Menger ain’t progressive enough for ya, who is?

  20. koppl Says:

    Now, now, Peter, my mother taught me that it is impolite to point fingers and I’m not going to do it.

  21. Mario Rizzo Says:

    Peter,

    The problem is that you don’t understand the stultifying *atmosphere* that the then-younger generation (younger than Kirzner-Rothbard) inhabited in the mid-70s to mid-80s and somewhat beyond. If you lived it you knew it was there.

    Hayek was always an inspiration but he operated at his own level with only a slight interest in the “Austrian revival.” It is no accident then that The Economics of Time and Ignorance owes so much to Hayek. It also owes much to the paths and themes that Lachmann helped make us aware of. The “old guy” believed that we could learn something from reading economists outside of the Austrian school — a radical idea at the time.

    I should also add that the publications of Kirzner and Rothbard and, of course, Lachmann were great. But look at the publication dates: 1973, 1962, and 1956.In addition, as Axel Leijonhufvud once observed at a conference in the 1970s or ealy 80s: Austrians did not give the young much to do aside from dotting i’s and crossing t’s. This was the atmosphere at that time — however it might have been before.

  22. Richard Ebeling Says:

    If I may offer a more, well, conciliatory conception of the status of Austrian Economics in the 1970s and into the 1980s.

    Lachmann would tell us young Austrians at NYU in the mid-1970s that from his vantage point in South Africa in the 1950s and early 1960s, he thought that he would be among the “last”of the Austrian Economists. Other than in history of economic thought texts, the Austrians were never mentioned in the mainstream literature.

    The Neo-Classical ascendancy in microeconomics and the Keynesian avalanche in macroeconomics had “buried” the Austrian School.

    Rothbard’s “Man, Economy, and State” (1962) and Kirzner’s “Competition and Entrepreneurship” (1973) were restatements and defenses of a “lost” tradition.

    That first Austrian Economics conference sponsored by IHS in June 1974, brought together virtually all those interested or having a sympathetic knowledge of the Austrian approach (all 40 of us!).

    The lectures delivered by Lachmann, Kirzner, and Rothbard at the conference, and then published in 1976 as “Modern Foundations of Austrian Economics,” was a redefining of what Austrian Economics had stood for, as understood by those three scholars at that moment in history.

    (Not one of us at that conference could have imaged that a few months later Hayek would be awarded the Nobel prize. If you think that the Ostrom receiving the prize this year raised eyebrows and confusion, you can’t imagine the eyebrows and confusion when Hayek got it. Economists did know him at all, or if they knew the name it was as some “conservative extremist” who wrote “The Road to Serfdom.” They knew nothing about Hayek’s place in monetary theory in the 1930s, and nothing but maybe as a name that had been “wrong” about the workability of socialist planning.)

    The Austrian Economics program only started at NYU that same year in 1976. Jerry O’Driscoll at finished his disseration in UCLA and it was published in 1977 at “Economics as a Coordination Problem.” Mario as a relatively “fresh” University of Chicago PhD, joined the NYU program with Kirzner. And, Kirzner arranged for Lachmann to come over as a visiting professor.

    Rothbard was still teaching in “obscurity” at Brooklyn Polytech.

    This was a time of “regrouping” and “consolidating” through a rediscovery of what the Austrian tradition had been before the 1940s.

    But the purpose for these IHS sponsored conferences and book publications, and the NYU program, was precisely to reawaken interest in the Austrian tradition, and to foster a new generation of young Austrians to pick up the threads where they were left off by the late 1940s.

    (By the way, this was financially due to the long-term visionary investment of Charles Koch, who funded much of IHS’s student activities.)

    What began to emerge in the 1980s was exactly what had been hoped for: young Austrians taking the Austrian ideas they were absorbing and thinking about and developing them in new and creative ways; and applied to the problems and issues that were of interest to them and to some in the mainstream of the profession.

    And by the way, one could say the same about the Austrian Economists of the interwar generation. With the end of the First World War, the economic contributions of the earlier Austrians (Menger, Bohm-Bawerk, and Wieser) more or less came to an end.

    That interwar generation of Austrians went off in a variety of “New Directions in Austrian Economics” that had not been on the agenda of those “founding fathers” of the School.

    And. . .they argued with each other in the 1920s and 1930s about a wide variety of issues concerning the “foundations” of the logic of economics, time preference, the role and meaning of time and uncertainty, and aspects of monetary theory and policy.

    And anyone who has heard about the “goings-on” among these Austrians in the Vienna of this time will know that they were not always, well, shall we say, polite, dispassionate gentlemen!

    There were “young rebels” and “upstarts” then, and there are today. But another way of saying this is that there were those who thought that it was better to more strictly follow in the footsteps of the “masters.” And there were those who learned from the masters, valued the contributions they had made, but believed that the highest form of respect for their “intellectual fathers” was to build upon the legacy through new insights and applications.

    In other words, then, just like today.

    Richard Ebeling


  23. As Mario said, you had to be there to fully understand. It wasn’t about age, as Mario has clarified, but openness to new ideas. It was not so much about what was written, but what was said in seminars and conferences.

    I remarked to Mario that, in some respects, our book was being better received outside Austrian economics than inside. We made new friends and lost a few old ones.

    This is in the past and what is important is what is happening today and will happen in the future. Onward and upward.

  24. Peter Klein Says:

    OK, I don’t want to press this point too far. But Mario, when you say of Lachmann that he “believed that we could learn something from reading economists outside of the Austrian school — a radical idea at the time,” you mean that in the mid 1970s and early 1980s, Austrian besides Lachmann were not reading anything outside the Austrian school? That certainly wasn’t true of Rothbard and Kirzner in the 1960s and early 1970s. Man, Economy, and State has hundreds of footnotes to contemporary papers from the AER, JPE, QJE, etc. Rothbard was very well versed in the mainstream, neoclassical literature of his day. His revisionist account of the early history of the Austrian school — presented at South Royalton and published in the 1976 Dolan volume, I might add — is based entirely on non-Austrian sources. Things must have gotten pretty bad between 1974 and 1985!

  25. Mario Rizzo Says:

    Quod Scripsi Scripsi.


  26. A nice assessment by Richard.

    My dissertation started out as a term paper in Axel Leijonhufvud’s graduate macro class, and was one of 30 or so suggested topics that he handed out.

    I tried to place Hayek in the context of those who went before him, his contemporaries, and those who came after. I inevitably saw Hayek through the prism of the UCLA tradition in which I was educated. They were congenial because everything at UCLA was micro, even macro. “Coordination” was as much a UCLA theme as an Austrian one.

    In that sense, I was making the first tentative step to go beyond Hayek (an endeavor Hayek recognized and praised in his Foreword to the book). The Coordination Problem was generally well-received in and outside the circle of 40 that Richard mentioned.

    There were some grumblings from a small number of committed Misesians who didn’t like all the talk about subjectivism (which actually did not occupy all that much space in the book). Perhaps that reaction was a foretaste of things to come.

    I suspect that a rereading of our 1980 paper would show that Mario and I were already going beyond a restatement. But we didn’t decide to do it consciously until the decision to write a book.

  27. Joe Salerno Says:

    Like Roger, I was there and I too recall the intense opposition that Time and Ignorance stirred up. But I think my friend Mario does a serious disservice to our attempt to understand the reasons for such opposition by attibuting it to an entrenched and nameless “old guard” who expounded a “stagnant research program.” To paraphrase the great economic semanticist Fritz Machlup: One of the main uses of “progressive” research program and “stagnant or “closed” research program has been to distinguish “a writer’s own work from that of his opponents against which he tried to argue. Typically, [a stagnant research program] was what those benighted opponents have been writing. [A progressive research program] was one’s own, vastly superior, theory.” (Machlup was referring to the use of “statics” and “dynamics” in economics.)

    As I am sure Mario knows the deep fissure in Austrian economics is based on much more profound and complex factors than can be captured in the facile polemical terms “progressive” and “stagnant.” In fact, the themes that Mario lists in his initial post identifying Austrian economics is little changed from the list I have in my notes from Israel Kirzner’s graduate course on Austrian economics, which I audited in Fall 1981. This list included, in order: 1. radical subjectivism-entrpreneurship; 2. methodological individualism (coordination not sociual welfare); 3. purpose; 4. future oriented agents; 5. emphasis on expectations; 6. causal-genetic approach; process versus equilibrium; 7. skepticism regarding use of mathematics; 8. anti-scienticism including a. explanation in terms of intelligibility rather than predictability, b. skepticism with respect to empirical sources of knowledge.

    Now this list or ones very much like it have been repeated so frequently in identifying Austrian economics in the last thirty years that it has almost assumed the status of religious credo. This raises a number of interesting issues. Mario tells us that these “principles” of Austrian economics must “be open to change.” Fair enough. First, let him tell us how the list he presents in his post differs from the early Kirznerian list and what precise principles in the latter have been found wanting and have been jettisoned as Austrian economics has evolved. Second, if no significant principle has been dropped from or added to the Kirnerian list, does this reveal a “stagnant research program”? It is interesting to note that the hidebound orthodoxy that developed around the listing of a jumble of Misesian, Kirznerian and Lachmannian themes as the essence of Austrian economics was finally challenged in 1991 by Murray Rothbard, under prodding by me, in his article “The Present State of Austrian Economics.” Without addressing any of the substantive issues, one could not say that that Rothbard’s challenge represented the overthrow of a “stagnant research program.”

    Finally I wholeheartedly agree with Mario’s point that “making errors” is an inherent product of scientific research conducted by fallible human beings. As he further notes, “bold thinking will, ex post, often reveal that the scientist was wrong. But we go on.” In the aforementioned article, Rothbard expresses a very similar view, writing in the context of Austrian economics: “Along with growth and flourishing in numbers of economists, students, and contribution, there is bound to be a proliferation of error and of false leads and byways. That, in a sense is a healthy development in the history of a science, but only if there are corresponding forces who will clear the underbrush and sweep away the rubble.”

    Now the nub of the difference between Rizzo and the “listers” and Rothbard and the “definers” lies in a comparison of the last sentence of the passage I quoted from Rizzo and the last clause of the quotation from Rothbard. It has nothing to do with empty words like “progressive” and “stagnant”; it has everything to do with the criterion used to identify “error” and how error is subsequently dealt with. Rizzo and the listers have painted themselves into a corner. For Rizzo it is “inappropriate” and “almost a category mistake” to rigorously (not rigidly)define the method of a science. Rizzo is loath to specify a method of discovering truth which will enable us to detect error. For him, errors somehow pop out at us and are a cause of regret and maybe an opportunity for discovery, “but we move on.” Rothbard and the definers, in contrast, specify the method of praxeological reasoning as means for discovering truth and error. Since human reason is fallible, this method does not guarantee that economic research is free of error, but is is the only tool we have for detectig it and rooting it out once it has occurred.

  28. Mario Rizzo Says:

    I do not choose to get into a further discussion of these issues at this time and especially in the blogosphere.

  29. Walter Block Says:

    I thought I’d add my 2 cents in, since I was around at the time. Let me make several points.

    1. In general, I am very supportive of the views expressed by Joe Salerno and Peter Klein.

    2. Israel Kirzner was not then anything of a movement builder. The reason he invited Ludwig Lachmann to be a visiting professor at NYU is that Walter Grinder, with an important assist from me, bugged the hell out of Israel to get him to do just that. Ludwig, in contrast, was more of a movement builder than Israel, and, I think, a lot of the credit for the building up of the movement centered at NYU should be credited to Ludwig. I remember fondly Ludwig saying to me in his heavy accent: “Ve must smash zem!” And he was talking about non Austrians. Inspirational.

    3. I didn’t at all experience any intellectual stultification. Two of my very early articles were critical of three of the leaders of the Austrian movement, and I never felt any animosity from any of them. Here are the specifics:

    This article:

    Block, Walter. 1977. “Austrian Monopoly Theory — a Critique,” The Journal of Libertarian Studies: An Interdisciplinary Review, Vol. I, No. 4, fall, pp. 271-279; http://www.mises.org/journals/jls/1_4/1_4_1.pdf

    was critical of Israel Kirzner and Ludwig von Mises. I always had a warm relationship with Isreal. I only met Ludwig once, so this is a bit of a moot point with regard to him.

    This article:

    Block, Walter. 1975. “On Value Freedom in Economics,” The American Economist, Vol. 19, Spring, pp. 38-41; http://www.mises.org/etexts/valuefreedom.pdf;

    http://141.164.133.3/faculty/Block/Blockarticles/valuefreedom.htm;

    was critical of Murray Rothbard (as I remember it; I couldn’t get these urls to work, and I’m not now in my office, so I can’t check this and be sure)

    and Murray and I had a decades long friendship. Indeed, I think I’m the only one to have ever co authored anything with Murray.

    4. Mario, I find your criticisms of this epoch as indicative of “a stagnant research program” among Austrians rather problematic, in that you do not give a single solitary example of this. For many years, I confess, I was sorely disappointed in you for not allowing me to be the commentator on Demsetz’s attack on me regarding my criticism of Coase at that NYU conference in the 1970s. But then you explained that you didn’t know what Demsetz would say, and didn’t have the final say in the choice of commentators. Had I not raised that issue with you, personally, I never would have found this out. I believe that “sunlight is the best disinfectant.” If we want to resolve these decade old problems, I think the only hope to do so is to be specific. So, I invite you to do so.

  30. Walter Block Says:

    Roger talks about “those of us who valued the tradition but felt stultified by its exaggerated conservatism back then.” I never felt stultified, as I said in my previous post. Maybe I had too thick a skin to actually feel the stultification that was all around us then. But, I think not. I have indeed felt stultified in my life, in places that didn’t give me tenure, but not then.

    Let me recount my early experiences with Murray Rothbard so as to furnish a specific example. I met Murray when I was a graduate student at Columbia; I was reading MES for the first time, and let me tell you, it was more than a breath of fresh air. It was a veritable life raft for me. (If you want a real example of stultification I suffered from in the late 60s and the early 70s, it was grad education at Columbia, which consisted, mainly, of math and stat. Hey, I got into econ because of Econ in One Lesson and Atlas Shrugged, and, believe me, grad education at Columbia was nothing like that.) So, by day I’d read MES, and at night I’d see Murray and his living room crowd. My feeling was then of almost complete worthlessness; I was a little pipsqueek, still am in many ways, and Murray was my guru, my mentor. So, how could I be worthy of the friendship this great man was trying to bestow on me? I knew how. I’d criticize him, I’d keep criticizing him, until he thought I was worthy of being in his living room. I attacked him for having a picture of Mises on his wall, since Mises was an archist. Murray just smiled gently at me, suggesting I read Mises (I hadn’t yet). I criticized Murray for his views on voluntary slavery, again and again and again. (I don’t like to brag, but, when it comes to pestering, nudging, making a pain in the ass of myself, I am truly WORLD CLASS). What was Murray’s reaction to all this? Did he bar me from his living room? He did not. Did he stultify me in any other way? No, he encouraged me to write, and helped my career as best he could (he didn’t have much of a career at that time, either). All I can say is that if the Austrian movement was a rigid, stultified one at that time, you couldn’t tell that based on how Murray treated me.

  31. Jule Herbert Says:

    Gentlemen: I wasn’t asking for a rehash of all this on the blog. I was just asking if the criticisms raised against The Economics of Time and Ignorance were answered at the time, and, if so, if they are presently available for examination. I thought that perhaps some “errors” may have been conceded, but I gather that was not the case. If not, I would suppose some elaboration and further explanation should be available to be examined.

    Best to all.


  32. [...] in the 1970s. Some claim it was “stultifying.” Others ask for evidence of this charge. View Mario Rizzo’s blog post (”What is Austrian Economics?”) and a whole host of fascinating comments. Some of the [...]

  33. Peter Boettke Says:

    Jule Herbert,

    I would suggest reading Bruce Caldwell’s review of the book, as well as Paul Craig Robert’s review. Also, I suggest you look at Jochen Runde’s response to Paul Davidson’s review essay on the book.

    This might not be easily available online at one site — but perhaps you could access your university library and use a database such as EconLit (which gives you a good window on the profession).

    Also, I’d suggest looking at Rizzo’s introduction to the 2nd edition of The Economics of Time and Ignorance (published in 1995) as well as his current Palgrave essay.

    Pete

  34. Mario Rizzo Says:

    I am now closing comments on this topic.


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