Introduction: Peter J. Boettke is the Deputy Director of the James M. Buchanan Center for Political Economy, a Senior Research Fellow at the Mercatus Center, and a professor in the economics department at George Mason University. Boettke received his BA in economics from Grove City College and his PhD in economics from George Mason University. Before joining the faculty at George Mason University in 1998, he held faculty positions at Oakland University, Manhattan College and New York University. In addition, Boettke was a National Fellow at the Hoover Institution for War, Revolution and Peace at Stanford University during the 1992-1993 academic year. He has been a visiting professor or scholar at the Russian Academy of Sciences in Moscow, the Max Planck Institute for Research into Economic Systems in Jena, Germany, the Stockholm School of Economics, Central European University in Prague and Charles University in Prague.
Daily Bell: Thanks for making yourself available for this interview. When did you get interested in Austrian economics and how?
Peter Boettke: You're welcome. I was introduced to the teachings of the Austrian school of economics in the late 1970s and early 1980s when I attended Grove City College and studied economics with Dr. Hans Sennholz (one of Mises's PhD students from NYU). I did not intend to study economics when I enrolled in college, but did once I had met Dr. Sennholz and read the books he had us read that year – Hazlitt's Economics in One Lesson, Mises's Socialism, and Bettina Bien Greaves, Free Market Economics: A Basic Reader. Milton Friedman's Free to Choose also was very significant in my early education – both the book and the TV series. After that introduction I was basically hooked for life. I switched my major to economics, with a minor in philosophy, and I took every course that Dr. Sennholz taught, attended seminars at the Foundation for Economic Education, and began my own independent reading in economics.
In my junior year, Sennholz invited me to join his "graduate seminar" (he taught for the International College, which offered correspondence degrees and many of the foreign students working with him would spend some time in residence at Grove City). We read intensely into the history of economic thought for that seminar – Smith, Say, Ricardo, Malthus, Mill, Marx but of course the main works we studied were Menger, Bohm-Bawerk, and Mises. On my own I read contemporary Austrians, including all of Sennholz, but also Kirzner and especially Murray Rothbard. The 21-year-old version of myself was a complete Rothbardian on economics and politics. I had read Hayek's The Road to Serfdom and found the book to be too "weak" ideologically for my tastes.
Anyway, after graduating from Grove City College in 1983, I had contemplated a variety of career moves and had been accepted to law school but decided not to attend. I thought about attending Rutgers, NYU, Auburn or GMU. We visited GMU and I met all the professors and felt comfortable with them so I continued to study on my own and applied for graduate school in economics. I enrolled at GMU in 1984.
I attended GMU from 1984-1988, earning my PhD in 1988, and began my teaching career at Oakland University (1988-1990). In 1990 I then joined the faculty as an assistant professor at New York University and I taught there until 1998 (1997-1998 I also taught at Manhattan College). In 1998, I moved to GMU and have taught there ever since.
In addition to my regular faculty positions, I have held research positions, or visiting professorships at Stanford (1992-93, Hoover Institution National Fellowship); 1993, Russian Academy of Sciences; 1993, Central European University; 2004 and 2006, London School of Economics. And I have had the great opportunity to be on dissertation committees at foreign universities such as Stockholm School of Economics; University of Paris I, University of Paris IX, and University of Aix-en-Provence; Anglia Ruskin University (UK) and UFM in Guatemala. And of course, I value working with the graduate students at GMU tremendously. In 12 years, I have chaired 24 dissertations, 21 of them are now teaching or hold research positions at universities and colleges.
Daily Bell: Give us a short rundown on your background and most important work.
Peter Boettke: Well I already have given you a lot of the background. As for my most important work, that is best for readers to determine rather than for an author. I just try to keep making progress in my efforts to consistently and persistently apply the economic way of thinking. My scholarly background is in the field of comparative political economy, where I did original research on the history and collapse of socialism; The Political Economy of Soviet Socialism (1990); Why Perestroika Failed (1993); Calculation and Coordination (2001). I also edited a book on development economics, The Collapse of Development Planning (1994), and a 9-volume reference work on the history of the debate over socialism, Socialism and the Market (2000).
In addition to my work in comparative political economy, I have also pursued studies in the history and methodology of economics and published papers in the peer-reviewed journals in those fields, such as: History of Political Economy, Journal of History of Economic Thought, Research in the History of Economic Thought and Methodology, Journal of Economic Methodology, etc. And in the context of both of these areas of specialty in economics I have emphasized the Austrian school of economics.
But perhaps, to be honest, my most important contribution is as a teacher of economics. I consider teaching a "calling" and consider my role as an economic educator both at the undergraduate and graduate level very seriously and enjoy my role as a teacher tremendously.
Daily Bell: What is your specialty as an Austrian economist?
Peter Boettke: As I have stressed, the issue of comparative analysis of economic systems and the critique of socialism and government intervention. But I have also been a generalist with respect to Austrian economics and have written over the years papers not only on the history and methodology of Austrian economics and the calculation debate, but also the debate with Keynes, the debate with modern formal theorists of competitive equilibrium, the development of the entrepreneurial theory of the market process, the relationship between Austrian economics and modern developments in law and economics, public choice and constitutional political economy, and the economics of anarchy and self-governance.
I have been involved in the promotion of scholarship in Austrian economics since I was a graduate student and became the managing editor of Market Process, a newsletter that evolved into a journal under the editorship of Don Lavoie. I was the founding editor of Advances in Austrian Economics when I was at NYU, and in 1998 I was recruited by the publisher to become the editor of The Review of Austrian Economics, which I have edited ever since.
In 1994 I edited a work that had a wide readership among college teachers and students, Elgar Companion to Austrian Economics, which has been used in a variety of classroom settings. I just published a new edited work, The Handbook on Contemporary Austrian Economics, and I also recently signed a contract with Oxford University Press to publish a major reference work on Austrian Economics (which I am very excited to get to work on with my close colleague Chris Coyne over the next year).
At NYU and at GMU I have also taught the PhD course on the Austrian School of Economics. At GMU I am the chair of the field exam in Austrian economics, and I also am the Director of the Program in Philosophy, Politics and Economics, which hosts a weekly research workshop. And finally, I have been involved with the Advanced Summer Seminar in Austrian Economics (now hosted at FEE) as student and then as a member of the faculty since the mid-1980s. My entire professional career is intimately connected to Austrian economics.
Daily Bell: There is a controversy about the name Austrian. Why?
Peter Boettke: There really isn't any controversy. The name means something within the academy and is primarily associated with the work of Menger, Mises, Hayek and Kirzner. The name has come to mean something else in the age of the Internet and it is more tied up contemporary politics and public policy.
The reality is that (a) the Austrian school has always featured spirited debate among its members, and (b) always attracted a non-professional audience that includes journalists, policy oriented intellectuals, financial analysts and amateur economists.
I am myopically focused on the advance of Austrian economics within the economics profession and the academic community. I appreciate greatly the debates among the members (provided they are conducted in a civil and intelligent manner) and the wide appeal of the Austrian school to individuals who are not professional economists. But my agenda is about teaching graduate students, conducting research, and writing economic arguments within the given academic and professional structure.
If the Internet understanding of Austrian economics comes to dominate in the public and scientific imagination and that internet understanding does not represent the subtle and sophisticated theories that one finds in Mises, Hayek, and Kirzner, then those of us myopically focused on the academic conversation must recognize the potential barriers to advancing the conversation and adjust. This is definitely not about "selling out" or "de-emphasizing" some theorists rather than others. It is about understanding and cultivating a conversation related to the fine points in economic theory and political economy. Think of it this way – there is a Mises that influenced Hazlitt, Sennholz, Bettin Bien Greaves, etc. and there is a Mises that influenced Hayek, Machlup, Habeler, Morganstern, etc. I can respect and appreciate greatly the influence on Hazlitt, et al., while still preferring personally the sort of conversation that Hayek, et al., were engaged in. Is it controversial to recognize the difference between the discourse that takes place in the professional journals from what takes place in outlets such as The Freeman, or Liberty or Reason let alone the op-ed pages from the New York Times to your local newspaper, let alone blogs and Internet discussion groups? Seriously, this is not controversial. I recommend your readers look at Steve Horwitz's post the other day at Coordination Problem on What Austrian Economics Is and Is Not, it is important on that.
BTW, I do understand where you are getting this from – our change of name from The Austrian Economists to Coordination Problem. First, let me state unequivocally, anyone who knows Austrian economics will understand that the term "coordination problem" is an Austrian terminology of the economic problem that must be solved in human affairs. Perhaps the only way to make it more Austrian would be to say the coordination of economic activities through time. Anyway, the puzzle in economics is the coordination problem; the solution is the entrepreneurial market process. This is pure Austrianism, to deny that is to reveal ignorance of the tradition.
Our decision was completely driven by what we were hoping to accomplish with the blog. Our goal was not to attract amateur economists, nor even policy oriented intellectuals. Our goal was really to cultivate in an academic blog a discussion of the Austrian tradition as it related to economic research among professionals and the debate among professionals (and aspiring professionals) over policy implications. We don't always succeed, but that is what we are trying to cultivate among our readers.
Daily Bell: What is the difference between Ludwig von Mises and FA Hayek – and is GMU more sympathetic to the view of one than the other?
Peter Boettke: A lifetime of work can be written on the differences and similarities between Mises and Hayek – and some have in fact done so. I prefer, as Kirzner did, to see Mises and Hayek as two-halves of a coin that represent the progressive research program within modern Austrian economics. I do recognize differences both in emphasis and substance in these great economic thinkers, but I think their shared research program far surpasses the differences.
Personally, I consider Mises the greatest economist of all time, but I consider Hayek the greatest student of Mises. I encourage my students to think in terms of providing a Hayekian reading of Mises and a Misesian reading of Hayek and the synthesis of those two revisionist readings will provide the way forward for Austrian economics. I understand completely that this is not how others think about it and I respect that. But it is my judgment that the two most important works in Austrian economics are Human Action and Individualism and Economic Order.
There are many different faculty members conducting research in Austrian economics at GMU. Larry White works on money and macro and has a great book coming out soon on the history of 20th century economic debates. Pete Leeson works on the economics of anarchism and the institutional pre-conditions for Mises's notion of Ricardo's Law of Association to be realized – the idea of social cooperation under the division of labor. Chris Coyne is working on the political economy of war and after war reconstruction. Frederic Sautet is working on entrepreneurship, theory of the firm and public policy. Paul Dragos Aligica is working on comparative institutional analysis and the question of democratic self-governance. Virgil Storr is working on culture and economic sociology from an Austrian perspective. And Richard Wagner has in the past few years published fantastic books in public finance and a more general work in Austrian economics. Wagner is currently finishing another work in public finance focused on the current budget problems. Wagner is one of the most amazing minds I have ever had the good fortune to work with and learn from. And I shouldn't forget about the large group of graduate students who come to GMU to study Austrian economics and work with the faculty and pursue their own research agenda in economics and political economy.
There is no single perspective at GMU. There are a multiplicity of perspectives with respect to Austrian economics. We debate about this in a spirited way. Some build more on Mises than Hayek, others more on Hayek than Mises, others work primarily on Kirzner, while still others work a lot with Rothbard's works. In our classes we teach regularly all four major thinkers – Mises, Hayek, Rothbard and Kirzner. How many other PhD courses world wide have taught from Rothbard's Man, Economy and State, or even Ethics of Liberty? How many programs have consistently taught Human Action for close to 30 years at the PhD level every year, year after year, and in multiple courses?
This fact is sometimes not understood in these Internet discussions of who is and who isn't an Austrian. At some level this debate is mind-numbingly stupid and at another level it is frustrating. In both instances it is completely unproductive. Just do good work in economics, build on the great endowment of ideas we have gotten from Mises and Hayek, and strive to be a responsible scholar, logical thinker and clear writer. If you do that, you will add to our knowledge in economics. I don't care what you call yourself. But we should always be mindful of bad thinking. As Bastiat put it: The worst thing that can happen to a good cause is not to be skillfully attacked but to be ineptly defended.
Daily Bell: Can you put into words the over-arching vision of GMU as a center of Austrian thought?
Peter Boettke: To cultivate a culture of excellence in research and teaching for the next generation of Austrian inspired economists who plan to go into academy and engage in professional research and the teaching of undergraduate and graduate students. We want to develop outstanding teachers of economics and serious scholars in economics and political economy. All our efforts are geared in that direction.
Daily Bell: What are the over-riding interests and themes?
Peter Boettke: There is no over-riding theme, as mentioned. It varies with the faculty members in our group. But over the past decade we have done a lot of work pursuing what I have called "anarchism as a progressive research program." Former students such as Ed Stringham, Ben Powell, Virgil Storr, Scott Beaulier, Pete Leeson, Chris Coyne, Dan D'Amico, David Skarbeck, etc. have all published significant papers along these lines. This would take us a bit off topic, but I really encourage you to look into this work.
Daily Bell: A few years ago, a faculty colleague of yours, Bryan Caplan, wrote an essay – "Why I am Not an Austrian Economist." Comments?
Peter Boettke: I disagree with Bryan on this, but I will tell you this – you will be hard pressed to find a more serious thinker than Bryan and he is a wonderful person. Bryan is brilliant and he is a genuinely curious intellectual. He is just fascinating to be around – even though I disagree with him on Austrian economics and on several other issues. Don't worry, we talk about our disagreements!
In fact, besides the faculty that I mentioned above that work within our Austrian group, we are so fortunate because we have so many knowledgeable and intellectually engaged colleagues. With respect to Austrian economics, of course you could have a deep conversation on the history of the school with James Buchanan or Gordon Tullock or Henry Manne in the past, but also right now with Tyler Cowen, Don Boudreaux, Russ Roberts, Dan Klein, David Levy, and Todd Zywicki. And to go back to the explicitly Austrian group in the economics department – last spring (2010) Mario Rizzo from NYU was a visiting professor for the term and this upcoming spring (2011) we will have week long visits from both Richard Ebeling and Gerald O'Driscoll. And, one of the greatest assets that we have at GMU (though not as regularly now as in the past) is Leonard Liggio.
Daily Bell: Could GMU be said to constitute a neo-Austrian perspective?
Peter Boettke: I would not make that distinction. We are Austrian economists (our group, not the entire department). We have our own different perspectives but we all share a deep respect and commitment to learning from and developing the Mises-Hayek perspective and advancing this perspective within the scientific community of economists.
Daily Bell: Is Austrian economics catching on? Has the economic crisis made it more or less fashionable?
Peter Boettke: Yes, Newsweek just had a nice article talking about the resurgence of interest in Hayek's monetary and business cycle theories. Of course, the Hayek versus Keynes rap video has had over 2,000,000 views. I applaud all these efforts – especially when they get what the Austrian school is about correctly (see again Horwitz's recent blog post on this at Coordination Problem).
Daily Bell: Are you anti central banking, when mandated by the government?
Peter Boettke: I believe there is no economic justification for a government monopoly over the supply of money. So yes, I am anti-central banking. And I am in favor of any set of activities that will constrain the power of the Fed. I recommend your readers look at the recent paper by White and Selgin on the history of the Fed. It is a track record of failure.
Daily Bell: What about entirely private central banking?
Peter Boettke: Not quite sure what that would mean. If we had a truly free market in banking services and a central banking system evolved, then I guess the market would have selected that form of organization. I have no objection to market experimentation in organizational forms. I have objections to government attempts to out guess the market.
Daily Bell: Free banking? Fractional reserve banking?
Peter Boettke: Complicated question. Let me just take the Sennholz line in his book Money and Freedom – abolish legal tender laws and all privileges in banking and let's see what the market will deliver. I don't think we should confuse a market prediction with a theoretical battle line.
Daily Bell: How about the Real Bills doctrine? Is it a market phenomenon that would reoccur in a free-banking environment?
Peter Boettke: I will let Larry and others debate that – from what I gather people have strong positions on this.
Daily Bell: Do you believe the market ought to decide money? Would it inevitably result in full reserve gold banking?
Peter Boettke: The market should decide. Don't know what the market would deliver. We have to free up the market and eliminate banks operating under any privileged position with respect to the state and see what happens.
Daily Bell: Is gold money? How about silver? Why?
Peter Boettke: Don't know. The market will determine what is money today. Historically that is a different question and varies over societies. We want "honest money" and we want "sound money" – that might be gold (we have good reasons to believe that), but it might also be something else that we simply lack the imagination to know until we see the free market process of discovery in operation.
Daily Bell: Has this economic crisis finally killed Keynesianism?
Peter Boettke: Not yet and that's too bad as far as I am concerned. As a doctrine of economic policy Keynesianism is very difficult to defeat.
Daily Bell: Can economics predict the future?
Peter Boettke: Depends on what you mean. I certainly don't think economists can make point predictions. But economics can provide pattern predictions. Economics is not a science of point predictions but one of tendencies and directions of change.
Daily Bell: What is the predominant economics discipline in the West today – and why is it so bad at predicting monetary crises? Why were the Austrians the only school to predict what has happened?
Peter Boettke: Well the claim to Austrian exclusivity is not right. The crisis originally was often discussed as a Minsky moment. Readers should read David Prychitko's recent Review of Austrian economics article on this. I don't find the Minsky discussion persuasive. And I certainly don't find Krugman's explanations persuasive. The dominant economics theory in the West in macro prior to the crisis was one of formal models employing rational expectations, etc. I don't believe we have seen where economics is going to head due to the crisis yet.
Daily Bell: With all that has happened, how can economists justify NOT being Austrian?
Peter Boettke: Look within the scientific profession economics is basically what economists do. And what economists do is build models and test the generated hypotheses with sophisticated statistical techniques. If you do not conform to this methodology and set of methods then you will have a more difficult time getting your perspective across in the scientific literature. We have to try harder, not throw up our hands in disgust. We have to figure out ways to impact the scientific discourse.
Daily Bell: What kind of money would YOU like to see?
Peter Boettke: I would certainly back a return to the gold standard, or any mechanism that would tie the hands of the monetary authorities. In my perspective, the biggest problem we face is the proclivity of governments to engage in an endless cycle of deficit, debt and debasement. We have to cut off this cycle.
Daily Bell: Where is China headed? Will price inflation bring China down?
Peter Boettke: I will be teaching this in depth next term, I will let you know after I am done studying it in more depth. I don't think China is a "real" growth miracle, so that might give you a hint of where my judgment might fall. But I don't know for sure yet, I need to study more about the specifics. You know in economic analysis of real world events the devil is in the details.
Daily Bell: What is inflation? Didn't Mises believe it was a monetary aggregate plus the CIRCULATION of that money?
Peter Boettke: Mises in The Theory of Money and Credit is pretty explicit that inflation is an excess supply of money that is not offset by an increase demand for money.
Daily Bell: OK, sorry, we were speaking of fiat – in which case we would make the argument that the paper currency still has to circulate to be inflationary. How did Murray Rothbard define inflation versus Mises? Wasn't his emphasis monetary?
Peter Boettke: Rothbard pretty much claims any increase in the supply of money is inflationary. This is not what Mises said at a sophisticated level. But remember, The Theory of Money and Credit was written to Mises's scientific peers, most of Rothbard's monetary writings are not written with that same target audience. I consider What Has Government Done to Our Money a great essay in persuasion. Rothbard was a genius and a very talented writer. He wrote across audiences but a lot of his work was directed not too his scientific peers – rather to interested students inside and outside of the academy. For practical purposes, many of Rothbard's more blunt force treatments of the fine points in economic theory are not only acceptable, but also powerfully acceptable.
Daily Bell: What is deflation? Is it a monetary phenomenon? Is there such a thing as price deflation versus monetary deflation?
Peter Boettke: Technically, deflation occurs when there is an excess demand for money not offset by an increase in the supply of money. But you can also have a good deflation caused by productivity gains. You can have a positive case for a declining price level – what Selgin causes the case for Less than Zero. Practically, the problem is sorting out the difference, so I come more or less to an older "classical" position rather than the more modern position of Selgin and others – not as a matter of theory, but as a matter of political economy.
Daily Bell: Can you have REAL deflation in a fiat money economy?
Peter Boettke: The problem as a matter of practical policy is that Milton Friedman was too persuasive (laugh!), and everyone believes that the Great Depression was caused not by the manipulation of money and credit in the 1920s, but by the Great Contraction in the early 1930s. So central banks may say that they will "fight inflation," the reality is that they "fear deflation" and as a result central banks in their attempt to avoid deflation will engage in inflationary policy. This goes along with my fear that the endless cycle of deficits, debt and debasement is continually unleashed and thus that we have to continually fight against this. Irresponsible fiscal policy leads to unsound money. Government is the source of our problems, certainly not our solution. We need to constrain government and eliminate the monopoly control over money.
Daily Bell: Is fiat money collapsing worldwide?
Peter Boettke: This seems to be a conclusion a reasonable person could be led to believe given the facts we read in the news everyday. On the other hand, government involvement in the financial sector and the economy in more general terms continues uninterrupted. So as long as government is so deeply involved I cannot see them relinquishing the control over currency. What I think we might see is a shift out of fiat currency into another money that's perceived to be more sound and then perhaps to a commodity basket notion, etc. It would be fascinating to watch as an economist if it didn't create such long lasting damage to people. But I am excited that in my lifetime we might see the day when government is no longer in the business of monetary policy.
Daily Bell: Will the EU survive?
Peter Boettke: I hope not.
Daily Bell: What is the role of government if any?
Peter Boettke: None. Well, to get out of the way and allow the market to operate. My main complaint about US policy from 2008-2010 has been that we consistently have turned a market correction into an economy wide crisis by one bad policy after another. We didn't get "hope and change," we got "more of the same." And what was not tried was "nothing." We still need to give "nothing a chance."
Daily Bell: What are your feelings about the war on terror? Was Mises anti-war? Hayek?
Peter Boettke: We are moving away from economics. We have already moved away from my expertise by moving into monetary economics. There are much better people than I to talk to about the issues you just raised. And there are much better people to read than me on the issue of the War on Terror. On the failure of US led efforts to export democracy and the free market, see Chris Coyne's After War (Stanford, 2007). Coyne's work is a brilliant praxeological analysis of US policy in the 20th century.
As a factual point – neither Mises nor Hayek were anti-war completely. Mises's Nation, State and Economy is a radical critique of government, but Mises was not a pacifist. Neither was Hayek. They believed that the state had a positive role to play in defense of a country and its people. But again, we are moving away from economics. If you push me on this, I am radically anti-war and believe that our military adventurism, not our culture of capitalism, is what has led to terrorism. The best policy to defeat terrorism, in my opinion, would be to bring the troops home and curtail our military efforts and instead lower all barriers to trade between these countries.
Daily Bell: What is your take on Ron Paul? On the Tea Party?
Peter Boettke: Ron Paul – he has been around and knowledgeable about Austrian economics in a public way since I was an undergraduate. I applaud him for his knowledge and his often principled stance on important issues of public policy. He is a politician, not an economist. But he is a very good spokesman for monetary responsibility and fiscal discipline. I do not vote and I do not get involved in politics, but if I did Ron Paul would be the only politician in DC that I would find acceptable.
On the Tea Party – again, remember I just said I don't pay that much attention to politics. But my college fraternity brother and fellow classmate in undergraduate and graduate school, Matt Kibbe, is president of Freedom Works and he has been very involved with the Tea Party movement. If you read Matt (and Dick Armey's) book, Give Us Liberty: A Tea Party Manifesto, it is a very good exposition of free market principles and the classical liberal principles of limited government. If the Tea Party is a positive force to advance these ideas, then I think it is awesome. If the Tea Party is a positive force to limit the power of the government, then I think it is great. I think anger can be a wonderful muse. But I hope the Tea Party will now hold the Republicans feet to the fire so to speak with the same level of enthusiasm that they expressed their anger at the Democratic party.
Bottom line: I'd like to vote all the bums out of DC and get the US out of North America, so the idea of working within the existing political structure is not something I am persuaded about. Instead, I am much more myopically academic and comfortable in the world of the pointy-headed eggheads. That is the conversation I want to change. Haven't succeeded yet, but I keep trying.
Daily Bell: Are you generally hopeful about the direction the West is taking?
Peter Boettke: Ludwig von Mises once said that he started out to be a theorist, but became a historian of decline. Since 9/11 I have understood what he meant better than before. But I am also hopeful that we don't have to defeat the twin evils of socialism and fascism that were advocated so explicitly as Mises had to. We deal with much more subtle versions of socialism and fascism. Perhaps because of the subtlety they are more dangerous. But by nature I am an optimist so despite the accumulating evidence, I choose to be hopeful and enjoy a good laugh much more than a good cry.
Daily Bell: What is the future for Austrian economics?
Peter Boettke: I am very excited about the future of Austrian economics within the academy. My former students are now starting new Austrian centers and establishing great careers for themselves. Some of my former students have started to make major inroads into the economics profession at the highest levels. Peter Leeson, e.g. was referred to in the pages of the New York Times as one of the most creative economists of his generation. Peter is simply a superstar in the making. But he is not alone. Ben Powell is helping to establish a program within the PhD program at Suffolk and I am very impressed with his students. West Virginia University has some very strong students, Florida State, etc. Peter Klein has some very promising students as well at U of Missouri.
Austrian economics needs to mimic the Keynesian avalanche within the economics profession. We are at a unique moment in high education because of faculty turnover during the next decade or two. It is my goal – I know an ambitious one – to see a free market economist teaching at every college and university in North America and Europe within the next 20 years. We need about 20-30 clusters of 3 or more faculty in those universities, about 10-15 PhD programs and 2 or 3 of those PhD programs have to be in the elite departments.
Economics is a very competitive, yet hierarchical profession – there are really only 5 schools that matter: Harvard, Chicago, Princeton, Stanford and MIT. All the rest are chasing after those programs. There are probably 20 or 30 schools in the top 10 and 50 schools that claim to be in the top 20. But the top 5 never really change. That is the conversation that we need to impact. I am convinced we will, not tomorrow, but within 20 years. We have to.
To put this another way, we Austrians have this amazing endowment of scientific ideas from Mises and Hayek. We cannot squander this endowment of unbelievably powerful ideas. We must win the day in the scientific debates.
Daily Bell: What is the future for GMU and its Austrian focus?
Peter Boettke: We have five full time faculty in our research group in the department of economics and 3 research affiliates that work day to day with us. So that is eight individuals working day in and day out to advance Austrian economics within the professional conversation. Our group is very active – we have published close to 500 distinct refereed journal articles, over 20 individually authored books, etc., etc. GMU has more Austrian faculty, has more uniquely devoted Austrian courses, has more fellowship money and more seminar discussions than any place in the world. I believe that other universities will be coming along to compete with that, but right now that is not the reality. A program with one faculty member is not a program. A program without a PhD program is not a program for training graduate students. Our students study Austrian economics, write dissertations in Austrian economics and get jobs where they in turn teach Austrian economics. Our students are doing dissertations in money and macro; in development and comparative; in public finance; in law and economics; in industrial organization; in trade; and on the economics of anarchy. Again, I ask, where else do students have this opportunity? I am sure there are some – you just have to list them so we can start a conversation with some facts on the table.
It is, however, important to stress that there are many scientific research traditions at GMU – law and economics, public choice, New Institutional Economics, experimental economics and Austrian economics. This unique mix is very productive and I hope we continue to build across the board and continue to be the best department we can be and to educate a new generation of economic thinkers in all these areas. I hope our Austrian group continues to be productive scholarly and effective teachers. We need to cultivate a culture of scholarly excellence for ourselves and for our students. We have challenges; all good departments do.
GMU's department was inspired by Hayek (Nobel 1974), it was made famous by James Buchanan (Nobel 1986) and it was rejuvenated by Vernon Smith (Nobel 2002). And over the years our law school reflected the influence of Ronald Coase (Nobel 1991) and our economics department has developed deep intellectual relationships with Doug North (Nobel 1993) and Lin Ostrom (Nobel 2009). This is just an extremely exciting place for anyone to be doing economics.
Daily Bell: What do you do next? Where is your career and well-received work headed?
Peter Boettke: I am currently working on finishing up a book based on a series of lectures I gave last year on The Science of Liberty. It is very much inspired by Rothbard but focused more on an economic and political economy research framework that integrates Austrian economics with Virginia Political Economy and the Institutional Analysis of the Bloomington School. I actually published a book (with Paul Aligica) on the Bloomington School of Political Economy (Lin and Vincent Ostrom) that appeared right before Lin won the Nobel, so that turned out to be fortuitous for us. Anyway, this book I hope to have finished up in manuscript form prior to the end of the academic year, will address these framework issues and provide policy examples from the modern context.
Then I am going to start research on a project dealing with moral philosophy in the age of economic scientism. The book will be bracketed by a discussion of Hayek and Buchanan, but the primary focus will be on the careers and ideas of Kenneth Boulding, Albert Hirschmann and Amartya Sen.
And finally, I have another book project that is a history of modern economic thought.
That will keep me busy for a while. But with all the great colleagues and students I have around, these projects will surely take a few twists and turns. I mentioned earlier my project with Chris Coyne for Oxford and Frederic Sautet. I also just completed the 10 volume Collected Works of Israel Kirzner for Liberty Fund. And, of course, there is the Review of Austrian Economics and our efforts to constantly improve its academic standing within the scientific community.
Daily Bell: You have said you are relentlessly focused on academic publication. Are you worried about taking Austrian economics out of the realm of the amateur? Isn't the appeal of Austrian economics that anyone can understand it?
Peter Boettke: I am not worried about that. First, Austrian economics will continue to be valued by amateurs despite whatever I do as a professional economist. Second, I actually don't think anyone can understand it anymore than anyone can understand the fine points of neuroscience. I do think we can brush with broad strokes and the public can understand, but the problem with many of the autodidacts that I have met in Austrian economics is that they are not content to brush with broad strokes but take very specific positions on very technical issues. This is a mistake. But I am not going to correct it. All I can do is do follow my comparative advantage – which is being a teacher and a research scholar in economics. I want to improve economic literacy in our society and to improve economic knowledge within the scientific community.
BTW, I am very involved with three organizations outside of the academy: the Foundation for Economic Education, the Institute for Humane Studies and Liberty Fund. I personally think these are the most important institutes for the advancement of economic and political liberty in the world today. That statement undoubtedly reflects my myopic perspective on ideas rather than policy.
Daily Bell: Is Austrian economics the only kind of economics that basically gives the individual practitioner the assurance that he or she can trust his or her own judgment within the larger parameters of Austrian analysis? In other words one does not have to do, say, a mathematical analysis to determine whether there is inflation or not. If prices are going up, then there is price inflation and monetary inflation to boot. Comments?
Peter Boettke: I agree that we don't need mathematical analysis to understand the logic of economics. But I don't believe it is correct to say that judgment undisciplined by the serious study of economic thought can be trusted. I do not believe that econometrics "tests" theories. But some questions can be approached statistically. I prefer the analytic narrative approach to empirical work in economics. I think this approach is the closest in modern academic economics to the program laid out in Mises's Theory and History. Pete Leeson, Chris Coyne and I have a programmatic paper entitled "Comparative Historical Political Economy" which lays out our approach to empirical work, how to do it, what types of cases to select, etc.
Daily Bell: How complicated is economics really? One cannot predict the future except generally. Perhaps the study of Austrian economics ought to be confined to showing how other schools of economic thought are invalid and don't come up with legitimate results? Thoughts?
Peter Boettke: I don't think Austrian economics can be viewed as primarily negative and be successful. It has to be viewed as a progressive research program in economic science. Critique is an important element, but so is positive analysis of significant problems. To be scientifically successful you have to be part of the conversation. To be part of the conversation you have to work on problems that are of interest to others within the scientific community and you have to make progress on those problems in a way that is recognizable to your scientific peers. That is how I think about these things.
Daily Bell: Human action tells us that individuals will create solutions for themselves and their families and communities as necessary. What else does one need to know but "let the market decide?" What are the other mysteries that need to be delved? Is it analysis of HOW the process works that is important? Or does this over-complicate things?
Peter Boettke: Improving our understanding of how the process works is always preferred to blind faith. When one of my favorite students came to me to discuss his dissertation, I simply asked, "What do you want to accomplish with your work?" He replied, "That freedom works, baby!, that freedom works." I laughed and said, ok, lets get to work on that. He did a refined analysis of development planning and examined the role of government in the East Asian tigers in the 1980s, the Celtic tiger of the 1990s and the failure of government in Japan in the 1990s. All three of his papers where published in refereed journals. He has had great jobs. He has developed into a great economist. His work shows that "freedom works" but it doesn't just say that. He dug into the details, he worked through the analysis and he honed his craft as an economic research – a logical thinker and a clear writer. No, we must come back again to the Bastiat quote – never fear a harsh critique, always fear a weak defense.
Daily Bell: Is the proper place of an Austrian economist more historical than not? Perhaps the Austrian professional ought to focus on economic history, showing how things went wrong when the state got involved?
Peter Boettke: I am a fan of economic history. My first and second books were examples of economic history and then contemporary economic history. I'm a big fan of history analysis. I would say that the purpose of theory is to do history, to aid us in writing better histories of man. But that position overstates my true position slightly. Theory is important in and of itself. But the application of theory to help us do better history is critical. I agree that the study of the failure of the state is an important task for historians to engage. I love the work of Bob Higgs. And I haven been trying to get Jeff Hummel to publish this wonderful book manuscript of his "War is the Health of the State."
Daily Bell: And speaking of the state, Rothbard believed in money power, though he did not write about it a lot. Is there room in Austrian economics for conspiratorial history – the idea that there is a small elite group of banking families that have conspired to create a one-world government and used the levers of mercantilism and central banking to do so?
Peter Boettke: I fully believe that interest groups attempt to manipulate government to benefit themselves at the expense of others. I just don't know the value-added intellectually of calling that a conspiracy theory as opposed to following Mises's lead in the clash of group interests. Conspiracy theories seem to imply something more than moneyed interests and attempts at manipulation. And not all conspiracy theories are correct, right?
Daily Bell: Finally, how do you respond to the issues of the Koch Brothers involvement at GMU and in your career? Do you see any problems with it? Why do some others? What influence has Koch Brothers' funding had on your career and GMU?
Peter Boettke: We receive financial support from a multiplicity of sources, the Koch Foundation being one among the many. These sources include foundations as well as private individuals and families. We also are at a state university so we receive tax payer support as well in the interest of full disclosure. I have met many of our donors through the years and they are wonderful individuals who care passionately about liberty and economic education and economic scholarship. Both Charles and David Koch are the same way. They care passionately about the cause of economic and political liberty and they have generously provided significant funds to support numerous efforts. The recent New Yorker article had many inaccuracies, but the most egregious one was the claim that the Koch brothers are engaged in "covert" activities in their support for less government regulation of the economy. How "covert" can it be when Charles Koch wrote a book dealing with freedom at an individual level, at an organizational level and at a societal level. It is a very good book, full of insights from a lifetime of self-study and experience.
I have had many conversations with Charles over the years, including about research priorities for a free society. He has never once tried to influence what I was working on, or the way I was working on it. He is a man of great intelligence and intellectual curiosity. The claims that he attempts to downplay Mises is absurd, again look at his own book, The Science of Success. I personally have never witnessed him attempt to steer any scholar in one direction or another with respect to Mises or Hayek, or even Rothbard. I have been teaching Mises and Hayek, and Rothbard and Kirzner, since I started teaching economics in 1986 or so. I still teach these authors in my classes today. I write about Mises – I published an essay "Was Mises Right?" which was about methodology. The answer is YES, he was right about the methodology of economics. When the Handbook of Economic Methodology was being put together by the leading economic methodologists in the profession, they turned to me to write the essay on Mises and I defended Mises's approach as sophisticated and correct.
I am a Mises-Hayek-Kirzner Austrian economist and an anarchist in my political philosophy. I am very vocal in my endorsement of Austrianism and my displeasure with state power. You can see this in all my writings. I am not that subtle. And while I have lived in Northern Virginia for the past 12 years, I am not part of the "beltway" libertarian crowd. I am much more comfortable being at a basketball game than I am attending cocktail parties. Almost all my spare time has been spent either coaching or watching basketball until a year ago when I finally retired from full time coaching at the high school and AAU level. As anyone who has known me will tell you, economics and basketball have pretty much been my focus – not power-brokering among the DC elite.
Charles is someone I admire and am grateful to for both his support and his professional friendship over the years, but if you want to know outside of academy who has influenced me the most in my outlook it is a businessman in investment – Edward Weick – and a foundation representative/businessman/author/philanthropist – Richard Cornuelle. Both of these individuals have had a major influence on the way I think about the world and about what problems I want to solve. Inside the academy, besides the obvious role played by my formal teachers Hans Sennholz and Don Lavoie, it would have to be Jim Buchanan and Israel Kirzner.
Daily Bell: Any books or articles you would recommend to our readers?
Peter Boettke: On my desk for reading at the moment includes three new historical books: Deirdre McCloskey's Bourgeois Dignity; Timur Kuran's The Long Divergence; and Roger Congleton's Perfecting Parliament. From what I have gleaned so far in these works, they will pay the reader back several times over for a careful and thorough read.
I will mention two books coming out in respective series that I edit. Mark Pennington's Robust Political Economy: Classical Liberalism and the Future of Public Policy is forthcoming in a series I edit for Edward Elgar – New Thinking in Political Economy. This book is really fantastic and takes on all the challengers to the classical liberal view and defeats them. The book will be out with a few months. A more longer term project to keep an eye out for is Mario Rizzo's New Paternalism which is under contract with Cambridge University Press in a series I edit with Timur Kuran – Cambridge Studies in Economics, Cognition, and Society – and this book tackles the developments in behavioral economics that are producing a new call for paternalism, even called at times "libertarian paternalism."
Finally, I should end as has been my custom of late by stressing that I think economics should be viewed as both the most exciting and fun discipline to study in-depth and the most deadly serious subject to study with the fate of humanity hanging in the balance. If you are looking for the fun and excitiement in economics, I can recommend no better book than my colleague Peter Leeson's masterful, The Invisible Hook: The Hidden Economics of Pirates. If you want the deadly serious and fate of humanity work, I can recommend no better book than the logical and sober assessment of US led efforts to promote democracy and free markets through military intervention found in After War: The Political Economy of Exporting Democracy by my colleague Chris Coyne.
Daily Bell: Thank you for your time and graciousness in conducting this interview with us. We look forward to reading more of the great work coming out of the GMU Austrian school.
Peter Boettke: Thank you.
We have interviewed several of Professor Boettke's colleagues (including the wonderful Walter Williams) but this interview we found perhaps the most interesting yet, certainly the most comprehensive. He was most courteous to share so much time with us and to answer so many questions bravely and forthrightly. He is obviously a brilliant, dedicated person, and that certainly comes through in his interview. He can't hide his light so to speak.
So is there a caveat? Perhaps. It cannot be that the program is a "soft" version of Austrian economics, for he has been firm about GMU's position here and in past statements: GMU "loves Mises to pieces." There is perhaps only one argument (fair or not) that might militate against an academic Austrian effort of the size and scope that he's implementing; by working so hard to put Austrian finance into an academic context, he and the others are in a sense, perhaps, running the risk of removing it from popular culture.
One of the most charming (and tremendously important) concepts espoused by modern Austrian economists such as Murray Rothbard is that economics ought NOT to be only the purview of a refined academic class but ought to be actionable and implemented. In fact, two of Austrian economics most powerful points are 1) economics is not predictive except most generally and therefore using economics to make specific predictions is mostly a waste of time and 2) one does NOT need to be an economist to make common-sense judgments about the way society works – and to act on them.
One could find plenty within the Austrian literature that justifies using one's OWN life-experience and come to perfectly reasonable free-market conclusions that do not need academic validation to be actionable. In fact, these two observations, when placed together, do much to minimize Austrian economics as a purely academic pursuit, if one accepts them at face value. Austrian economics can be seen, in fact, as a socio-political tool that allows one to criticize the inevitable power grabs of authority, to chart, historically, the decline and fall of civilizations as elites gradually manipulate them into bankruptcy and even to suggest free-market solutions.
There is a thriving on-line literature built around Austrian economics – hard money sites, literary sites, etc. – because Austrian economics is generally so welcoming of those who take the time to read its basic texts. And places like the Mises Institute give out many texts for free to encourage the idea Austrian concepts are democratic not elite. This is one of the reasons in our view that Austrian economics has spread so quickly on the 'Net once it found its electronic voice. There is little about Austrian economics that is authoritarian and less that is exclusive. It is equal-opportunity-information and not overly complex in many of its (non monetary) components.
Of course, we suggested our caveat might not be considered fair. And certainly the response is (among others) that Professor Boettke is taking the good fight to illuminate places that need sunshine the most – the dark economic areas of academia that will cling endlessly to authoritarian nostrums because by promising solutions economists can guarantee themselves private and public jobs. Seen from this perspective, the effort launched by Boettke et al. to put Austrian economics on an equal footing with other kinds of economics is both laudable and necessary.
Certainly, we do wish Dr. Boettke all the best in his courageous quest to establish a permanent Austrian beachhead upon the dark continent of Keynesian academic dogma, and then to mount a further invasion. Perhaps one day we shall see the best of both worlds, an academic environment that accepts the inarguable dynamism of Austrian economics and a larger private (and even public) sector that accepts the logic that government regulation and laws are nothing (mostly) but harmful price fixes.
Both GMU and the Mises Institute are working in their own separate venues to bring about change that supports freedom. Those who believe in human action and honest money should feel fortunate that liberty has such brilliant supporters, Peter Boettke prominently among them.
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