Exclusive Interviews
Steve Horwitz on GMU, the Mises Controversy and the Promise of Austrian Economics in the 21st Century
By Anthony Wile - October 03, 2010

Introduction: Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University in Canton, NY. He completed his MA and PhD in economics at George Mason University and received his A.B. in economics and philosophy from The University of Michigan. He is the author of two books, Microfoundations and Macroeconomics: An Austrian Perspective (Routledge, 2000) and Monetary Evolution, Free Banking, and Economic Order (Westview, 1992). Dr. Horwitz has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and macroeconomics. In addition to several dozen articles in numerous professional journals, he has also done nationally recognized public policy work on the role of the private sector during Hurricane Katrina for the Mercatus Center, where he is an Affiliated Senior Scholar. His current research is on the economics and social theory of the family, and he is currently at work on a book on classical liberalism and the family.

Daily Bell: Give us some background. Where did you grow up and go to school?

Steve Horwitz: I grew up in suburban Detroit, in Oak Park, Michigan. I then went to University of Michigan, Ann Arbor, where I got my Bachelors degree in 1985. That degree was a double major in economics and philosophy. After that I was off to Graduate School at George Mason where I got my PhD. I was there from 1985 to 1989.

Daily Bell: How did you become interested in Austrian economics?

Steve Horwitz: A lot of economists get interested in economics and then they learn about Austrian economics. For me, it was the other way around. I actually was interested in libertarianism before Austrian economics per se and that was in high school. I was working at the local public library and at the time, say 15 or so; I read a lot science fiction and was interested in anybody who had a weird theory of the world. This new book came into the library, that not many libertarians ever mention as one that "converted" them, called "Restoring the American Dream" by a guy named Robert J. Ringer, who was an investment advisor, a libertarian guy.

Ringer's book was a popular brief for libertarianism on the eve of the 1980 election. So I read this book and I was very persuaded by what he had to say. I looked at the books that he said I should read and one of his books that I found in the library was Murray Rothbard's "For a New Liberty." I was also reading Ayn Rand and other Austrian economics books and I kept following it as I went into University and became an economics major.

Daily Bell: Tell us about your book, Microfoundations and Macroeconomics: An Austrian Perspective.

Steve Horwitz: This is hard to summarize in a brief conversation but basically the book looks at the issues that conventional macroeconomists want to look at, inflation, deflation, business cycles and these sorts of things, but from an Austrian perspective and focusing in particular on the way in which inflation, deflation, business cycles ultimately manifest themselves as microeconomic phenomena. That is, the problem with inflation is not just that it changes the price level; rather that it affects every single price in the economy differently. And when inflation does that to prices, the distortive impact it has on those prices upsets markets across the entire economy. So when you have inflation, it's not just that you affect economic aggregates, but that you affect these individual prices.

And from an Austrian perspective, it's those prices that really matter for what entrepreneurs do, for what consumers do, for economic coordination. What I am trying to do is to resuscitate the pre-Keynesian macroeconomic tradition and tie it more tightly to the Austrian understanding of entrepreneurial market processes that has come to be associated with Mises, Hayek and the rest. It's a book on Austrian macroeconomics but one that reminds us that macro matters because it disrupts that micro coordination process.

Daily Bell: What is your specialty as an Austrian economist?

Steve Horwitz: Monetary theory, macro, for sure. Like most Austrians I write the history of economic thought from time to time. I teach and I have written things on comparative economics, political economy, socialism, and capitalism. More recently I have been doing work on the economics of gender and the family and a book project on libertarianism and the family that I am almost done with. I think all those would qualify as specialties. I have written a lot on Hayek as well.

Daily Bell: Are you still comfortable with the name "Austrian"? If not, why not?

Steve Horwitz: Am I still comfortable with the word Austrian? Yes and no. I think that the name still remains useful for conveying a certain set of ideas, ideas that I believe in deeply and passionately.

On the other hand, and I gather this is where this question is coming from, we changed the name of our blog to "Coordination Problem" from "The Austrian Economists." We had a couple of concerns. Austrian economics has become tightly identified with libertarianism and free market politics, especially in the land of the Internet. Many people who call themselves Austrian economists are not even economists; they are people who are interested in Austrian economics, which is great, but they are consumers of it not producers of it.

So part of the name change was to say we understand Austrian economics, but we care about other strands of economics that assist with understanding the world in a productive way. Austrian economics is a body of thought; it's a series of questions; it's a theoretical framework; it's not a set of answers. So what we really wanted to explain is what interests us. How do people coordinate their behavior under uncertainty, under limited rationality, using a marketplace to do that; how do markets facilitate that coordination in ways that government can't? All kinds of questions that deal with coordination, which was at the center of certainly Hayek's work and I think Mises' works as well. We really wanted to change the name of the blog, from what was an answer ("Austrian Economics") to a question ("Coordination Problem").

Daily Bell: Can you characterize the Austrian school at GMU? Would you refer to it as Hayekian?

Steve Horwitz: I think there are a couple of things at GMU that may be confused in the public mind. The George Mason Economics Department has at least 30 members. Of those probably 5 or 6, would be comfortable with the label Austrian; the rest of the department would not call themselves Austrian. The George Mason department is not an Austrian department. It's a department where there are a number of Austrians and a place where one can study Austrian economics and get a PhD.

The department as a whole is a wonderful, crazy madhouse, full of eclectic people who generally believe strongly in the market. I love them, but they are not all Austrians. As far as Austrian economics goes, they are interested in Mises and Hayek and Kirzner and just about everybody else.

Daily Bell: What is the difference between Mises and Hayek from an economic/philosophical point of view?

Steve Horwitz: There are certainly differences there and we could write books about it. Certainly Mises was more of a rationalist in ways that Hayek criticized. Mises had the strong belief in a priori economics. I think from a political standpoint, Mises thought there was a smaller role for government than Hayek did. Hayek was more engaged with the mainstream in economics than Mises was but for all those differences, the over all general principles behind their ideas is highly synergistic.

There are numerous debates about who was what and there are people who are skeptical about Hayek because he was not really a libertarian. Hayek gave the state a more significant role and because of that he gets dismissed. I think that is ridiculous.

People who dismiss Hayek because he is not a "radical enough" libertarian are making a foolish mistake. There are a lot of good things in Hayek that help us understand how such a society – a radical libertarian society would work – even if Hayek himself didn't go there. More importantly, there are a large number of economists who are highly influenced by Hayek (like those of us at Coordination Problem) who are also radical libertarians. The division between the radical Misesians and the quasi-statist Hayekians is for the most part a false one. One can be a Hayekian and be radically libertarian, even if Hayek himself didn't take that position. The claim that those who are relatively more interested in Hayek's work are necessarily less radical is simply false.

Daily Bell: Why do you think Austrian economics has not caught on more academically?

Steve Horwitz: It's because we have different views of what constitutes a good argument and good evidence. Those who control the levels of power in the discipline don't think we are completely scientific in many cases. They are better than they were 25 years ago in graduate school, though.

Why hasn't it caught on in the policy world? It's hard to convince people who have power to give it up. Most Austrian economists are libertarians and think that the state should be smaller than it is and it's hard to convince people who depend upon government for their living or their power to say that's no good. As far as the public goes, economics is tough. It's counterintuitive and it's often easier to believe Keynesian type arguments.

Daily Bell: Should central banking under the color of the state be abolished?

Steve Horwitz: This has a nice short answer: Yes. Next question.

Daily Bell: Are you in favor of free banking? Is fractional reserve banking a crime? Does fractional reserve banking inevitably lead to a central bank and then a government takeover?

Steve Horwitz: Yes, I am in favor of free banking. I don't think fractional reserve banking is a crime or unethical or fraudulent. I agree with the critics who say that banks' policies need to be sufficiently clear to bank depositors. I think it is clear already that your deposit is a loan to the bank, which in turn loans it out to someone else. The nature of that contract ¬- the loaning process – is that you can call it in anytime and the bank is obligated to give you your currency or whatever it might be when you decide to cash in your demand deposit. (That is why it is called demand deposit.) That is their contractual obligation to you. If they should fail on that obligation because they are not holding enough reserves then they are in breach of contract. That is the crime and they should pay the appropriate legal and economic penalties for that breach.

The crime is not that they are operating on fractional reserves; it's when they don't live up to their obligations. There is just no real world example of where 100% reserve banks were preferred by the public, when they competed on equal/legal landscape with fractional reserve banks. The public understands it; they want it and they benefit from it and the economy benefits from it.

As for whether fractional reserve banking inevitably leads to a central bank and a takeover; well, the problem is that we have never had a system where we have had fractional reserve banking without a lot of other regulations that made fractional reserve banking not work very well. Before we had the Federal Reserve we had fractional reserve banking. We also had all these regulations in place that made the fractional reserve banking system work poorly. In the cases where we had factional reserve banking but no government interference, those systems worked very well. They worked very well for the economy.

Who they didn't work very well for were governments and particularly people in governments who wanted to raise revenue to fight a war or deal with an economic emergency. The reason central banks have emerged is not because fractional reserve banking or free banking failed per se but because politicians saw that by grabbing hold of the banking system through regulation or a central bank, they could manipulate it to raise revenue to fight wars or engage in other activity.

So, the story that says we got central banks because we had fractional reserve banking and it always screws up, just doesn't match the history. The history of central banks arose because of a need for revenue not because of any failure related to fractional reserve banking. The failures of fractional reserve banking systems have always been because they have always had other forms of government interference that made them not work well. When fractional reserve banks were free to operate competitively and freely, they largely worked very well.

Daily Bell: What is your position on the Real Bills doctrine?

Steve Horwitz: It's wrong but it was so influential on the Federal Reserve in the early 1930s. Many argue that it is one of the reasons the system screwed up so bad and ended up turning from a recession into the Great Depression. It is ultimately pro-cyclical, in that it will make inflations worse and deflations worse. It always surprises me when people who are concerned about inflation seem to believe in the Real Bills Doctrine. If you believe in this you will end up with much more inflation than you would otherwise get.

Daily Bell: When students are coming into school, what are they thinking about when they take economics courses? Do they have Austrian backgrounds or are they straight Keynesians in their thinking and you try to convert them?

Steve Horwitz: I think they are somewhere in between. Most come into an introductory economics class with no real preconceptions other than what they have picked up in the media. For example, they all think that consumer spending creates economic growth. That's a Keynesian idea but it's not because they got it from Keynes; it's because it's out there, in the media, CNN and every other place. Occasionally I have someone who has read a few different books, but the majority of them have no systematic views and have just drunk the water around them. So they are full of the usual populist fallacies. It does seem though, in the last few years, that there is a little bit more skepticism about what government can do in light of the crisis. Even that is a mixed bag.

Daily Bell: Is Keynesianism dead?

Steve Horwitz: I thought Keynesianism was dead but along came this big recession and it rose from the dead and is back. Some version of it is still alive and well.

Daily Bell: What is the predominant economic discipline today? Econometrics?

Steve Horwitz: I think today there is no dominant school of thought. Econometrics is not a discipline or a school of thought; it is a set of tools that economists use to look at the economy. It's true that much of the work in economics, the applied work, uses econometrics and other statistical techniques to understand various phenomena, but that is a technique. You can be a Keynesian and use econometrics, you could be an Austrian and use econometrics.

Daily Bell: How can economists justify their craft if they are not Austrian? So long as the price of money is fixed, nothing else works – theoretically or practically.

Steve Horwitz: They will say, look this is how science gets done. We go out and collect data and we test it and we look for a relationship in the data and we try to explain those relationships using economic theory. This is the way science proceeds. What they think they are doing is contributing to knowledge. I think that is not the only way you contribute to knowledge and that it is important to understand that there are very good economists out there who do very good work – economists who are free market libertarians and who are not Austrians. They use other techniques and other approaches to explain how markets work and why government fails.

Daily Bell: How did you meet Professor Boettke?

Steve Horwitz: We met at graduate school. He was about a year ahead of me at George Mason and so when I got there in 1985 he was already there. There was a group of us at the time who were just very passionate about Austrian economics, about libertarianism, and very motivated to try to take over the world and the world of economics. We have had a common vision for the last 25 years and we have been trying to bring that vision to reality in our different spheres and in our different ways.

Daily Bell: Were you surprised by the furor caused by the Wall Street Journal article on Professor Boettke? Was the young woman who wrote it surprised?

Steve Horwitz: You know there is a premise in this question that I think is very funny. The only furor was on like six libertarian blogs. There was no furor outside of that. There certainly was no furor on the side of Pete Boettke and the George Mason group. I spoke to the woman on the phone for an hour and originally it was going to be an article on the resurgence of Austrian economics within the economics profession. It was not going to be focused on Pete. And I think as she talked to more and more people, what she was hearing was that the center of gravity of what was happening was at George Mason and Pete was the person who was driving it. And I think the more she heard that, the more it seemed to be a good piece of journalistic narrative to make the story about him.

Was I surprised that, say, the Mises Institute and others were upset that he was portrayed as the leading Austrian economist … no. But she was looking to explain what was happening in academia. When this was all going on, I said that one of the differences is that the folks at GMU focus 90% of the time on training economists to work in academia and they believe that academia is the place where they fundamentally have to change the world first to have all the other changes we might like to see happen.

The Mises Institute has a much broader mandate. They do some things in academia but they also have public outreach, publish online, provide resources on their website and are involved in broader libertarian politics. The folks at the Mises Institute are more skeptical about academia; they tend not to believe that that's where the fight is. They don't try to engage the mainstream in economics. They are in their own world with respect to academic economics. It did surprise me somewhat that they were upset given that they haven't made academics their primary focus and GMU has. But, hey, who's leading the charge in academia; it's these guys over here. As for the young woman, I don't think she knows there was a furor. She has no clue about divisions within Austrian economics. She got the story that would sell the most newspapers. And ultimately that's what the Wall Street Journal cares about. They couldn't care less about libertarian infighting; they're not trying to consciously dismiss the Mises Institute. They just want a good story that sells papers.

Daily Bell: What do you think is going on the world today? Is fiat money dying?

Steve Horwitz: That's a really interesting question … if you want to go by the price of gold cracking $1,300 it sure seems like it! I don't think I want to say fiat money is dying but I have been a critic of central banking for 25 years, and I have never seen a time when more people are taking the idea that we don't need a central bank more seriously. Criticism of the Fed and auditing the Fed is out there in a way it never was before. I think that is a good sign. It does not suggest that our money is dying but people are beginning to ask some important questions.

Daily Bell: In your opinion what is the biggest economic issue today?

Steve Horwitz: I think it is the growth in government we have seen in the United States in the last few years and particularly the growth in debt and the potential inflationary consequences of that debt and the possibility of a sovereign debt crisis. That whole intersection of debt and devaluation of the dollar is by far the biggest issue today. We have set ourselves on a very dangerous path that I don't see how we are going to get out of in an easy way.

Daily Bell: Where is China headed? We think toward a real estate crash.

Steve Horwitz: I don't have much to say here. I am not an expert on China. China overtaking us I think is unlikely because they have their own problems to deal with.

Daily Bell: Will the EU survive?

Steve Horwitz: Again, I am not an international economics expert and again I am hesitant to say too much of anything. I will say though it is very hard to survive in a system like they have now where all the members have to make one decision about monetary policy but have to make separate decisions about fiscal policy. The Greek crisis is all about these sorts of things. When you decentralize fiscal policy but centralize monetary policy you create tensions there that make it very hard to survive for too long.

Daily Bell: What is the role of government if any?

Steve Horwitz: Well sometimes it depends what day of the week you ask me but certainly I have not ever seen a case for government to do something that is so persuasive that I think it's conclusive. That does not mean that such a case could not be argued, but my working hypothesis is that the role for government should be little to nothing and to the extent that is has a role it should be as decentralized, small and localized as possible. I am a great believer in governance. I'm a great believer in rules. I'm a great believer that groups of people need to organize themselves according to rules, but I am also a great believer that government works best when it's small, decentralized and voluntary.

Daily Bell: Do you believe the current war on terror is justified?

Steve Horwitz: No. We have created this enemy, terrorism, which we will never defeat, because it's not a person or a place, it's an idea. We will always continue to invent new ghosts to scare us. The American people have been so willing to give up so many liberties in the name of this abstract fight against something that in some sense does not even exist as a thing to fight. It is a war that can never be won because the enemy is so amorphous. It stuns me how quickly people have preferred the illusion of security over their own liberties. Throwing ourselves into serfdom over this constructed thing called terrorism is just a mistake.

Daily Bell: What kind of war is justifiable, if any?

Steve Horwitz: Genuinely out of defense. There is never justification for the initiation of coercion, whether it's by states or by individuals.

Daily Bell: Are you a fan of Ron Paul?

Steve Horwitz: My favorite question: Am I a fan of Ron Paul, no. Do I respect Ron Paul, yes. Has Ron Paul been important in getting some very good ideas out there, yes. Has Ron Paul put Austrian economics on the map in some ways, yes he has. But I also don't agree with a number positions that Ron Paul takes on particular issues. Immigration being one of them and free trade being another. I am pro-choice on abortion, so I have issues with him there. I have a good deal of respect for him and I think he has been important but I also have concerns.

Daily Bell: What do you think of the Tea Party?

Steve Horwitz: I could give almost the identical answer. I think there are some good libertarian elements in the tea party. I think to some extent it represents Americans who historically have not been willing to get involved but who are fed up and are saying enough is enough. We're not going to allow Washington to run our lives. I think within the Tea Party there are elements that I find problematic, particularly in the immigration area. I am an open border guy. One way to put it is that the Tea Party is split between the Ron Paul types and the Sarah Palin types and I'm much more sympathic to the Ron Paul types.

Daily Bell: Are you generally hopeful about the direction the West is taking?

Steve Horwitz: I am an incorrigible optimist. We live better than our parents did and our grandparents did. Not as good as we could with all the debt. I think ultimately human ingenuity finds ways of getting around even the worst things that governments do.

Daily Bell: What is the future for Austrian economics?

Steve Horwitz: What a great question! The future is very bright and that is because we now have people with Ph.Ds, who studied at George Mason and studied at other places that are out spreading the ideas and there are people with funds who are supporting those ideas. They are creating the infrastructure that we need to get Austrian economics institutionally established in economics discipline. In the broader public, I think we are seeing more people paying attention to those ideas in ways we have not seen before. So when people like Paul Krugman and Brad DeLong who are major Keynesian leftist economists feel like they have to at least talk about Austrian ideas, that is a important victory.

Daily Bell: What is the future for GMU and its Austrian focus?

Steve Horwitz: Hard to say. I mean, I am not there, but I would think their future looks pretty good too. They continue to get funding, they continue to make hires and they continue to see Austrian ideas as a key part of what they do.

Daily Bell: What do you do next? Where is your career and well-received work headed?

Steve Horwitz: I will continue to write on the crisis because it is so important. We need to make sure there is a narrative established right now that tells the truth about what has happened during the past ten years. Unlike what happened in the Great Depression where we believed a myth for 75 or 80 years and there wasn't a counter narrative from a free market perspective out there. We have the Internet now. We have all these outlets for publication. We can make sure that people understand what really happened and how government caused this crisis and governments made it worse and how the Fed in particular caused it and made it worse.

Daily Bell: Any books or articles you would recommend to our readers?

Steve Horwitz: I suggested a couple earlier. But there is a pamphlet about the crisis which Pete Boettke and I co-authored for the Foundation for Economic Education called The House that Uncle Sam Built. If you Google it and get there, there is a PDF which can be downloaded. It's a great piece to share with friends for a quick view of the recession. My website – http://myslu.stlawu.edu/~shorwitz – has lots of great information. The Mises Institute is a great source for Austrian books and articles as well.

Daily Bell: Thank you for your time and graciousness in conducting this interview with us.

After Thoughts

We thought this was a most interesting interview, coming as it did on the heels of a controversy over a Wall Street Journal article that mentioned GMU as a leading proponent of the Austrian school without mentioning the Mises Institute.

We ascribed that reporting to ignorance on the part of the writer, which Dr. Horwitz seems to agree with, though his perspective is that the writer was focused purely on academic achievement. But there can be no doubt that in the larger scheme of things, the Mises Institute does not have proverbial friends in high places, any more than Murray Rothbard did when he was alive.

This is not the first go-round for this sort of controversy. We have mentioned it before, but it is probably worth re-emphasizing that the power of ideas is truly extraordinary. Lew Rockwell's determination to launch the Mises Insitute – according to Rockwell – incited bitter commentary from the billionaire Koch Brothers. Here is how he recalls the scene in a January 1 2009 post:

A little background: when I started the Mises Institute 26 years ago, the head of the Koch family foundation angrily pledged to destroy me if I went ahead. "We have worked too hard to rid Austrian economics of Mises," he said. Hayek, he claimed, was their man, though, of course, he was far better than that, and a good supporter of the Institute. But the real problem turned out to be Murray Rothbard. It was the greatest of the Misesians and the founder of modern libertarianism whom the Koch World Empire longed to smash, and still does. Murray, founder of Cato, was the one man in the ambit to say no when the Kochs decided to jettison Mises for reasons of DC preferment. Otherwise, they felt, it would be harder to curry favor with the Fed and the Republican party. Hayek's views on central banking, gold, conservatism, and competitive currencies are no more DC-friendly than Mises's and Rothbard's, but they are ignored, and just his name invoked.

What is remarkable about this is that Murray Rothbard was no mover and shaker among the power elite of the time and Mises' name could hardly be found in a textbook at this time. Lew Rockwell was not exactly a household name either, and yet the Koch brothers were absolutely passionate about both Rothbard and Mises – in a negative sense.

Now 26 years later, the Misesian "hard" perspective as regards libertarianism has swept America and is in the process of sweeping the world. Ron Paul's Liberty Committee has gained hundreds of thousands of young adherents and Mises's great work Human Action enjoys a popularity far beyond what it found in his lifetime.

As we can see from the above interview, a Hayekian libertarian perspective has blossomed as well in the fertile soil provided by GMU and by Dr. Horwitz. This is good from our humble point of view as competition between schools of thought will probably spur on proponents on both sides. Both sides have elements that are attractive.

We have always had trouble with the Rothbardian concept that anything less than full reserve banking was something of a criminal activity. Thus some of the free-banking, fractional (private) reserve ideas espoused by GMU camp (and presumably we would place White and Selgin in this ambit) seem a worthwhile intellectual endeavor and provide a cogent argument. On the other hand, the Rothbardian approach to war as "the health of the state," and the emphasis on anarcho-capitalism seem eminently logical as well.

The trouble with a "soft" approach to free-market thinking (from a purely intellectual standpoint) is that there is ultimately no justification for state action. The real problem is that every regulation and every law is a "price fix" resulting in a queue or some other economic distortion. It cannot be otherwise. When you are telling someone what to do, and demanding they do it on penalty of jail, you are "fixing" the market. This is the problem. Where does this activity stop? Where do you draw the line? (Did Hayek ever answer this question?)

From a purely academic point of view, it ought to be the market that determines human activities not government. This has been called anarchy, but of course it is nothing of the sort. Human culture and traditions provide a substitute for law-making and it is one reason why the fewer laws a society has the more formally religious the society is apt to be. When "God is dead," you can likely be sure law-making has killed Him.

So there is much to recommend the Rothbardian/Misesian approach from an intellectual standpoint. It hangs together. That does not mean that one necessarily insists immediately that society be stripped of all rules and regulations. Living life in the real world is different in our view from espousing a belief system. (Often in real life it is best not to be overly-didactic.) But as a belief system – as an elegant and fully realized intellectual structure – anarcho-capitalism holds the promise of releasing the full potential of individuals and parallels Mises' thought in his great book Human Action.

Editor's Note: We received the following letter from Dr. Peter Boettke regarding the GMU program and have posted it within the thread below and also here so that it is immediately available to viewers:

Dear Daily Bell:

I thought Steve Horwitz's interview was quite informative, but I also think you have the wrong impression about several issues. Our Austrian program at GMU (2 course PhD sequence, 1 undergraduate course, weekly PPE seminar, a weekly graduate student workshop, fellowship program, dissertation fellowships, etc.). The faculty involved are Richard Wagner, Lawrence White, Peter Leeson, Chris Coyne, Virgil Storr and myself. Other faculty and scholars associated are Todd Zywicki (GMU School of Law) and Frederic Sautet (entrepreneurial studies) and Dragos Aligica (institutional analysis).

On our faculty, we have some others who are sympathetic (Walter Williams, Russ Roberts, and Don Boudreaux) and we have others who are very knowledgeable but less sympathetic to Austrianism (Tyler Cowen, Alex Tabarrok, Bryan Caplan, and Dan Klein). And of course we have several others who are neither particularly knowledgeable nor sympathetic, but they are respectful.

But the biggest misinformation that you are working under is that we somehow are dismissive of Mises – Mises's works are required reading in multiple classes at GMU and we value Mises's contributions greatly. Pete Leeson and I published a paper in a refereed journal entitled "Was Mises Right?" Our answer, YES. Leeson, Coyne and I as a research team start from Mises's discussion of Ricardo's Law of Association as the basis of our work, and have been explicit in that. Our work on institutional "stickiness" in transition studies is an attempt to draw the generalized implications of MIses's "regression theorem" for money applied to institutions in general.

Our classes teach Mises, our exams question students on their knowledge of Mises, our dissertation students work on topics related to and drawing from Mises.

The second misinformation is that we do a sort of "soft" form of libertarianism. This again is somewhat ironic since our work represents a radical challenge to the state and the status quo in politics, methodology and analytical approach. No place has done more work on anarcho-capitalism than the work that has come from my dissertation students in the past decade " look at the survey article on anarchism in PUBLIC CHOICE written by Ben Powell and Ed Stringham. Or look up any of the work by Ed Stringham. Or look at my essay "Anarchism as a Progressive Research Program in Political Economy."

So the Mises-Hayek-Kirzner branch is neither anti-Misesian nor anti-anarchist. There can be more classical liberal statements of this program — Kirzner — and their can be more Hayekian emphasis — Caldwell — but what there isn't is a dismissal of Mises or an out of hand rejection of the anarcho-capitalist position.

Even the fractional reserve banking position that is associated with White, is radically anti-state, not a defense of the status quo! It is fractional reserve banking UNDER a free banking regime; not a defense of our current Federal Reserve System and privileged banks with Deposit Insurance.

I would in closing like to point you to the blog posts I have over the years on Rothbard. www.coordinationproblem.org/2010/07/why-graduate-students-not-only-should-but-must-read-rothbards-man-economy-and-state.html

Also, follow the links provided in that post to earlier discussions of mine on Rothbard.

I have also written on the Mises Institute — austrianeconomists.typepad.com/weblog/2009/04/the-mises-institute-does-amazing-work.html

I will leave it to you to figure out WHY Lew Rockwell, Joe Salerno, and Tom DiLorenzo write what they write. I will just point out to you that when the Mises Institute published Peter Klein's book, they asked me to write a blurb endorsing the book — which I did. Also, Jesus Huerta de Soto just published his book on socialism, I wrote the preface.

There is a lot of entertainment to be had on the internet by instigating conspiracies and furor when there really is none. As I believe I told you, the WSJ article was about spreading Austrian ideas (captured by the name Hayek in this instance since he was the main historical opponent to Keynes) within the academy. I have chaired 24 dissertations, 21 either have research or faculty positions at universities throughout the US and Europe.

Ask the others if they have PhD students, and if so have they placed them in teaching and research positions promoting Austrian/free market ideas. I am sure there are some and I would be very interested to know the extent of that activity so if you find out please let me know.

But that is what captured her imagination because she was told by the Paul Krugman types of the world that Austrian economics was so discredited that it had no presence in the academia and then she found out that there was a presence at NYU (a top 10 department world wide) and at GMU and that at least in the last decade GMU has been producing students who are now in positions at UVA, Duke, UC Santa Cruz, Penn, and Chicago. Seems weird right? That is why she found the story fascinating — that is what Steve is talking about how the story evolved the way it did.

It had nothing to do with the Kochs, it had nothing to do with the CIA (by the way I am vocally anti-war), it had nothing to do with trashing Mises (as Kelly Evans in fact reported back to one critic, quoting me, Pete tells all his students to "love Mises to pieces").

Anyway, there is a lot of misinformation, and even in your follow up to the Horwitz interview you perpetuate some of this misinformation. I hope if you interview Larry White you will in fact come closer to an understanding of the truth of the various positions within contemporary Austrian economics.

Peter J. Boettke

BB&T Professor for the Study of Capitalism at the Mercatus Center,

George Mason University

Our response:

Dear Professor Boettke.

We already heard from Professor Horwitz on this issue and posted the following response (see below) within the interview thread itself. However, given your letter on this issue, and your concern, we shall post your letter as well so that there shall be no mistake about your intentions nor the reality of your program.

This is how we responded to Professor Horwitz, and obviously the sentiments apply to the points you make as well. We were quite pleased with the interview and we have also interviewed Dr. Williams and separately Dr. Selgin (who is sympathetic to private fractional reserve banking) in the past and hope to provide more information about your fine program and work in the future.

Response to Dr. Horwitz (who expressed concerns similar to Dr. Boettke's, see thread below):

If we misinterpreted your remarks in any way, we apologize. No offense was intended, nor did we purposefully intend to distort your views or GMU's. Thank you, as well, for providing the link to the syllabi, and also for making the point about Canada, which we have read before and ought to be re-emphasized.

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