There are days where I wonder whether things will ever get better, and then there are days when I know things will. Saturday was the latter kind of day, because I read this article in the Wall Street Journal about the Austrian school revival being led by George Mason University's Peter Boettke. Full disclosure: I am a big fan of Peter Boettke; he was on my dissertation committee and taught me most of what I know about Austrian economics. More importantly, Boettke is the one who, ever since I left the econ department at George Mason to pursue a career in policy (which he wasn't happy about, as he thinks that academia is the place to fight our fight), has tirelessly reminded me that ideas, not politics, are what matter and what I should focus on. … We all remember how Glenn Beck, a few months ago, managed to put Friedrich Hayek's Road to Serfdom on the Amazon bestseller list. That was great. However, no matter how powerful Glenn Beck is and how capable he is at popularizing some of Hayek's ideas, this moment can't be sustained without recognizing where the ideas come from. This movement is based on real ideas that are studied in academia by serious economists — even when no one believes in them. – National Review Online/Veronique de Rugy
Dominant Social Theme: Finally, someone to bind them and lead them.
Free-Market Analysis: Well, we are still trying to recover from yesterday. It started when we suggested in our analysis of the Wall Street Journal article on "Austrian" Peter Boettke that, by leaving out the Ludwig von Mises Institute, the writer/editor was motivated by willful ignorance or perhaps antipathy.
Many Bell feedbackers – far more prescient than the ink-stained wretches who work here – insisted that the writer was not ignorant and that missing information was part of a much larger elite promotion: "There is no Austrian School other than George Mason University and the Ludwig von Mises Institute doesn't exist."
In this article therefore, and with extreme trepidation, we will rehearse the back-and-forth that occurred during an extremely busy day, thick with feedbacks. We will move beyond analyzing the Wall Street Journal article to analyzing what is obviously an evidently much deeper schism in the US Austrian economic school and then speculate as to what this means going forward. We think such efforts are useful, of course if for no other reason than to generate revenue for the stomach-acid industry.
Of course it is more serious than that. Elite dominant social themes can have significant impacts on the real world. And the introduction of a new mainstream meme – "There is only one Austrian school and it is located at GMU" – is of some import, if only because it means the Austrian School itself (as we pointed out yesterday) has come to dominate the economic landscape in less than two decades, in no small part due to the efforts of the Ludwig von Mises Institute. (Which was not mentioned in the Wall Street Journal article, etc., etc.)
But let us now lob a few additional complications into the mix just to make sure we are covering all the bases before moving on to a conclusion. There is the issue of nomenclature itself. Ironically, though the Wall Street Journal piece has labeled Peter Boettke an Austrian-school pioneer, he and his colleagues actually renounced the name at the beginning of the year. Lew Rockwell himself on his blog noted the following:
"A group of market economists at George Mason University first called themselves Austrians, then, when they took up hermeneutics, Market Process economists. Then they switched back to Austrian. Now they are dubbing themselves Coordination Problem economists. As Professor Pete Boettke announces on their blog, "This name change is symbolic as well as substantive. The term 'Austrian economics' has become…a hindrance to the advancement of thought…."
An additional point was made about the Journal article by BNet.com's Alain Sherter who yesterday observed the following: "WSJ Profiles Free-Market Economist, Fails to Note His Koch Brothers Tie." … "You don't have to share George Mason University economist's Peter Boettke's unbridled faith in the 'free' market and suspicion of government to acknowledge that he's a distinguished academic. But readers of the WSJ's article this weekend about Boettke would've benefited by knowing of his affiliation with the Mercatus Center, an ultra-libertarian think-tank affiliated with the school that serves the interests of industrialists Charles and David Koch."
Sherter goes on to observe that "Boettke himself has a position at Arlington, Va.-based Mercatus, a not-for-profit organization billing itself as 'the world's premier university source for market-oriented ideas.' He's arguably the leading proponent of Friedrich von Hayek and the ideas developed more than a century ago by Austrian-school economists, who have waged intellectual combat for decades with disciples of John Maynard Keynes."
Sherter points out that Boettke himself is linked to Mercatus through virtue of being a vice president for research. He also mentions a New Yorker profile by Jane Mayer of Koch Industries and notes that "financial records show that the Koch family foundations have contributed more than thirty million dollars to George Mason, much of which has gone to the Mercatus Center, a nonprofit organization."
Why is Sherter upset about this linkage? He writes: "Boettke is described in the Journal story as wary of being linked with anti-government 'crackpots' and 'conspiracy theorists' trying to destroy [Austrian economist FA Hayek's famous book] 'Road to Serfdom.' For anyone familiar with the frankly anarcho-corporatist agenda of the Kochs, however, his association with Mercator is a curious way to distance himself from loopy conspiracies. Odder still that the paper didn't see fit to mention the connection."
What can one do but throw up one's hands and chuckle. Sherter is upset because the Wall Street Journal did not reveal Boettke's radical "anarcho-corporatist" linkages. Lew Rockwell, in his Boettke post (see above) would perhaps be concerned for the OPPOSITE reason. He writes: "I should add that the then-head of the Koch foundation (oil plutocrats Charles and David Koch, who are also the major funders of the Republican party and Beltway 'libertarianism') vowed eternal enmity against the Mises Institute and me at its founding, as they had earlier against Rothbard."
As he recalls the conversation, Koch told him: "'Do you realize how much money we have spent purging Mises from Austrian economics? Everyone hates him. Even Milton Friedman hates him. Hayek is the only path to influence." He continues: "The Kochs fund the GMU program, of course. The competition continues, but this time, when they openly state their motives and strategy, in a healthy way. Oh, and as they themselves note, we are winning. This time, let's hope the Coordination Problemists, unlike the Market Processists, stick to their name."
So Sherter damns Boettke for his radical ties. For the Rockwell-Misesians, Boettke's relationships are suspect for exactly the reverse reason: They make a plainspoken analysis of free-market economics more difficult. This is not exactly a new conundrum. Money for thought-analysis has to come from somewhere. The CATO Institute has solved the money problem by intensive fund-raising but in the process has become far less "edgy" than Mises under Rockwell. The Kochs are involved with GMU and Richard Mellon Scaife funds almost everything else with the "L" word. (A full list of his generosity, as well as his background – and his father's – can be found clear as day on Wikipedia. It's not especially encouraging.)
We confess here that we have gone as far as we can with this analysis. We are not qualified to speak to the issue of Hayek versus Mises from the point of view of the Kochs – as Lew Rockwell and others around him can. We know that Hayek was likely not as doctrinaire as Mises and that he apparently converted from socialism at some point. We cannot imagine that Hayek departed from Mises on issues regarding Human Action or the business cycle (which they developed together). So that probably leaves the issue of money and banking itself – presumably that's the nub. Others are welcome to weigh in here, or perhaps today there will at some point (today?) be an article at LewRockwell.com that will clarify matters.
Note: There IS a fine article today by Ryan McMaken on LewRockwell.com that clarifies the "schools" of Austrian economics in terms of market intervention (Hayek versus Rothbard/Mises). His contention is that Boettke is more aligned with the moderate libertarian CATO camp and more apt to encourage market intervention. We don't know how Boettke feels about this, but we would encourage a read.
There certainly are differences between Boettke and the Rockwell-Mises group that are easy to see. In 2007 (as we pointed out yesterday in a feedback exchange regarding this issue), Boettke on his blog endorsed free-banking and competitive currencies. We ourselves have humbly suggested it might be preferable to let the market decide about private fractional reserve banking instead of criminal courts. But in a more recent statement (presented on Lew Rockwell's blogsite), Boettke sounds more like a monetarist, advocating a steady-state central bank.
So what can we conclude from the above? Is Boettke's position shifting? (Is it the price of fame?) Did the Journal decide not to mention Rockwell-Mises out of spite or was it something more? Does the Journal article kick off a determined elite (Koch) promotion to blot out the name of Ludwig von Mises Institute forever? (The trouble being of course that Boettke has now voluntarily rejected the nomenclature Austrian himself.)
There are ludicrous aspects to being profiled as the founder of a school while rejecting its name as Boettke has done. And given what Rockwell himself has indicated there are continued tensions between the GMU and the Mises Institute. No doubt these tensions will grow continually stronger as the Austrian school makes further media and academic inroads. Perhaps a new set of parameters may have to be promoted to contain the Austrian initiative – a new dialectic in other words. And perhaps Boettke's group has been tapped for the job. That's speculation of course.
Let us return momentarily to the article at hand. We see no reason to change our analysis of willful neglect and antipathy. We're not sure the writer or even editor received instructions to leave the Institute out. But what this episode has amply illustrated is that the powers-that-be are predictably more comfortable with Boettke (or CATO, or Reason, etc.) than they are with Rockwell's stiff-necked bunch. Success will only increase the tensions apparently. But we're glad the Austrians are attracting such attention.