Rhetoric Poisoned the Austrian School of EconomicsPosted: July 28, 2013
Lately I have been reading about Nominal GDP targeting on Scott Sumner’s blog The Money Illusion. I highly recommend reading his work, as it is extremely creative and reasonable. While I support free banking versus any standard enforced by government, I believe that NGDP targeting is best way to manage a fiat system. Much better than using a system involving unemployment, interest rates, or inflation. This NGDP topic elicited reading about economics, especially concerning Milton Friedman and F. A. Hayek’s view on monetary policy. I found it interesting that both economists espoused similar views on NGDP targeting, especially Hayek who in 1975 noted his love for the program based on empirical evidence. Slowly but surely I dived into gold bug blogs and strict Austrian publications. While I feel that the Austrian school has produced some of the best if not the best arguments for capitalism some members today lack the deductive reasoning that made the school so enlightening. Many forget any of the consequentialist arguments needed to accompany the natural law cause. Instead many libertarian Austrians just use “look he is a statist” rhetoric.
Just browsing through the Mises Institute website and searching for Milton Friedman information will make many confused. Milton Friedman was by far the best at embodying the argument for laissez faire capitalism. He argued both that philosophical and consequentialist argument. It was Friedman and Hayek that made socialism look bad today. You will be hard pressed to find anyone who thinks communism or socialism is any good. However, many Mises Institute readers and writers disagree, some dislike Hayek and many hate Friedman. I would point however that their founder Rothbard never had as much effect on the political atmosphere besides possibly through Ron Paul. While this doesn’t mean his ideas were wrong it does mean that painting a picture of Hayek and Friedman as Keynesian apologetics is hardly fair. As well, the idea that they stepped away from Anarcho-capitalism to get Nobel prizes and medals from presidents is, and excuse my colloquial language, baloney.
The Rothbardian and Internet Austrian argument for freedom is based on the Non-Aggression Principle (NAP). Aggression should be avoided as it undermines rights of individuals. This is a basic tenet of justice. However, when one delves into economics this argument cannot be the only tool to deductively determine if government intervention is warranted or not. I don’t agree with fiat monetary policy but just noting that its supporters don’t believe in NAP doesn’t justify vilifying them as statists. Instead one needs to prove that free markets better mankind rather than worsen the condition. Don’t call Friedman a statist or a Keynesian just because he supported a constant monetary base. This view is hardly Keynesian. If anything Friedman was the first to discover that the use of inflation to deter recessions and unemployment is ineffective. He changed minds and did so by arguing the intrinsic value of liberty but also the utility of liberty.
It seems the Austrian school has transformed into an Anarcho-Capitalist school, one that hasn’t added more strong foundational arguments, instead it repeats Rothbard and Mises’ ideas poorly. It is filled with politically incorrect academics (Hoppe and company) that only make the quest for liberty look bad. Hardly do any of them challenge the Keynesians on their own perspectives and some just avoid talking to “statists” because they do not believe in NAP.
Hayek, Friedman, Mises, Rothbard, Nozick, Hazlitt and others furthered liberty. Some of their followers today are in some way responsible for the decline in popularity of free markets. Instead of nurturing every little step towards liberty (which even Rothbard supported) Anarcho-capitalist and Internet Austrians just won’t move forward unless their rhetoric is met with action. To further liberty you need to convince people that free markets work on a moral and consequential point. Refusing to argue or move towards certain policy because it is still statist is not a good trade off. After all any good economists should recognize the opportunity cost of his political ambitions. I am not saying that libertarians should back any slightly free market policy. Instead I am asking that Anarcho-capitalists and some Austrians actually engage in the debate rather than just sit in a corner calling everyone the economic boogieman because they haven’t read Rothbard.
Even though I am not an Anarcho-capitalist I don’t understand how it can be achieve without government decreasing dramatically first. Anarcho-capitalists might as well give up or espouse individual agorism, as their movement will not grow without the help of Friedman and Hayek, and most importantly other free market economists, even if they support the existence of a state.
P.S. Like I said I am not an Anarcho-Capitalist. I find too many faults with the argument. I am also not a monetarist, market monetarist, or an Austrian. I lack the fundamentalist approach to tagging onto a school of though even though I once did. Hayek, Mises and Friedman have mostly influenced me. Please feel free comment on your opinion of the Austrian school.
I however would like to note that there are still many highly respectable “Internet Austrians” and Austrian academics so please know that I am only shinning light on what I see is a small percentage spoiling the pot not just for all Austrians but all free market supporters.