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the sociology of austrian economics

I recently had the pleasure of attending a workshop on Austrian economics at Texas Tech University. The conveners have asked people to reflect on Austrianism and how that tradition addresses sociality. Some of us offered criticisms while others explored and expanded Austrian ideas. In addition to writing my own piece, which uses spontaneous order theory to think about autonomy, I spent a lot of time thinking about the social position of Austrianism within the economics profession.

Classic Austrianism (1800s-1940s): There was a time when Austrianism was a Big Deal in economics. The early figures were extremely influential and their ideas were assimilated into the mainstream. For example, Carl Menger was a big proponent of marginal utility theory, which is now econ 101. Another example is FA Hayek. In polls of economists, his article, The Use of Information in Society, remains one of the most mentioned and it provides the standard account of what prices are all about. In the classic stage, Austrian leaders wrote widely influential books, published in leading venues, had appointments in well regarded departments, and held positions of influence. They were considered central figures in economics.

Enervated Austrianism (1940s-1980s): Then, the floor fell our from underneath Austrians. The Great Depression resulted in many people moving toward more interventionist forms of economics like Keynesianism. The rise of highly mathematical economics, like Debreu’s equilibria theory, and applied statistics meant that verbal and historically informed economics, preferred by Austrians, was out the door. At this point, the “old leaders” – Mises and Hayek – no longer taught in economics programs. Mises was a lecturer at NYU and Hayek ended up at Chicago – but in an interdisciplinary humanities program called the Committee on Social Thought. I also think competition eroded Austrians’ position. If you want a pro-market perspective, you could go with the likes of Milton Friedman. No need for fussy old Austrians.

The new generation of Austrians, like Murray Rothbard, became sectarian. They taught at schools of modest rank and developed theories wildly out of the mainstream (e.g., Rothbard was a market anarchist). They still published in economics journals and participated in the social world of economics, but they were clearly not leaders and they actively promoted the view that they represented an alternative to mainstream neo-classical economics.

The best way to describe Austrianism in this time period is (a) the disappearance of an older generation of intellectual giants, (b) their replacement with a new cohort of niche players, and (c) the bump down in institutional position.

Austrian Revival (1980s-present): Austrians have not recovered their early 20th century glory, but they’ve had quite a bit of revival. In my view, a few things happened. First, the major libertarian think tank (the Cato Institute) was co-founded by Murray Rothbard in 1974 and it became a player on the American Right. Second, various libertarian educational non-profits, like the Institute for Humane Studies and Liberty Fund really expanded, and they support Austrian scholars. Third, the Mises Institute was created in 1982 and their one job is running seminars on Austrian economics. They recently announced an MA program. Fourth, Austrians founded journals and they developed footholds in a handful of departments like GMU and Auburn, where they can churn out students.

The result? Since they eschew mathematical economics, they won’t be populating top research schools, nor will you find Austrian articles  in top journals. But they now have many appointments in teaching intensive institutions.  They are also well represented in a handful of doctoral programs. They are a real community with the academy and they can even get some positions of leadership: Pete Boettke, a leading modern Austrian, won election as president of the Southern Economic Association.

Sociologically, this means that, sooner or later, Austrianism will outgrow its phase as an “opposition” form of economics that fights the mainstream. It’s just too big for that. Yet, they still will not likely be admitted to the mainstream any time soon. This leads a sustained sense of unjustified marginalization. Whether they need to break off or continue growing within the economic professions remains to be seen.

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Written by fabiorojas

April 17, 2020 at 12:30 am

Posted in uncategorized

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  1. Fabio, I think this glides a little too readily over an important part of the Austrian “revival:” A concerted effort among moneyed, highly-motivated interests to inject libertarian thought into the public’s understanding of economics via supportive donations to public universities (those institutes didn’t pop out of nowhere). Including all of the institutions you mention, but also more importantly, Florida State, where we know the Kochs exerted direct control over hiring. GMU is home not just to Austrians but to other more uncategorizable libertarian-minded faculty like Tyler Cowen and Bryan Caplan, which is consistent with the rise of “Austrianism” as a side effect of a general increase in funding for libertarians.

    Incidentally, it’s interesting (surprising?) that their decline dovetails with the era in which there was a lot of progress in answering (albeit perhaps indirectly) the classic Misesian information critiques of central planning. (i.e., the 1996, 2007, 2012, 2014, and 2016 Nobels)

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    ia

    April 17, 2020 at 11:36 pm

  2. You have indeed given thought about the Austrians, Fabio. Not just the sociology of economics, but (as I recall) in other posts about the nexus between Austrian economics and economic sociology. This was a nice windshield tour of the history of the “School” — scare quotes needed because it is less uniform and monolithic than most outsiders perceive. I believe that the post-1940 decline has a multiplicity of causes, including the ones you note. I would like to see a scholarly analysis of the parallel decline of American (and British) pragmatism over the same period. Replace analytical, formal models of economics with analytical formalism in philosophy… Maybe we came blame both phenomena on John Dewey!

    Seriously, thanks for this post. In pandemic lockdown, I have been reading Menger, Veblen, Schumpeter, and Knight. Sorting out their economics from their sociology, from their own perspectives as well as from my own, is a fraught task. Too much Weber among them?

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    Randy

    April 21, 2020 at 5:20 am


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