Tenured Austrian Economists vs. Murray Rothbard
by Gary North: James
Howard Kunstler: Foul-Mouthed Apologist for the Good Old Boys
School of economics in the twentieth century was dominated by Ludwig
von Mises. He died in 1973. His followers have divided into two
main camps: the Rothbardians and the Lachmannites. They have adopted
rival philosophies and rival strategies.
The main strategy
of the Lachmannites is to get tenure at a university. The main strategy
of the Rothbardians is to persuade the general public of the truth
of economic liberty.
A college teacher
who is granted tenure need not publish anything ever again. He will
be paid for merely showing up to class. The number of classes that
he teaches declines. He is immune from dismissal. This is the bureaucrat's
dream come true.
The quest for
tenure emasculates people. It turns them into intellectual geldings.
They must please the tenured bureaucrats who hand out The Prize.
The goal of every academic department is mediocrity within the department.
The screeners do not want to hire anyone who will show them up,
making them look second-rate at best. They also do not want to bring
in anyone so incompetent that the university's administration may
intervene to investigate. The requirement for tenure is clear: Don't
rock the boat. He who succeeds in not rocking the boat long
enough is more likely to be granted tenure, although these days,
hardly anyone is. The good old days are fading.
look for a risk-free career, in which they will receive far above-market
wages, yet be immune from market forces. Tenure is the dream of
every bureaucrat. The offer of tenure lures intelligent people into
lives of high-salaried irrelevance. They write narrow, useless papers
for publication in journals that no one reads, except in a quest
for footnotes to steal.
It also creates
envy on a massive scale: envy that is directed against those who
have achieved relevance outside the cocoon of the halls of ivy.
rival tiny camps of Ph.D.-holding Austrian School economists, the
central figure is Rothbard. One camp bases its thinking heavily
on Murray Rothbard's writings; the other camp is self-consciously
opposed to virtually everything he ever wrote, and does whatever
it can to prove to the tenure-granters that he is not "their" man.
This division began 40 years ago, and it has accelerated ever since.
This was not
true 50 years ago. In the summer of 1963, I got a summer internship
at the original libertarian think tank, the William Volker Fund.
It had recently changed its name to the Center for American Studies.
I was paid $3800 a month (in today's money) to sit and read books.
This was in a day when there were almost no income taxes at all
on people in that income range. It was the best job I ever had.
I read all three of Rothbard's books, which had been in print for
less than a year. The first was his doctoral dissertation, The
Panic of 1819. The second was his magnum opus, Man,
Economy, and State. The third was America's
Great Depression, which focused on Herbert Hoover's administration,
not on Franklin Roosevelt's. I was probably the first person in
what can be called the third wave of Misesians to read all three
of Rothbard's books.
The first group
of the followers of Mises were those who were converted out of socialism
in the 1920s. These included F. A. Hayek, Wilhelm Roepke, and Lionel
Robbins. The second wave more like a ripple was Rothbard's
generation, which began in the early 1950s. It included Hans Sennholz
and Israel Kirzner. The third wave was my generation. We came together
at a meeting held in South Royalton, Vermont, in 1974.
At the meeting
in Vermont, the division became visible. It was a division between
Rothbard, who attended the meeting, and a member of the first generation,
Ludwig Lachmann, a somewhat obscure economics professor from South
Africa. He had written a few articles in the 1930s and 40s, but
he had never written a book of significance. He was a believer in
almost total economic chaos as the basis of economic theory. I am
not exaggerating. He called this kaleidic perception. His example
of economic entrepreneurship was based on a kaleidoscope, which
children look through, turn the base, and see ever-changing but
meaningless patterns. He really did believe that this is the basis
of entrepreneurship. He was also the worst lecturer I ever heard,
and I have heard many terrible lecturers.
that economic theory should be based on a series of axioms and corollaries.
This was the original view of Mises. Rothbard was faithful to this
position. He believed in economic rationality as the basis of comprehension
of real-world actions. He then applied Mises's comprehensive theory
of human action to the economy and politics. He did not believe
that you could use economic facts to refute theory, but he surely
believed that you could use economic facts to illustrate theory
in action. That made him unique in the camp of the followers of
Mises, because he was relentless in his application of Mises's categories
of human action with respect to politics, academia, foreign-policy,
wars, and the work of conspiracies to gain control of political
power in order to further their ends. Therefore, he believed in
academia, a conspiracy theory has much the same effect that a crucifix
had on Bela Lugosi's Dracula.
Rothbard's commitment to the application of Mises's theory to virtually
every area of modern politics, he has earned the respect of intelligent
people who are outside of academia, and who see through the delusions
of both grandeur and independence that tend to afflict those who
are inside academia. In contrast, those Lachmannian followers of
Mises who are inside academia, and who gain their sense of importance
from their peers in academia, regard Rothbard as the turd in the
punch bowl. If Rothbard was right, then almost everything they are
doing is either irrelevant or worse.
also on the faculties of tax-funded schools, but he never derived
any ideological support from those schools. He never gained any
credence within the academic community. Well, that may be too much
to say. His original book, The Panic of 1819, which was rhetorically
restrained, unlike everything else he ever wrote, because it was
a doctoral dissertation. It did receive favorable reviews. That
was the last time anything he wrote received favorable reviews in
academic publications. The reviewers in 1963 did not know who he
was, and they did not know what he stood for. As soon as America's
Great Depression was released, that was the end of his academic
openly a supporter of conspiracy views of history. He believed that
rich people and powerful people get together quietly, and deliberately
plot ways of capturing political power in order to further their
ends. They use political power, precisely because they cannot compete
effectively in the free market. They need the state to interfere
with free market competition, so as to protect their positions.
also completely hostile to every form of fractional reserve banking.
He believed that it is a form of theft. By inserting this moral
element into the discussion of central banking, and even fractional
reserve banking, Rothbard horrified academics in general. It was
inconceivable to them that anybody would raise a moral issue with
respect to the operation of a supposedly neutral, technocratic institution
like a central bank. In their view, his argument that the Federal
Reserve System was the product of an elitist political conspiracy
whose goal was to steal from the public falls just short of blaming
the international Jewish bankers' conspiracy. They were not going
to put up with anything like this.
To the extent
that Rothbard was considered a spokesman for the Austrian School
of economics, the Austrian School economists who were on the payroll
of the American academic Establishment desperately wanted to separate
him from themselves. If it was suspected by the academic community
that somebody like Rothbard represented the Austrian School, they
might not be able to get their articles published in third-tier
academic journals any longer.
Not one of
them ever got onto the faculty of a top-tier university, meaning
an Ivy League school or similar institution. To get into one of
these schools, you must privately renounce your commitment to Mises.
That was set as unofficial policy of economics departments in the
late 1940s and 1950s. The two main figures who got into high-level
positions, Fritz Machlup and Gottfried Haberler, had both abandoned
their early commitment to Austrian School economics. That was the
quid pro quo. They paid it. In the United Kingdom, Lionel Robbins
got into the London School Economics in the 1930s, as did Hayek,
but after Keynes' revolution, he publicly renounced his book, The
Great Depression, which was explicitly written in terms
of Austrian economic principles. Hayek was blackballed by the economics
department at Chicago. He did not meet their ever so rigorous, ever
so neutral academic standards. He taught for free in the obscure
Committee on Social Thought. His salary was paid for by the Volker
This is how
the academic game is played at the top, and the Lachmannians know
it. They must seek tenure in lower-tier schools. But the money is
good, so they play along. They may occasionally mention Mises in
their footnotes, but they rarely invoke Mises's original writings
in defending their positions. They do not cite him as authoritative.
They come with new approaches approaches that are more methodologically
acceptable, or at least aesthetically acceptable, to the Keynesian
editors of third-tier academic journals. They either ignore Rothbard
or else dismiss him. They do not cite his writings.
They have this
in common: almost no one has heard of any of them. Inside
Keynesian academia, they are barely known. Inside free market academic
economics, which is dominated by Chicago School economists, they
may be patted on the head and invited to serve on a panel at an
academic conference. They are allowed to say a few words in response
to the main speaker at one of the less significant sessions. But
they remain invisible to their peers most of the time.
annoys them. What annoys them even more is the fact that the Mises
Institute and LewRockwell.com are Rothbardian. These two sites are
highly ranked on the various website-ranking sites. These sites
get enormous traffic. The Austrian School is known to the general
public only through Rothbard-influenced sites.
School professors at third-tier schools have no influence inside
the academic economics guild, and they are unknown outside academia.
They believe that Lachmann was the true Misesian, yet almost no
one has heard of Lachmann. If it were not for the fact that a few
non-kaleidic books are available for free in the Mises Institute's
Literature section, no one outside of academia would have heard
of him. These professors have labored in the shadows to the
extent that college professors labor all of their academic
lives, and they have little to show for it. Rothbard gets the main
credit for extending Mises to the third generation, and through
the third generation to those that followed.
the rest of the article
North [send him mail]
is the author of Mises
on Money. Visit http://www.garynorth.com.
He is also the author of a free 31-volume series, An
Economic Commentary on the Bible.
2013 Gary North
Best of Gary North