Neoliberalism: Making a Boogeyman Out of a Buzzword by Max Borders

After stopped being interesting, they needed a way to drive traffic. Competition for eyeballs is tough, after all. In the dog-eat-dog world of attracting eyeballs, you’ve got to find clever ways to pull in new readers.

One way to drive traffic is to poke people you know disagree with you. And by poking, I mean turning them into a Voodoo Doll.

This variation on beating up a Straw Man has the benefit of the Internet’s sharing magic. That is, if you pick on some group they will feel it. Then they will turn around and express their outrage by sharing your stuff! Voila: instant Internet gold.

In making Voodoo Dolls, you don’t always have to pick on a specific person. You can go for a worldview. Salon has given libertarianism a lot of flak, of course. But now they’re going for an even bigger boogeyman, because the idea is to paint as many people as you can with the same tarbrush.

What better place to go for a big, sweeping label than the academy?

Here’s UC-Berkeley political science professor Wendy Brown talking “neoliberalism” in a Salon interview.

And how do you define neoliberalism? It’s not uncommon for me to experience people I’d consider neoliberals telling me the term is meaningless.

I think most Salon readers would know neoliberalism as that radical free-marketeering that comes to us in the ‘70s and ‘80s, with the Reagan-Thatcher revolution being the real marker of that turn in Euro-Atlantic world. It means the dismantling of publicly owned industry and deregulation of capital, especially finance capital; the elimination of public provisions and the idea of public goods; and the most basic submission of everything to markets and to unregulated markets.

So free enterprise is its clarion call, and even though it requires a lot of state intervention and state support, the idea that goes with it is usually also minimal state intervention in markets. Even if states are needed to prop or support or sometimes bail out markets, they shouldn’t get into the middle of them and redistribute [wealth]. That’s all true. That’s certainly part of what neoliberalism is.

Okay, let’s see if we can make heads or tails of this magician’s patter.

Start with Professor Brown’s concern that people have criticized the term neoliberalism as being meaningless. This doctrine, Brown says, “requires a lot of state intervention and state support, the idea that goes with it is usually also minimal state intervention in markets.”

Huh? If neoliberalism isn’t exactly libertarianism or anarcho-capitalism — because these doctrines certainly do not include or require state intervention and support of markets — then we might say she’s talking about cronyism. And certainly if someone were to build a doctrine around cronyism, that would not be meaningless.

It turns out such a doctrine does exist. But it’s not neoliberalism; it’s corporatism — and it’s a progressivist ideology.

According to Nobel laureate Edmund S. Phelps, quoted in the Freeman:

The managerial state has assumed responsibility for looking after everything from the incomes of the middle class to the profitability of large corporations to industrial advancement. This system . . . is . . . an economic order that harks back to Bismarck in the late nineteenth century and Mussolini in the twentieth: corporatism.

Phelps says,

In various ways, corporatism chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusiveness. It maintains lethargic, wasteful, unproductive, and well-connected firms at the expense of dynamic newcomers and outsiders, and favors declared goals such as industrialization, economic development, and national greatness over individuals’ economic freedom and responsibility.

Today, airlines, auto manufacturers, agricultural companies, media, investment banks, hedge funds, and much more has [sic] at some point been deemed too important to weather the free market on its own, receiving a helping hand from government in the name of the “public good.”

But where does this idea come from? Contra Brown, it’s not from the “free marketeers”. Economist Thayer Watkins says:

In the last half of the 19th century people of the working class in Europe were beginning to show interest in the ideas of socialism and syndicalism. Some members of the intelligentsia, particularly the Catholic intelligentsia, decided to formulate an alternative to socialism which would emphasize social justice without the radical solution of the abolition of private property.

The result was called Corporatism. The name had nothing to do with the notion of a business corporation except that both words are derived from the Latin word for body, corpus.

To be fair, Brown might protest, arguing that she would subsidize, cartelize, and manage the right industries, such as finance. At least she laments the liberalization of these industries, citing Thatcher as an example of neoliberal excess, despite what a basket case Britain had been under prior governments.

So which industries would she leave private and which “require a lot of state intervention”? And what sort of magic makes any such scheme immune to rent-seeking and capture?

It appears state support of business originated among certain less-communist advocates of social justice. But surely this is not something the more moderate progressives had in mind.

After all, says Brown, “What’s more, if those of us who oppose neoliberalism misinterpret it as simply another word for capitalism, we make the job of fighting it even more difficult. Franklin Delano Roosevelt was a capitalist, after all. But a neoliberal, he most certainly was not.”

Libertarian philosopher Jason Brennan says it’s time to point fingers and name names. In a rare polemic called “Dear Left: Corporatism is Your Fault” he writes,

America is suffering from rampant, run-away corporatism and crony capitalism. We are increasingly a plutocracy in which government serves the interests of elite financiers and CEOs at the expense of everyone else.

You know this and you complain loudly about it. But the problem is your fault. You caused this state of affairs. Stop it.

But the moderate left didn’t want radical socialism. They just wanted regulatory agencies to rein in the excesses of the market. They wanted the government to subsidize or own areas that ought to be considered public goods, like healthcare, transportation, education, and the environment. But good intentions are not enough, writes Brennan.

We told you this would happen, but you wouldn’t listen. You complain, rightly, that regulatory agencies are controlled by the very corporations they are supposed to constrain. Well, yeah, we told you that would happen. When you create power—and you people love to create power—the unscrupulous seek to capture that power for their personal benefit. Time and time again, they succeed. We told you that would happen, and we gave you an accurate account of how it would happen.

You complain, perhaps rightly, that corporations are just too big. Well, yeah, we told you that would happen. When you create complicated tax codes, complicated regulatory regimes, and complicated licensing rules, these regulations naturally select for larger and larger corporations. We told you that would happen. Of course, these increasingly large corporations then capture these rules, codes, and regulations to disadvantage their competitors and exploit the rest of us. We told you that would happen.

Brennan was probably a little upset when he wrote this, but fairly so. People like Wendy Brown have been trying to emblazon corporatism on the tunics of free marketeers and liberalizers for a while now. And they’re generally pontificating from the academy, rather than from the brothels of K St. in Washington, or Venezuela’s Ministry of Planning and Finance.

No one who calls herself a political science professor should have earned her letters without having read public choice theory. No, it’s time to admit that all progressive attempts to stitch together old scraps of socialism with markets will create perverse effects and corruption of one form or another.

Maybe Prof. Brown is okay with “corporatizing” some industries while leaving others in private hands, a la FDR. Hers seems to be an attempt to synthesize the heart of Marx with the will of the people. She says:

“Demos kratia” — “people rule” — is really the term that, however differently it’s been interpreted over different variations of democracy and different centuries, is one that we all cherish on some level. Demos is important because it’s the body, it’s the people, that we imagine are in control of the basic conditions and laws that govern our lives.

Ah, yes “the body,” the corpus. Haven’t we heard that one before? We’re supposed to cherish democracy, because, well, it’s as American as apple pie. Any more reflection would require admitting that the “demos” disagrees about stuff. And that’s a slippery slope to individualism and recognizing the need for tolerance and personal autonomy. This is the fact of pluralism that even the liberal philosopher John Rawls starts with.

Whenever you hear the world neoliberalism, be wary. It could be completely meaningless filler, but it’s always as squishy as silly putty. It’s a label that’s designed to demonize those who would never support it — a word to be accompanied by a sneer. It is a means of defining oneself as against something — preferably a nice soft Straw Man — rather than doing the hard business of coming out ideologically and defending your ideas.

When you realize that accepting degrees of state intervention is a problem of degree and not of kind, it becomes clear the Wendy Browns have nowhere to run but to nebulous concepts like “demos.” That is because between corporatism and communism there is no magical third way, only shades of state coercion, justified by a flimsy majoritarian facade. The choice between nationalized or regulated industries is binary, so the ideological choice set is really only between communism and corporatism. But communism screwed things up. Corporatism screws things up. All the variations screw things up because each permutation involves power and business forming unholy alliances.

People like Wendy Brown and her Salon interviewer Elias Isquith aren’t stupid. And like most people, they have good intentions. They are committed to a particular theory of angels. Demos, that golden calf, is the tired old notion that if we could just blur the peculiarities, individuality, and desires of 300 million people into a single prayer and send it up through the voting booth, what will come out the other side — in Washington, D.C. — is a kind of secular salvation. But this sort of thinking turns on hypostatization, that timeless fallacy of ambiguity that seduces people into collectivism.

We have to look them squarely in the face and say: “You caused this state of affairs. Stop it.”

Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also co-founder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

The New Republic: The Dumb Libertarian Era Is Here by Max Borders

As civilized human beings, we are the inheritors, neither of an inquiry about ourselves and the world, nor of an accumulating body of information, but of a conversation, begun in the primeval forests and extended and made more articulate in the course of centuries. It is a conversation which goes on both in public and within each of ourselves. – Michael Oakeshott

What do academics see when they stare down upon the rest of America? Columbia’s Mark Lilla, at least, thinks he sees a “libertarian age.”

Writing in the New Republic, Lilla wraps his punchline in a shroud of obscurity, concluding,

The libertarian age is an illegible age. It has given birth to a new kind of hubris unlike that of the old master thinkers.

Our hubris is to think that we no longer have to think hard or pay attention or look for connections, that all we have to do is stick to our “democratic values” and economic models and faith in the individual and all will be well.

Having witnessed unpleasant scenes of intellectual drunkenness, we have become self-satisfied abstainers removed from history and unprepared for the challenges it is already bringing.

Lilla suggests the old master thinkers knew better how to understand the great arc of history because they had an ideology. But we don’t.

“Our libertarianism operates differently,” writes Lilla, “it is supremely dogmatic, and like every dogma it sanctions ignorance about the world, and therefore blinds adherents to its effects in that world. It begins with basic liberal principles — the sanctity of the individual, the priority of freedom, distrust of public authority, tolerance — and advances no further.”

Now that’s strange. The normal line is that libertarians are too ideological. Of course it’s true that a form of libertarianism that advances no further than a few platitudes or axioms would be an anemic sort of libertarianism.

But the point of libertarianism is not to fill our lives with specific virtues and values; rather, it is to provide a superstructure for various moral communities to coexist peacefully.

A Libertarian Age?

Even if one agrees a libertarian age is upon us, the cock has only just crowed. According to Lilla, though, because this age is not rooted in an ideology, it is marked by an errant attitude that somehow washed over us after the fall of communism in place of all ideology. If that’s the case, why call it “libertarian”?

To describe this age as Lilla does is to fundamentally misunderstand the wordlibertarian, or at least to use it haphazardly as a convenient, if denigrating label. To misunderstand the word is also a failure to appreciate a living tradition that is only now beginning to flower in the digital era.

When I think about that rich, expanding tradition, I think of economic historian Deirdre McCloskey. She offers the kinds of connections Lilla might like to see, especially in her excellent The Bourgeois Virtues. I doubt, however, those connections are the ones Lilla would like us to draw.

Here’s McCloskey choosing not to abstain:

The master narrative of High Liberalism [modern, left-liberalism] is mistaken factually.

Externalities do not imply that a government can do better. Publicity does better than inspectors in restraining the alleged desire of businesspeople to poison their customers. Efficiency is not the chief merit of a market economy: innovation is. Rules arose in merchant courts and Quakers fixed prices long before governments started enforcing them.

I know such replies will be met with indignation. But think it possible you may be mistaken, and that merely because an historical or economic premise is embedded in front page stories in the New York Times [or The New Republic] does not make them sound as social science.

It seems to me that a political philosophy based on fairy tales about what happened in history or what humans are like is going to be less than useless. It is going to be mischievous.

It’s true. There is no ideology here, just the sum of facts.

A Narrative, an Ideology

But Lilla thinks he has a different and better narrative about history — one that is not so devoid of ideology. It’s difficult to say what that narrative is, because Lilla is so vague in his critique — so much so that one wonders if he’s simply dissatisfied with the want of ideology and hopes to put a sticker on it. He reaches for a sticker. “Libertarian” will do.

The closest we get to any proposed counternarrative comes in who Lilla would award for attempting to fix the Middle East: “The next Nobel Peace Prize should not go to a human rights activist or an NGO founder. It should go to the thinker or leader who develops a model of constitutional theocracy giving Muslim countries a coherent way of recognizing yet limiting the authority of religious law and making it compatible with good governance.”

Notice he did not say a working model, nor a successfully implemented model. Just a model. Despite the nod to a people’s history and culture, he wants to see more intellectuals with models.

Political philosopher Michael Oakeshott once said, “Like Midas, the Rationalist is always in the unfortunate position of not being able to touch anything, without transforming it into an abstraction; he can never get a square meal of experience.”

But that’s just the problem with models and planning, says Deirdre McCloskey:

How do I know that my narrative is better than yours? The experiments of the 20th century told me so. It would have been hard to know the wisdom of Friedrich Hayek or Milton Friedman or Matt Ridley or Deirdre McCloskey in August of 1914, before the experiments in large government were well begun.

But anyone who after the 20th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labor unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.

Or perhaps they’re failing to “look for connections.”

No Good Reason

But there’s more. Lilla writes:

Libertarianism’s dogmatic simplicity explains why people who otherwise share little can subscribe to it: small-government fundamentalists on the American right, anarchists on the European and Latin American left, democratization prophets, civil liberties absolutists, human rights crusaders, neoliberal growth evangelists, rogue hackers, gun fanatics, porn manufacturers, and Chicago School economists the world over.

The dogma that unites them is implicit and does not require explication; it is a mentality, a mood, a presumption — what used to be called, non-pejoratively, a prejudice.

Got that? A mood. A dogma. A prejudice.

Let’s assume that we all agree about what the words dogma and prejudice mean. A dogma is not an ideology because it offers no reasons for anyone’s commitments. A prejudice is simply a disposition to believe something, perhaps also for no good reason at all.

That means libertarians have no good reason to be suspicious of power (such as police power excesses in Baltimore or Ferguson), no good reason to commit to smaller government (like bank bailouts or military adventurism), no reason to believe that open trade helps the world develop (despite all the evidence), no reason to protect expression, no reason to acknowledge the social benefits of emergent order, and no reason to create a digital currency (Argentine inflation is fine).

Voluntary cooperation or the free flow of ideas, people, capital, and goods? These are all just byproducts of our dumb post-ideological age. Why? Because, according to Lilla, libertarianism is just a dogma.

To understand history through the lens of people with power screwing things up more than helping is not an abstention, and it is not illegible. The relationship between people with coercive power and the rest is our historical-ideological filter, and that’s just for starters.

Rational Irrationality

Lilla’s mischief does not just extend to history. That failure to understand libertarianism hangs about his thesis, too.

For example, a libertarian does not admire “democratic values,” as Lilla suggests. These are the values of those who would trade in the one-headed master with the many-headed one. Libertarians don’t find much value in masters at all.

Majoritarian elections don’t harness the wisdom of crowds, as Bryan Caplan reminds us in The Myth of the Rational VoterSuch wisdom can only be gained by people who are more directly accountable for their actions, who have more skin in the game, or who feel the invisible threads of community animating them in common missions. That’s not electoral politics, though.

Voters, as such, are hopelessly biased, because they don’t pay directly for what they pray for in the voting booth. So yeah, democracy is overrated. It’s certainly not something most libertarians wish to export or impose on people with twelfth-century cultures and mores. Nor is it is a twenty-first century social operating system for a free people.

Libertarians prefer organizations, markets, and community groups that compete for mindshare and marketshare. But organizations, markets, and community groups only emerge in the fertile soil of free institutions. That’s why libertarians like voluntary systems with rule of law, porous borders, and rights of exit.

Individuals coordinate either in support of organizational goals, or they participate in an order no individual could have planned. Both forms of order are beautiful — at least to the libertarian. But we certainly don’t expect to find such orders everywhere.

The Problem of Power

What about acquiescence to “public authority”? Yes, we are skeptical. And it’s true we are more interested in shedding authority, because power interferes with people’s life projects and communities. We don’t have this skepticism due to habit or breeding. We have it because we want to live the kind of happy and fulfilled lives that comes in a decentralized discovery process, which doesn’t figure into any planner’s plans. Yet planners are constantly trying to plan despite those life projects. You might say we’re not living in a “libertarian age,” but in a regulated age.

But Lilla insists our libertarian age is one marked by people failing to “think hard, or pay attention, or look for connections.” This is the sort of thing that might make progressives in the New York salon nod in vigorous assent, but it’s the nodding of those who have no idea what they’re talking about, the affectations and social signals of the salon.

The libertarian worldview is not based on technocratic dreams, government largess, or “communitarian” fancies in which elites concoct statutory schemes to blanket the land with unitary control. If this were really in a libertarian age, we would not be arguing over whether or not we are “self-satisfied abstainers.”

We would have a lot more opt-in systems — not everywhere, but in enough places, including the U.S. We would be a nation of joiners again. We could, as Paul Emile de Puydt suggested, “move from republic to monarchy, from representative government to autocracy, from oligarchy to democracy, or even to Mr. Proudhon’s anarchy — without even the necessity of removing [our] dressing gown or slippers.”

But this is not the age we live in.

The Coming Libertarian Age

The coming libertarian age will be marked not by a failure to think about the meaning of history. It will be marked by people participating in the creation of new communities, governance structures, businesses, and networks — building them up like coral reefs.

“Everyday forms of resistance make no headlines,” says James C. Scott in Two Cheers for Anarchism.

Just as millions of anthozoan polyps create, willy-nilly, a coral reef, so do thousands upon thousands of individual acts of insubordination and evasion create a political or economic barrier reef of their own. There is rarely any dramatic confrontation, any moment that is particularly newsworthy.

And whenever, to pursue the simile, the ship of state runs aground on such a reef, attention is typically directed to the shipwreck itself and not to the vast aggregation of petty acts which made it possible

If there is anything to terrify Lilla and the New Republic, it is that libertarian age. Technocracy runs aground on the coral reefs of genuine connection and decentralized market participation.

So in order to critique this “new kind of hubris,” Lilla should really tell us more about the hubris of the old master thinkers. I recall the organized-perfection society of Plato, whose order would be planned based on some, well, Platonic ideal about the virtuous person who would rule. Perhaps Lilla is referring to master thinkers like Bentham, who reduced humanity to an aggregate of hedonic calculation machines, which has given rise to an entire field of mathematical macroeconomics that lobotomizes the individual and ignores real people. Then there is of course Karl Marx, whose ideology left scores of millions destitute or dead.

Lilla cautions us not to ignore Marx’s concerns, even though the Marxists themselves left scorched earth. We still need ideology, he thinks:

The end of the cold war destroyed whatever confidence in ideology still remained in the West. But it also seems to have destroyed our will to understand. We have abdicated. The libertarian dogma of our time is turning our polities, economies, and cultures upside down—and blinding us to this by making us even more self-absorbed and incurious than we naturally are. The world we are making with our hands is as remote from our minds as the farthest black hole. Once we had a nostalgia for the future. Today we have an amnesia for the present.

Destroyed our will to understand? Libertarian dogma means “turning our polities upside down”? Making us self-absorbed? What in the world is he talking about?

Is he referring to those self-absorbed and benighted souls who brought down the Berlin Wall? Or is he simply disturbed that all they could find to do after communism’s fall was start shops and buy heavy metal albums? Maybe it’s their children — the millennials with their texting and their selfies.

He doesn’t really say. He only seems to suggest we need more Isaiah Berlins. Fair enough. At least give us something we can sink our teeth into. In conflating democracy with libertarianism, perhaps Lilla thinks voters are in fact too dumb to rule and that a wise, though considerably less hubristic, elite could show us the way if we weren’t so distracted by modern amusements.

But apart from evoking the bugbear of “neoliberalism” and praying for a theocratic modeler for the Middle East he’s scant on details. Instead, all he can offer is that we have “amnesia for the present.”

Sounds deep: chicken soup for the progressive soul. To show that we’re in a vapid libertarian age, Mr. Lilla needs to cite evidence and name names. Otherwise, it’s just the same innuendo and intimation we’ve come to expect from those prepared to spin out caricatures or just-so stories to slap the L-word on them.

In the Mood

So, Dear Reader, take with you your dogmas and your prejudices and make this world freer one act of defiance at a time. Why not? Because it’s fun — just a mood — and we have the excuse of living in that insipid age.

Your dream community, your world-changing innovation, or your preferred causes have no relevance there in the Department of History at Columbia University. Participate then in the creation of your self-absorbed fantasies with a thousand acts of permissionless kindness, a thousand dollars of investment in a small business, or a thousand lines of code.

What will flow from your dogmas and your prejudices is a great coral reef — one that is created by you and others locking arms in solidarity around a thousand different causes. And may the ship of state run aground on it.

Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also cofounder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

In Defense of Private Property: Mises and Aristotle by Jeffrey A. Tucker

I’ve just reacquainted myself with two seminal texts: Aristotle’s Politics and Ludwig von Mises’s Socialism. Though written nearly two and a half millennia apart, it’s remarkable how these two gigantically important treatises parallel each other.

They both come to the defense of property and realistic forms of political order in the face of all kinds of dreamers, fanatics, and would-be dictators. A central contribution of each book is to defend the institution of private property against its enemies, who, both Aristotle and Mises knew, would smash all that is wonderful about life.

They took different pathways toward the same goal. Aristotle focused on what makes people happy and permits the realization of the virtuous life. But he had very little conception of economics, and his theory of property was problematic, to say the least. Mises, on the other hand, focused on economic science, and presented a far more coherent vision of property, freedom, and economic growth.

Even so, they cover the same basic territory. What kind of social and political order is most conducive to human flourishing, and what is the role of private property and private life in this order?

Aristotle spoke of the impossibility of the realization of self under common ownership.

“In a state having women and children common, love will be watery; and the father will certainly not say ‘my son,’ or the son ‘my father.’ As a little sweet wine mingled with a great deal of water is imperceptible in the mixture, so, in this sort of community, the idea of relationship which is based upon these names will be lost; there is no reason why the so-called father should care about the son, or the son about the father, or brothers about one another. ”

The absence of ownership, then, leads to the disregard of one’s own life and the life of others. “How immeasurably greater is the pleasure, when a man feels a thing to be his own,” Aristotle writes, “for the love of self is a feeling implanted by nature and not given in vain…”

Everything is at stake: benevolence, gifting, appreciation, and even love. “There is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property,” writes Aristotle. “The advantage is lost by the excessive unification of the state.”

These are hugely profound insights. To be sure, Aristotle’s conception of private property is seriously marred by his defense of slavery, and he is reluctant to admit women into the realm of citizens who deserve what we call rights today. To read this material, one must always keep in mind how lost the contributions of the Enlightenment truly were on the ancient philosophers. They knew nothing of universal rights, freedom of speech, and freedom of religion. Still, given that proviso, we can see Aristotle working his way toward a coherent theory of the social order.

He goes further to condemn looting of property through the political system. “If the poor, for example, because they are more in number, divide among themselves the property of the rich, is not this unjust? … if this is not injustice, pray what is?” The reverse is also true, he wrote. It would be unjust for the rich to use their power and wealth to pillage the poor.

Aristotle repeats his injunction and summarizes: “I do not think that property ought to be common, as some maintain, but only that by friendly consent there should be a common use of it; and that no citizen should be in want of subsistence.”

Mises took this whole analysis much further. The first third of Socialism presents a complete theory of social order and the place of property within it. He treats property not as an ethic or plan from the top but as a technology, something created out of social consensus and made necessary by the existing of material privation.

The extension of the division of labor provides more opportunities for growing wealth, and, eventually the creation of money, which is the key to rational economic calculation in a modern economy. Without private property in capital goods, writes Mises, there is no hope for making sense of the main material challenges society faces.

We know about the opponents of Mises’s views. He was surrounded by an academic class of philosophers and economists who were generally sympathetic to the ideals of socialism. “Socialism is the watchword and catchword of our day,” he wrote. “The socialist idea dominates the modern spirit. The masses approve it. It expresses the thoughts and feelings of all; it has set its seal upon our time.”

Later in the book, Mises addresses prevailing religious ideas at the time, which had turned decisively to favor the socialist idea. He took them apart, one by one, showing that most of the religious thinkers of his day had no conception of the practical need for a thriving society to have modern economic institutions rooted in private property ownership.

Mises takes his argument further to point out that the end of property really is the end of freedom. Every would-be tyrant excoriates private property, not because communism would be great for the people but because private ownership is a barrier to the tyrant’s power and control. In its absence, power rules and there is nothing like freedom. Without private property, there can be no free press, freedom of religion, or freedom of association.

The parallels with Aristotle’s book are uncanny. I’m trying to think of the problems Aristotle faced in the 4th century, BC. There was the epic influence of Plato and his many pupils. Plato wrote, whether ironically or not, in favor of a communist utopia with no property, no families, no ownership, no private life, and he found this to be the only society that is consistent with justice and social harmony.

Aristotle took on Plato, who was representative of the first group of enemies of property in all times: the highly educated philosophy elite. So it ever was and ever shall be.

In addition, in Aristotle’s time, there was an official religion that was stable and reliable and he urged people to be faithful to it. It served the ruling class but it was not utterly insane. But the world must have been populated with self-proclaimed prophets everywhere, people serious about jazzing up the population with some frenzied dream. Always and everywhere this seems to have included the socialist idea. If we could just throw all things into the commons, all human division would disappear and utopia would appear!

This group, the mystics and spiritual dreamers, then, was the second group of enemies of property. Then and now.

But there was still another dangerous force in the land: would-be tyrants. They lie to people. They come to power through promises of democracy. They use the destabilization of revolution to displace one government and push a much worse one. Despots resent the private life of the people that ownership makes possible. They proclaim the wonders of common ownership, but the result of their visions is always the same: more power to the dictators.

We really do face a choice. We suffer under the tyrant’s boot or we uphold the sanctity of private ownership. Aristotle discerned this in the 4th century, BC. Mises drove the point home with his marvelous book of 1922. They lived in radically different times and spoke from a different perspective. But their concern was the same. Ownership and freedom are inseparable ideals, both in their times and in ours.

Jeffrey A. Tucker

Jeffrey Tucker is Director of Digital Development at FEE, CLO of the startup, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.

Is the “Austrian School” a Lie?

Is Austrian economics an American invention? by STEVEN HORWITZ and B.K. MARCUS.

Do those of us who use the word Austrian in its modern libertarian context misrepresent an intellectual tradition?

We trace our roots back through the 20th century’s F.A. Hayek and Ludwig von Mises (both served as advisors to FEE) to Carl Menger in late 19th-century Vienna, and even further back to such “proto-Austrians” as Frédéric Bastiat and Jean-Baptiste Say in the earlier 19th century and Richard Cantillon in the 18th. Sometimes we trace our heritage all the way back to the late-Scholastic School of Salamanca.

Nonsense, says Janek Wasserman in his article “Austrian Economics: Made in the USA”:

“Austrian Economics, as it is commonly understood today,” Wasserman claims, “was born seventy years ago this month.”

As his title implies, Wasserman is not talking about the publication of Principles of Economics by Carl Menger, the founder of the Austrian school. That occurred 144 years ago in Vienna. What happened 70 years ago in the United States was the publication of F.A. Hayek‘s Road to Serfdom.

What about everything that took place — most of it in Austria — in the 74 years before Hayek’s most famous book? According to Wasserman, the Austrian period of “Austrian Economics” produced a “robust intellectual heritage,” but the largely American period that followed was merely a “dogmatic political program,” one that “does a disservice to the eclectic intellectual history” of the true Austrian school.

Where modern Austrianism is “associated with laissez-faire economics and libertarianism,” the real representatives of the more politically diverse tradition — economists from the University of Vienna, such as Fritz Machlup, Joseph Schumpeter, and Oskar Morgenstern — were embarrassed by their association with Hayek’s bestseller and its capitalistic supporters.

These “native-born Austrians ceased to be ‘Austrian,'” writes Wasserman, “when Mises and a simplified Hayek captured the imagination of a small group of businessmen and radicals in the US.”

Wasserman describes the popular reception of the as “the birth of a movement — and the reduction of a tradition.”

Are we guilty of Wasserman’s charges? Do modern Austrians misunderstand our own tradition, or worse yet, misrepresent our history?

In fact, Wasserman himself is guilty of a profound misunderstanding of the Austrian label, as well as the tradition it refers to.

The “Austrian school” is not a name our school of thought took for itself. Rather it was an insult hurled against Carl Menger and his followers by the adherents of the dominant German Historical School.

The Methodenstreit was a more-than-decade-long debate in the late 19th century among German-speaking social scientists about the status of economic laws. The Germans advocated methodological collectivism, espoused the efficacy of government intervention to improve the economy, and, according Jörg Guido Hülsmann, “rejected economic ‘theory’ altogether.”

The Mengerians, in contrast, argued for methodological individualism and the scientific validity of economic law. The collectivist Germans labeled their opponents the “Austrian school” as a put-down. It was like calling Menger and company the “backwater school” of economic thought.

“Austrian,” in our context, is a reclaimed word.

But more important, modern Austrian economics is not the dogmatic ideology that Wasserman describes. In his blog post, he provides no actual information about the work being done by the dozens of active Austrian economists in academia, with tenured positions at colleges and universities whose names are recognizable.

He tells his readers nothing about the  books they have produced that have been published by top university presses. He does not mention that they have published in top peer-reviewed journals in the economics discipline, as well as in philosophy and political science, or that the Society for the Development of Austrian Economics consistently packs meeting rooms at the Southern Economic Association meetings.

Have all of these university presses, top journals, and long-standing professional societies, not to mention tenure committees at dozens of universities, simply lost their collective minds and allowed themselves to be snookered by an ideological sleeper cell?

Or perhaps in his zeal to score ideological points of his own, Wasserman chose to take his understanding of Austrian economics from those who consume it on the Internet and elsewhere rather than doing the hard work of finding out what professional economists associated with the school are producing. Full of confirmation bias, he found what he “knew” was out there, and he ends up offering a caricature of the robust intellectual movement that is the contemporary version of the school.

The modern Austrian school, which has now returned to the Continent and spread across the globe after decades in America, is not the dogmatic monolith Wasserman contends. The school is alive with both internal debates about its methodology and theoretical propositions and debates about its relationship to the rest of the economics discipline, not to mention the size of the state.

Modern Austrian economists are constantly finding new ideas to mix in with the work of Menger, Böhm-Bawerk, Mises, and Hayek. The most interesting work done by Austrians right now is bringing in insights from Nobelists like James Buchanan, Elinor Ostrom, and Vernon Smith, and letting those marinate with their long-standing intellectual tradition. That is hardly the behavior of a “dogmatic political program,” but is rather a sign of precisely the robust intellectual tradition that has been at the core of Austrian economics from Menger onward.

That said, Wasserman is right to suggest that economic science is not the same thing as political philosophy — and it’s true that many self-described Austrians aren’t always careful to communicate the distinction. Again, Wasserman could have seen this point made by more thoughtful Austrians if he had gone to a basic academic source like the Concise Encyclopedia of Economics and read the entry on the Austrian school of economics.

Even a little bit of actual research motivated by actual curiosity about what contemporary professional economists working in the Austrian tradition are doing would have given Wasserman a very different picture of modern Austrian economics. That more accurate picture is one very much consistent with our Viennese predecessors.

To suggest that we do a disservice to our tradition — or worse, that we have appropriated a history that doesn’t belong to us — is to malign not just modern Austrians but also the Austrian-born antecedents within our tradition.

Steven Horwitz

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University and the author of Microfoundations and Macroeconomics: An Austrian Perspective, now in paperback.

B.K. Marcus

B.K. Marcus is managing editor of the Freeman.