The title of the lecture, the revival of the Austrian school, Mises and Rothbard, is slightly inaccurate because what I'm really going to do, I'm going to get to that, but I'm going to finish up more or less from yesterday. So really this is going to talk more about the fall and then the revival of the school. And the reasons for the decline. Let me mention though, before I start the similarities between Mises and Rothbard, some very interesting similarities even though they're two generations apart.
First of all, I consider them the two greatest economists of the 20th century. They're born two generations apart, as I said, and they were world's apart in their cultural background and personal temperament. But as I said, there were important similarities. They were both creative geniuses who constructed a breathtaking system of economic theory.
Both worked in virtual isolation from mainstream academia, during very productive periods of their careers. Rothbard for all of his career and Mises for a very productive period of his career in beginning of the late 1930s were actually beginning after World War II. Thirdly, despite their extraordinary mental abilities, both men displayed tremendous intellectual humility. They didn't seek to build, to reinvent the wheel, to rebuild economics from the ground up.
Their vision was to refine and advance and correct the work of their acknowledged masters. Mises was always acknowledged by Robert as his master, whereas Rothbard always acknowledged Mises as his master. So they worked within an existing paradigm and tremendously advanced that paradigm. And both published comprehensive treaties on economics at crucial points in the history of economic thought that saved the Austrian school from really disappearing into oblivion.
Mises as Preetis in 1969, and Rothbard's Preetis, Maniconing State in 1962. And finally, both were very passionate and intransigent, seekers of truth. It was an article written by Mises's friend on Mises, Jacques Rueff, a liberal economist, member of the Montpellarant Society. And the article was titled, The Intransigence of Laudevon Mises.
They wouldn't take a step back on principle. And Rothbard always talked about compromising on means, but never on ends. And they really never deviated from Karl Menger's original vision of economic phenomena has rooted in the valuations and choices of human action. So that's sort of an introduction to the two men who did save Austrian economics and who are responsible for its rebirth.
Now, let me talk about the decline, the fall and the rebirth of Austrian economics. First, I'll give you what has come to be the standard account. It's not written down anywhere in detail. It was an account I accepted myself up until the late 1990s, when I started rethinking things.
You can find it in bits and pieces throughout Israel Kursner's writing. And recently, Bruce Caldwell's biography on Hayek incorporates this view. It's a view that almost everyone who was in Austria in the 1970s and later accepted pretty much biosmosis. And so I'll call it the Kursner Caldwell account.
Let me just tell the story according to Kursner Caldwell. According to this view, Austrian economics was riding high. It was developing tremendously during the 1920s and 1930s. By the early 1930s, it had offered really the only reasonable explanation for the Great Depression, so that while English-speaking economists were saying that we were going to live through an era of perpetual prosperity, and that the business cycle had effectively been abolished in the 1920s, because the Fed and the Bank of England, mainly the Fed, had stabilized prices, and that, therefore, without an inflation of consumer prices, you could never have an ensuing depression, Irving Fisher, the proto-monetorous and Milton Friedman's inspiration, claimed at the end of the 1920s that this was the era of perpetual prosperity.
And when the Great Depression destroyed what occurred was a lack of any explanation for why it should happen. It took many, many people by surprise, both in academia and in business. So the Washington Business cycle theory, which had been developed by Mises and Hayek during the 1920s, was ready at hand as an explanation. And it quickly spread its influence throughout the continent and to the United States.
So according to the Kursner Caldwell account, the Austrian school was actually flourishing and gaining even more adherence in the 1930s. Then 1936 struck and we had, quote, the Keynesian Avalanche, and the Austrian school disappeared down the memory pole. It was buried by the Keynesian Avalanche. Now one problem with this, and I'll talk about more detail later, is well, that's only macro, okay?
Certainly the quantity theory, which was developing at Chicago by some of Milton Friedman's mentors, including Mince and Henry Simon's, that theory was also buried in 1936. But Chicago, Michael Economics, wasn't buried, in fact, that continued to flourish. All right, so that's, so we have the Keynesian Avalanche explanation of why the Austrian school fell from its level of influence of popularity, okay? So it's up here and suddenly in 1936, you know, it reaches the nadir of its existence.
It's barely alive, okay? And then in this account, there's a big bang theory of its rebirth. Suddenly, someone has a good idea, hey, let's have an Austrian conference in 1974. And if you saw The Natural, the movie The Natural is a great movie, rather, right from baseball.
I know I'm sorry, not The Natural, the movie Field of Dreams, okay, with Kevin Costner, who's not such a great actor, but the movie was decent. In any case, in that movie, you had a phrase, if you build it, they will come. Well, this year, this account can be summed up in the following. If you hold it, they will come.
That is, where did all the 30 participants come from? There was no Austrian school. If the Austrian school was barely alive, there's only, you know, a few people writing who had been meeting his students in the 1950s when he came to America. Where did the 30 graduate students, myself included, and young faculty members in economics, where did they come from?
Why did they suddenly appear in this small Vermont town, just because this conference was being held, okay? No explanation is given. So in 1974, in the summer, there was the South Royal Film Conference, and then in October, Project Hayek received the Nobel Prize for the 1930s, and boom, this is a big bang, and now we have the reborn Austrian school, okay? Well, in a way, because I'm making this previous story brief, I am character-ing, in some extent, what they think, but this is basically the story.
Now, the problem with this story, or the problems with this story are meant. The first is that it really does not give us any idea, or it attributes almost no role to me that's in Hayek in the rebirth, okay, particularly through the books, Human Action, and Maniconomy and State, okay. Human Action is looked on as a book that means it's brought at the end of his productive career in 1949, and yes, it's a very good book, but it's sort of summed up what he had said earlier, and it wasn't very influential. Also, it treats the Austrian school as really a monolithic entity whose members all agreed with one another, okay?
And this wasn't even true at the beginning, as I've shown you. These are in Boberk, disagreed, okay, a very pro-family on basic value and price theory. In more particularly, it ignores two divergent traditions that grew up right to the beginning of the Austrian school, okay, both Boberk and these are war followers of Menger, but they took divergent paths. Beezers had a student, Hans Meyer, who tried to develop his thought in a certain direction and didn't do very well, and then Hayek followed Beezer.
So we had a tradition, which I'll call the general glory of tradition in all street economics, which was Beezer, and also Schumpader was in this tradition. Beezer Schumpader was Mises' cohort, he was in the third generation with Mises, and goes from those two from Beezer and Schumpader to Hayek, who was in the fourth generation. On the other hand, we have the Boberk Mises Rothbard tradition, and Hayek himself, and if you'd read my article on the place of Mises' human action and development of modern economic thought, Hayek himself recognizes the difference in tradition and talks about how Mises developed the Boberk line and he himself and Hans Meyer tried to develop the Beezer line, and that he was very disappointed when he, that the Beezer line didn't develop more, and that he admits that in the United States, the Boberk Mises line or tradition is dominated, okay. It also does not deal with the crucial importance of what I talked about yesterday, an institutional framework based on property and resources.
That is, that a paradigm needs resources to exist and flourish. You can have geniuses like Mises and Rothbard working in isolation without interaction, much interact with other minds, developing systems, but most of us are not geniuses. A Mises and Rothbard come around once a century. Also this leaves out of account Joseph Schumpader, who was treated as if he was just a Volrasion and wasn't really involved much in Wall Street and Economics.
In fact, he was very involved in Wall Street and Economics. Yes, it's true he followed by a rock, but he also followed Beezer, and his books influenced the general equilibrium traditional economics. Finally, it portrays very Rothbard wrongly as becoming, leaving economics sometime in 1970s and becoming a social philosopher and libertarian activist, okay, and ceasing any contributions economic theory or Austrian economics in general, okay, and that's completely wrong, okay. So that is a standard account.
Now what I would call the revisionist account, this agrees that the Austrian school suddenly was buried under the Keynesian abolition in 1936. In fact, I argue, and this account argues that the Austrian school was pretty much dead, at least the Bumbleberg-Manger tradition, by the late 1920s, early 1930s, okay. Let me just mention how this happened. By the late 1980s, there was a tremendous flourishing of work.
Bumbleberg, Beezer, and then many others in Austria began writing works in the tradition of Manger. By the 1890s, the Austrian school had become a worldwide entity, okay, there was a great international influence in U.S., a separate American school grew up, they called themselves the American Psychological School, J.B. Clark, Frank Federer, Herbert J. Davenport, okay, and let me just show you a few pictures of these men.
Okay, this is Clark, who was working along the lines of Manger, but wrote that in fact, one of his main influences was Manger, and he's known as a father of a sort of scientific American economics or marginal utility economics. Here he is with, here's Frank Federer, who taught at Princeton, and was a follower of Bumbleberg, and developed Bumbleberg's time-craft and theory of interest into a pure time-craft and theory, and rooted out some errors that Bumbleberg had in his theory, also was a great rent theorist and wrote a good principles text, which summed up Austrian principles right on the eve of World War I, and his text came out in 1915, and there he is with an older Clark, okay, we consider it to be the leader of the American Psychological School, which was an unfortunate choice, okay, it was really a praxilogical school, it wasn't a psychological school. This is, it's pretty scary looking like a wolf man, but this is Herbert J. Davenport, who wrote a number of important treatises and was a subjective value theorist, wrote a great treatise called, which came out in right around World War I, the meaning of World War I, called the Economics of Enterprise, in which he stressed the entrepreneur and was an American Austrian, part of the American Psychological School.
Unfortunately, as we'll see, this school collapsed because of tremendous personal animosity between the half-important Federer, they continually attacked one another in the journals, not just intellectually, but personally, and they were very close in their thought, okay, so that was unfortunate, because they left no students, they left no followers, and then in England, okay, the school, as I mentioned, Jevins, Lone Fowler, Philip Henry Wixtee, also became Bulma-Virtian, and Mangarian, and Board of Astronautics, Great Britain, and there were a few others, Edwin Cannon and William Smart, and we'll let the evil Alfred Marshall, which we'll talk about, or we'll talk about, okay, so also in the romance countries, in Italy and France, as we saw, we had the liberal school transforming itself into a marginalist liberal school, following Bulma-Bauber, okay, so the Austrian school became global, or became international in the 1890s. Now, what, what, and it really reached the peak of its influence by 1914, okay, there were three great treatises, just in England, just in English, one by Wixtee, one by Davenport, and one by Federer, okay, and they were thorough treatises, setting out or presenting Austrian thought up to that point, okay, in the Mangier-Bauber tradition, okay, what caused the client of the Austrian school? First, let's look at it very briefly at events in Austria. As I mentioned yesterday, Bulma-Bauber went into government service in 1889, after he had finished his three-volume treatise on capital in the interest, and stayed there until 1904, okay, he returned to academia in 1905, and they created a chair for him at the University of Vienna, but he was in ill health, and his creative powers had been, had been withered, okay, just to characterize him.
In other words, he ceased to become really a player in, in Austria and economics at that point when he came back. He couldn't do any, any innovative or creative work. For example, somebody, one person, described him as, to me, seemed older than his years suggested. He was only 54 years old when he came back.
Okay, he himself, two years after he returned academia, described himself as an old man, okay, this is what, all those years in the U.S. government for your office, you can do it. He had tremendous workload, and he also tried to keep up his economics at the same time. Also, Mises had an interesting comment.
He attended Bulma-Bauber's famous seminal in Bulma-Bauber's return, and he observed, quote, he observed, quote, Bulma-Bauber could have produced much more conditions that permitted it, but his physical constitution would no longer stand, could no longer stand the hard work necessary from block upon great works. His nerves were failing him, the two-hour seminar per week already taxed his strength, okay. So, Bulma-Bauber was more or less out of the picture when he returned, okay, in 1905, and then he died prematurely in 1914, okay. In the meantime, Manger retired, okay, Manger really stopped writing theoretical articles in the 1890s.
His book went out of print, he refused to revise it, but, despite the tremendous demand for his book, he refused to revise it, and refused to allow it to be reprinted, okay. It was commanded tremendously, high prices in, in used bookstores that disappeared from the libraries, and yet, it wasn't reprinted until after his death by his son, okay. So, that book wasn't around. They created a chair, or they gave the chair to Visa, okay, Manger shares given to Visa as a main professor at the University of Vienna, who would teach all incoming students economics, okay, because, as I said, Bulma-Bauber comes to the government service at the time.
As I pointed out yesterday, not in too much detail, but Visa did not follow Manger's causal realistic approach to economic theory, trying to find out the causes of real economic phenomena, of real crisis that we observe every day. That was not what Visa did. He gave us a, a huge general equilibrium system, describing how prices would be if everything was pretty much adjusted, okay. That is, how prices would be in a never-land where there's no change in the data and so on, okay.
He didn't use math, and he tried to make it more realistic than the Volrasion mathematical system, but it was still a general equilibrium system. He also published the first treatise, complete treatise on economics in Austria, okay, in 1914, called social economics. Then, in 1903, or 1904, Trumpator enrolled in the University of Vienna, who was a brilliant man, famous economist, and he became Visa students, but he was also a follower of all Ross, though he didn't know much math, okay. He thought about Ross as the greatest economist who had ever lived.
He wrote two books at very young ages, in 1908, he wrote a book on the Nature and Essence of Wolfing Economics, I'm sorry, about economic theory, and then in 1911, he wrote a book on business cycles, a theory of economic development, and that established an international reputation. So, in the third generation, it was Trumpator, who was seen as a star. Mises, who was Bon Bauver's student, also, had only published a book in 1912 on theory one, a great book on theory one, but you've seen as much narrower than Trumpator. Trumpator had produced a book on methodology in the first book on the second work on business cycles.
So, he was seen as, as Trumpator was seen as a system builder, and the star of the third generation. Now, in the fourth generation enrolled, after World War I, that included Hayek, Fritz Machler, Gottfried Habler, Oscar Morgan Stern, and so on. All of these men either went to Great Britain in the 1930s or the United States. Okay, Fritz Machler, Portet, Princeton, and NYU for many years, Gottfried Habler, Portet Harvard for many years, Morgan Stern, also Portet, Princeton, and so on.
Anyway, those people entered the University of Vienna between 1918 and 1921. They studied under Visa. So, their first exposure to economic theory was to this other tradition. Hayek's has many great things about Visa.
He calls it my revered teacher. You can tell that Visa was the main influence on the early Hayek. There's no doubt about that. You can read Hayek on Hayek.
No matter how much the other slide argues that that's not true, who's called well as your person, it is true. Okay, in fact, you were not allowed to join Mises's private seminar until after you had had your degree, which means after you had had had your economics courses at the University of Vienna. Now, it's true that Mises did teach a course at the University of Vienna as a private doze-on, which is someone who is an unpaid lecturer, who the students just give nominal fees to. But Hayek himself says he sat in one day and didn't like Mises's attitude, and so he never completed the course.
Okay. But even if he had, Mises did not lecture on general economic theory. That was Visa's job. Mises, lectures on things that were interesting to him.
Things that he was researching on, such as monetary theory, business cycle theory, and so on. Okay. So, basically, they also, this generation was, because Schumpader had gained an international reputation, they read his books, and it had a lot of influence on them, and he was a very, very pro-vall-rasion, very pro-generally equilibrium. Finally, they did attend Mises's private seminar after they graduated, through the 1920s up to 1934, and Mises left.
But by that time, as I mentioned, they had already become economists. Their views had already been formed by Visa and by reading Schumpader's books. And in the seminar, what they discussed were applied topics and advanced topics. Okay.
Now, it's not to say that Mises did have an effect on them. Mises did have an influence on these people. When they read his socialism, which was published in 1922, most of them were social democrats. And almost all of them became much more liberal in the European classical sense, because of that book, and I point out how influential that book was.
But again, that was a book on one aspect of economics, okay, socialism. So, they were very influenced by Mises's monetary theory and Mises's theory of economic calculation, socialism, and so on. But they were looking at these works through the lens of equilibrium theorists, because of their early training. Okay.
Now, that's one reason for the Austrian school, or at least the Mangerian, Bumba Berkey, in Portland school, dying out. Second reason is, in the rest of the world, they were very factors operating, which I'll go through pretty quickly. Alfred Marshall wrote a very famous, the most famous treatises of the 19th century on economics principles of economics in 1890. By 1910 or so, that book had swept all of England, okay?
So, the few options that were in England were pretty much marginalized or pushed to the side. Which he didn't have an academic position. He also was a preacher and wrote on religion and so on. And so, his treatise was swept aside, okay?
The treatise which he wrote in 1911 was what I forgot about. By 1920, everybody in England was a Marcellian economist, except for one school, the London School of Economics, where Lord Robbins, Lionel Robbins later become Lord Robbins, had read a lot of New German and read a lot of the Austrian literature, was very influenced by the Austrians, was also very influenced by Wicksdee's book, okay? There's one outpost that remained in Great Britain, okay, after the Marcellian dominance. And I'll talk about what happened there in a minute.
In the US, we had the fight between, you know, veteran Davenport. They never really went on to the town of the school, okay? By the 1920s, they were old men. They ceased to contribute to economic theory.
And there was a big gap in economic theory, so what happened? Marcellian economics was important. And the vacuum in economic theory was filled by Frank Towson, who was sort of a Ricardian, Mill, and a Marcellian. They called him Towson, the American Marshal, because his brand of sort of neoclassical combination of some marginal utility in the old classical school, his brand really dominated American economics.
In France, and Italy I mentioned yesterday that the Austrian-Marcell school was eventually replaced by a combination of martial with some German historicism, okay? So, Austrian economics died out in the 1920s throughout the world, okay? Then you had the emigration of Hayek from Austria to the London School of Economics. He was invited there by Lord Robbins, who was the chairman of the department.
And he gave lectures in 1930, lectures which later became published as his great book, The Crisis in Production, which was an advance in Mises' business cycle theory. But what happened was that when he arrived at the London School of Economics, he met a brilliant student of Robbins, John Hicks, who was one of the fathers of sort of modern neoclassical economics. And for whatever reason, he influenced Hicks to reread Bill Frato, who was a follower of all of all of Ross, and who was a mathematical, general equilibrium theorist. In the English-speaking world, there was no mathematical, general equilibrium theory, okay?
There was some in Italy and France and so on. But now, in the 1930s, for the first time, this new theoretical system was introduced, okay? And it was introduced by two high-atts influence, okay? So Hicks read the book and wrote a book called Valium Capital, which came out in 1939.
He was working on it throughout the 30s. It was a very influential book, and what it did was to introduce general equilibrium analysis into the English-speaking world. Now, Robbins, who was an Austrian and who had read Mises and who had read Stregal, who was also a follower of all of the work and others in German, happened to have a personality flaw. In the beginning, he was on the influence of Hayek very strongly, Hayek economics.
By, after Hayek's book came out in general theory in 1936, he quickly changed his mind and became sort of a quasi-Kainzian, okay? And he had written a great book explaining the great depression using the Austrian business cycle theory, simply called the Great Depression. And in his autobiography, written in the 1970s, he apologized for writing that book and said that he couldn't even stand to read it through again, okay? So Hayek, once I heard Hayek speak once, and Hayek said that Robbins was very, very influenced by the strong opinions held by those around him.
So many, since everyone in England was becoming a Keynesian, he became a Keynesian. Well, the same thing was true though, which people don't realize, of his price theory, his microeconomic theory, okay? He was initially a mangerian. If you look at his great book on the nature and significance of economic science, it's really straight menger and early Mises and so on.
The methodology is very practical. But because Hicks began to write this book, and Hicks was a brilliant man, Hayek also was thinking in terms of general equilibrium. Robbins began to forget about his mengerian, Bolberkian roots, and to move to that side of the tradition. And if you look at his reading list for his course in general economic theory, you see this, you know, this is occurring very clearly between 1934 or so in 1938.
So in his 1934-1935 session, his syllabus included under the heading Modern Works in general theory, he had listed treatises by Balbauvar, Wicksnied Fedder, Clark and Davenport, all Austrians, all hardcore Austrians. And he did have alongside that he had a few works of Cassell and Paredo, who were general equilibrium theorists. But the main works were Austrian, Bolberkian works, okay. However, he did write in the notes, he's already, you know, it's already 1934-1935, Hayek's been there for a while, Hicks is thinking in terms of general equilibrium.
He appends a note to a syllabus in which he says, the treatment will be non-mathematical in character. Students who wish to witness the same problems treated mathematically should attend course number 66, Introduction to Mathematical Economics. So evidently by that time, you really saw the two theories as being really different ways of expressing the same concepts, okay. Then, things got even worse in the syllabus in 1939, he moved further away from that getting tradition, he got rid of the general theory heading and he put statics and comparative statics, statics meaning, you know, general equilibrium theory.
And no longer were there listed the great treatises by Clark, Fedder and Davenport, okay, or Balbauvar, okay. He kept Paredo's treatise, mathematical treatise, and then he added Hicks and Allen's article on a reconsideration of the theory of value, which was a precursor of Hicks's book introducing general equilibrium theory into the English-speaking world. He also included another English economist's book called Mathematical Psychics, it's a great title. And also books by Edward Chamberlain, The Theory of Monopolistic Competition, that was also added, and instead of Wick's treatise as being the main book that entry students should read, he listed Knight's Risk and Certainty in Profit, which was largely Austrian, which introduced perfect competition theory.
So we see that changing. So the London School of Economics, okay, was the Hungarian character in the early 1930s. Finally, if you look at the social calculation debate, okay, then during the mid-1930s, Hayek and Robbins emphasized, and we'll talk about this two days from now, they emphasized the difficulty in central planning of collecting all this first knowledge and getting into the planner. They did not emphasize the stress, what Mises had stressed, which was the problem of trying to, of monetary calculation, or economic calculation, trying to determine from market prices what goods are most demanded by consumers, and what methods of producing them are the most economic, okay.
This is what Mises stressed, it was not stressed by Hayek and Robbins, okay. There was more of a general equilibrium view that there's a lot of information out there that the prices have automatically, um, viewed a case to the producers and think of, or fairly mechanical, okay. So I don't want to say that they are straightforward, volrasion, general equilibrium appearance, okay. So, um, the final problem leading to the, final faculty to the decline of the Austrian School, the death of the Austrian School, was that there was some problems in the actual Austrian theory itself, which had been developed up to 1914, okay.
Um, first of all, it really did not clarify the proper use of equilibrium. There is a use for equilibrium in economics, and it was not clarified, um, even by the most sophisticated treatises of, of which need and, and that important, okay. Sometimes they talked about a moving equilibrium that the market was moving, that, that, that, we weren't in, they realized you weren't in a fixed equilibrium, but that equilibrium was moving and the market somehow was chasing it, but they didn't, they didn't make it clear. Um, they also didn't integrate money in price theory, okay.
As Mises says, economics is all about explaining money prices, where do these money prices that we observe every day come from? The theory of, from anger forward, the theory was really a barter theory, it was a theory of relative prices, okay. Money really wasn't integrated into economics. Wixtee tried his treatise and partially succeeded, I think, but um, Mises did succeed in 1912, okay, in his book, but um, that wasn't, he didn't, he wanted to write a full treatment of economics, but was not able to, he didn't do that until he did human action, and he says himself that my theory was not complete until I wrote, um, national economy, which was the German forerunner of, um, human action, okay.
So, um, and the third problem was that, um, they didn't really stress, the Austrians really didn't, before Mises wrote human action, didn't stress the important role of the entrepreneur in forecasting the future and acting as someone who demands present capital goods, okay. In other words, the entrepreneur is the one who's responsible for the appraisement or for the pricing of, of factors of production, based on his or her forecast of what future prices will be. So, given these defects, in the 1930s, when general equilibrium theory was introduced in the English speaking world, the Congress looked around and said, wait a minute, you know, the Austrian theory is simply an unsophisticated, less rigorous version of general equilibrium theory. It's, you know, it's, it's basically general equilibrium theory, but it's, it's, it's not elegant, it's, um, it's wordy, we can say the same things in, in just, in equation, okay, much more simply, much more clearly, okay.
So, because of certain errors in the Austrian theory, which undermined, um, or, or obscured the fact that it was, that, that it was focused on a dynamic, changing, uncertain world, it was just pushed aside because it was in elegant. We can, we can say the same things you're saying, we can, we can integrate marginal utility by a system of, of, of, of simultaneous equations. Okay, so that's the way things do the 1930s. Now, Mises was extremely productive, continued to write, okay, articles, books, and so on, through the 19, early 1930s, back to 1933, he came out with a collection of, of his papers that went from 1928 to 1933 on methodology in which he began to develop a system that came to fruition in human action.
And was at that point, see, that was, that was, that was already too late for the fourth generation, high X generation to absorb, okay. They thought that Mises was saying the same thing in some sense as, um, as, as Mises was saying, they never really realized that Mises had a whole different system in the back of his mind, a much more dynamic development of Menger and Bon Bauberg's price theory. So, Mises now leaves Austria in 1934, he, he, remember he was working for the Chamber of Commerce, which was an advisory, um, body to the Austrian legislature. He's working full time in writing all these books, and, um, it was a full time job, and, and still writing books in the audience and still teaching at the university and holding a private seminar, who's extremely productive.
But then when he goes to Switzerland, to the, um, to the, uh, Institute of International Relations, I believe, the graduate, the graduate Institute of International Relations, something like that. Okay, he's a writer there, he remains there for six years, and he doesn't write very much there, okay. You're wondering, you know, what's going on? You write a few book reviews, I think only one academic article, but what he's doing is sitting there realizing that, well, Austrian economics has died, that, that Mengerian, the dynamic, Mengerian, Bon Baubergian approach, the price theory is completely gone.
And so, he decides to reconstruct this theory, solve the problems, and put forth the world in General Prius. So, he sits there for five years, and he does this. And in 1940, okay, you know, we know time is everything, in 1940, out comes his, um, uh, book, National Economy, and, um, unfortunately, because of the outbreak of the war, World War II, it can't be distributed in the German-speaking market, and the Swiss publisher goes bankrupt. So, the book just disappears, okay.
So, it doesn't appear until after World War II, when Marchelin economics has completely taken over throughout the world with a little bit of old-rasion economics. So, if you looked at, at textbooks after World War II in the 1950s, you have 90%, 90% of basically Marshall's partial equilibrium analysis, and the other 10% at the end, you tell the students, well, all of these markets are really connected and we connect them mathematically. And that's what you have. And no, and then human action comes down, and no one's going to pay attention to human action.
I mean, given that view of things. So, um, but the book is there, and it's important that the book is there, that this whole system now has been integrated. Mises has solved the problems. So, what happens?
In the 1950s then, Wall Street Economics is almost completely dead. Um, oh, let me mention before, before I get to that, it's interesting to see Hayash's reaction, both to Mises' first to the decline of the Wall Street in the 1930s, okay, to the decline of its price theory, and to Mises' book on, um, uh, National Economy. Um, first, on page, my article, I give a quote on page of the Census, because it really does show how Hayash's thinking is so much different from Mises, where Mises was in 1934 sitting around attempting to reconstruct Wall Street Economics. Here's what Hayash said about the fact that Wall Street Economics as a tradition, as an independent tradition, disappeared in 1930s.
He's writing this 1968, looking back. He says, but if this fourth generation, meaning his generation of Wall Street, in style of thinking and in interest, interests, still shows the Vienna tradition clearly, nonetheless, they can hardly any longer be seen as a separate school in the sense of representing particular doctrines. A school has its greatest success when it ceases as such to exist, because its leading ideals have become a part of the general dominant thinking. What's the general dominant thinking in the 1930s?
General equilibrium thinking. He's saying, they've absorbed everything that the Austrians had, they've absorbed more to the utility and so on, and the Austrians will disappear, but this is a quiet for the Austrian school, okay, and try to figure that out. The Vienna school has to a great extent come to enjoy such a success. Its development has indeed led to a fusion of the fort standing from Menger, with that of Jevins, you know, quasi-mathematical, by way of Philip Wixteep, of Leon Valraz, by way of Alfredo Paredo, and especially of the leading ideas of Marshal, of Alfred Marshal.
So what's he saying? He's saying that the Austrian school has made it smart and has been combined with this great neo-classical synthesis of Marshal and Valraz and all these guys, okay. Now, tell me that that's, you know, medium in action and then see if that means his attitude, where he's continually attacking all of these divergent friends, okay. Now, what does he say about, he shocked the national economy comes out, because I don't think he realized it, how differently he means it was thinking.
So from that 1940, he reviews it, overall he likes the book, but here's some interesting things, he's perplexed by it. He says, he's perplexed by the fact that Mises had been unaffected by, I'm quoting, the general evolution of our subject, during the period over which his work extends. In other words, Mises doesn't incorporate imperfect competition theory, doesn't incorporate, you know, Valraz, doesn't incorporate Marshal. So he's perplexed by this, okay.
He needs a bit of whack-up side to the head. And as you go down and say, and after the development of Mises's law, during this period, a quote appears to be decidedly autonomous, unquote, meaning the terrible way of saying that Mises hasn't read anything, and that just wrote this, you know, on his own without, you know, reading Valle's literature. And then he says, oh, so why is he confused? He's confused because he can't understand, he fails to realize, I mean, that this book represented Mises's attempt to autonomously reconstruct the paradigm that could not be reconciled with the general evolution to use Hayek's term of economics in the direction of Eurasian, Marshalian, combination of which Hayek himself approved.
Now, particularly revealing his Hayek's prediction that the central part of the book, okay, now, those are the central chapters of human action, those are the sections on monetary calculation and on prices, okay, which is, you know, development of Menger. He says that the central part of the book would not be its main interest to most readers, okay? But of course, these are the precisely the sections that contain the reconstructed system. So he likes the practicality, likes the subject of his, but he doesn't like the actual price theory, which is the central part of the book.
So this is my reason for, you know, this is my revisionist view of why Western economics died. I'm sure the Keynesian revolution had some of that, but it destroyed one aspect, or maybe forget one aspect of Western economics, and that was the business cycle theory. But one of the reasons for that was that that business cycle theory was based on sort of, not very solid foundations. It moved away from a dynamic sort of system of pricing, and it was based, Hayek himself with his books on business, like looking really very good, based it on, on, on, on, on, on, on religion theory.
In one of the books, he says that the highest form that economic theory takes is that of the Lausanne school. Lausanne school is the school of all Ross and, and parade him. Okay. All right, now, so what happens then in the 1950s?
Well, there's not much being published in the 1950s. What's going on is that Mises does have a seminar at NYU. We can't get a, we can't get a regular position, so there's some debate about this. P.
Becky has seen letters in the archives at the Hoover Institute, in which they're in the Hayek archive, which Hayek and, and, and, and, and, and, and, and, and, and, and, and, McLop is saying, what are we going to do with our problem, child, meaning Mises? He keeps turning down all these positions. Okay. And McLop is probably going to get him a position at Johns Hopkins, but he would have to teach undergraduates, and, and, and, and, and, and, and, and, and, and, and he means, and he just wanted a position.
There was, there was something called the Institute for Advanced Studies. It's at Princeton University. It still exists. It's where Einstein worked.
It's where Morgan Stern and, and, and, and, and, and, and, and, and, and, and, and, I think Nash worked out game theory. In any case, he would have liked that. It was a research position. He would have liked that position.
He reveals that in his memoirs. Okay. Or no, his wife actually reveals that in her, in her memoirs of, of, of, of, of, of, of my life, of, of, of my life, of, of, of my Mises. So, whether or not he could get, he could, he certainly would have, like, he wasn't flooded with offers.
Okay. Because he was perceived as right-wing, you know, free market, anti-socialist. So, what happens is that a right-wing foundation begins to pay his salary and gets him a visiting professorship at NYU. Basically, NYU allows him to teach him, because, you know, it's free.
Okay, if they're getting somebody to teach it for free, it's the foundation's paying salary. Okay. So, what happens is that there's a, a period in 1950s in which there is a seminar going on. It's going on at NYU.
Henry Haslett attends it. Murray Rockwater attends it, Israel Kurzner, a very bright man, Hans Sandholz. But not much is published during this period. Okay.
Hayek has moved out of economics and is writing in social theory on the one hand. What we get published are a few books, Haslett writes a great book, smashing Keynesianism, the failure of the new economics. Rothbard writes a great article, reconstructing utility and welfare theory. Kurzner writes his dissertation under Mises, a very good book on the economic point of view, which shows, which deals with the history of methodology, up to Mises' praxeology.
Not much else is written. Mises does write a great treatise on theory in history. It comes down to 1956. Okay.
But the books are very few and the school is almost dead. Now, what happens? In 1962, Rothbard comes out with man-economy and say, okay, and he had been funded to publish this book by a foundation of Volcker Fund. He lived on these grants and he began writing the book in the early 1950s, if he had read human action.
And his initial objective is to fill in the blanks in human action, but really to make it a shorter, more accessible book. Okay. He winds up really reconstructing economics once again. Okay.
Let me put it differently. He synthesizes economics. Okay. He takes not just Mises, but he takes better Wixby, the good things that were written by Robbins.
And I mean, if you go to a tremendous number of some of Clark's stuff, and he synthesizes all of these American and British economists that were influenced by the Austrians. And in particular, he constructs a tremendous theory of production. I take up five chapters of the book. And that theory of production was very, very skimpy in Mises.
If you look at the Rothbard letters that he's writing to the people that give him the grants, he mentions that he has to write the production theory himself, because there's very little in Mises to guide him. Okay. So he comes up with a new synthesis of economic theory, squarely within the manger, Bombavar Mises tradition. In fact, Mises himself, for some reason, didn't like the structural production analysis that Hayek had introduced, which came from Bombavar.
Okay. And Rothbard reintroduces that. So he combines a pure tri-propance theory of better with the structure production theory of Wixell and Hayek. Okay.
So it's a tremendous work, but he's not done. Okay. In 1963, he comes out with the great America's Great Depression, a book which applies to Austrian theory to the causes of the Great Depression. He also comes out in 1963 with a short primer.
People think it's simply, you know, an introductory book, a short primer on monetary theory, what has government done for our money. And in it, though, he gives us really, for the first time, this is really even missing in Mises, a theory of how fiat money comes into existence. How is it that we have this transformation from a gold standard through to a pure fiat money? Even in human action, Mises says it's not clear whether paper money, previous episodes of paper money were true fiat money.
In other words, Mises believed that they could have been credit money, meaning that people were always expecting at some point to go back to the gold standard, because that always happened. You went off, had paper money during the war, or during some sort of crisis, but then a few years later, you went back. That's what happened in Great Britain from 1797 to 1821. That's what happened in the United States during the Civil War, and elsewhere during the war, World War I.
So the value of money was not purely based on supply and fiat money. It was also based on the expectation that whether it was greater or lesser, that you would go back to gold. So that maintained the value of paper money. But Rockford shows that, in fact, we have a system of fiat money, and he shows how it develops in this very short book, clearly written book.
So it's a great contribution there. Now, he's not done. He's written actually a third value of an economy state, which is too radical, so the company that is funding him, the foundation refuses to publish that third volume. They make him cut it down tremendously, take out the anarcho-capitalist analysis in a power and market, what became power and market, and he cuts it down.
So it's only a two volume of man economy state. But he comes out to full power and market, which was to be the third volume in 1970. And he gives us an exhaustive typology and analysis of the different types of government interventions, including taxing and spending. If you see that as an intervention, then you see the free market naturally as being a market with competing defense agencies.
In 1973, he publishes Four New Liberty, a work in libertarian political economy, which presented the first full argument in defense of a purely anarcho-capitalist society, which was grounded on natural rights. Even though Mo and Ari talked about it, he didn't ground it on natural rights like Rockford did. And finally, in 1974, he published a collection of previously published essays called the Galatarianism as a Revolt Against Nature. What else has been done?
Not much else has been done, going this period. Is your cursor finally published in 1973? It's an influential competition entrepreneurship. The only other notable work in Western tradition published during this period was the Miss of Antitrust, which was published in 1972 by a very young economist, Dominic Armantano, which was a great Austrian critique of antitrust theory.
Hans Sandholz publishes a number of great pamphlets and articles and booklets criticizing contemporary monetary theory and policy. But it was mainly Rockford. Now, the rebarts then did not occur in 1974. Why did 30 people come to South Royalton?
30 people came to South Royalton because we were all two to the last man and woman. And I think it was one woman there, maybe two. We were all rock bordians. We had read all of these works, okay?
That had been the fruit of this enormous period of pre-creativity that Rockford had between 1962 and 1974. Everyone was a rock bordian. Curser's book, yes, was very influential, and it was a topic of discussion at the South Royalton Conference. But it just came out, you know, it was out for a year, and everyone looked on it as well, being consistent with Rockford, just being a critique of the neoclassical microeconomic theory.
So, it was 1962. I marked as the revival of Austrian economics, okay? Now, Rockford has worked inspired many graduate students and young members of, you know, young faculty members, right? I was selling some people at lunch yesterday.
I was in college and discovered, you know, the Austrian school, I think, in 1970 or so, 1971, the junior college. And a great article in New York Times had come out about the radical alternative. Libertarians on the radical alternative. It was on the front page.
This would never happen today. The front page of New York Times Sunday magazine. Okay. And there were two Columbia law students standing there, law students standing there on the front page.
They had a fist raised, and they had a black flag behind them. And in it, they mentioned, I had read Rand, and that was really about it. I knew Rand, and I knew when I arrived to college, my freshman year, I realized it was the difference between the libertarians and libertarians. And it was sort of a magazine called, exactly, a conflict or something.
I forget the name of it. But it was a magazine in which you had the division talked about. So I was going to settle a bit, but I didn't know much about Austrian economics. And I was taking all these lousy principles of macro, micro, and intermediate macro, micro.
And then I had to mention to someone, I read this article in the New York Times Sunday magazine, and they mentioned this Austrian economist. Who I had heard about the Austrian school in my history of four classes, being from Bob Burke, Menger, and Visa. And the teacher was actually a very good professor, and he was very, very excited about it. He wasn't answering himself.
But he says when the first time in the history of four, that three such brilliant men had gotten together and worked together on developing the same paradigm. So when I read that, there was a guy who was an Austrian, I said, what, he, 200 years old? So I had heard about it. So I mentioned to one of the conservatives in the Young Americans for Freedom, there were libertarians and conservatives in this chapter at Boston College where I attended.
And we got along pretty well when we argued. He said, what is this here? He said, I have a panty, brought me in the next day, panty. It was called Depressions, Quas, and Cures.
So my home, it was 30 pages with a small little mini book. And I read it, and it was by Rothbard. And I just saw the light. I just realized that I learned more in reading that in 45 minutes than I did in sitting through all the principles of macro and intermediate macro.
And so I just became an overnight, I became an Austrian. And so then when I went home that summer to my junior and senior year, I remember, as I was mentioning, I was a janitor. It was a depression. It was a recession.
It was a deflation. It was a party and a job. So I take a job as a manager, as a janitor. So I do work a little fast, and I sit in a broom closet with this little light, and it was reading through America's Great Depression.
So my experience isn't, I'm not alone in that. All of these people throughout the country who were libertarians and who had discovered the Austrian school were reading Rothbard on their own or in very small groups. No one knew the other existed. So when you did have this South Wales conference announced, you had people who were already completely grounded in Austrian economics.
Not maybe not completely, but to a greater or lesser extent. By 1974, I had read Human Action, Price and Production, and so on. Most of me is in Rothbard and Ohio. And once again, that's not peculiar.
That occurred throughout the country. So that was the, that's why you had these people coming together coalescing into a self-conscious movement in 1974. And then, of course, it was reinforced when Hayek won the Nobel Prize in October of 1974. Okay?
But without man-economy in state, without human action, you would not have had the Austrian revival. We could do a counterfactual, or even just with human action, without the other, well, there would have been no man-economy state without human action. In fact, I asked Rothbard once, I said, well, before you read Human Action, 1949, you know, he was in graduate school, right? I said, well, you were libertarian, but what kind of economic did you hold?
He says, well, basically, just, you know, I read Alfred Marshall, I knew about supply and demand, I knew price and frauds were bad. He says, but, you know, really, not much else. He says, I was really dissatisfied with economics. He says, I liked when the, the institutional attacked the, the neo-classical, the neo-classical attacked the institutionalist, but, you know, there was nothing, no positive theory that attracted me.
So, you know, Rothbard would have been some sort of a, of a, you know, ways I'm a challenge or something without human action, even though he was still a bit libertarian, of course he was. All right, so now, the other point I want to make, we have a time here, is what happens is that after this, this, this coalition of, or this coalescing of, of a new Austrian movement in 1974, there are two more conferences run by these two free main studies, which sponsored the first conference, okay? In 1975, there was a conference in which young graduate students, such as myself, give papers, and senior Austrians, such as Rothbard, Kurzner, Haslett, Hayek was even there, Leland Yeager, and Ludwig Lockman. They, um, commented on our papers, and I actually had, had a comic on my paper, which was, which was really thrilling.
And my paper was sort of on international monetary economics, and Hayek wrote a great book on this in 1937, and the small book is called Monetary, Nationalism, and International Order. And any, in any case, um, so I, I cited that quite a bit in there, and the first thing he says was, I had forgotten that I made a contribution in this area when we got up. I mean, he had written so much. So, um, no, no.
But in any case, um, what happens then is, uh, then in 1976, there's another, uh, conference at Windsor Castle, in, in, in, in Great Britain. Um, and so the comic books come out, a book comes out of the first conference in 1974, that book comes out, I think it came out in 1975. It's called The Foundations of Wall Street Economics, then a book comes out of the Windsor Castle Conference, I think it's called New Trends in Wall Street Economics, so things look like they're going great. But then in 1977, there's a change in what we might call the property base, okay?
Um, the, uh, uh, uh, billionaire, Charles Koch, begins to donate money to, um, to, um, institute your main studies. He comes under his influence, and, um, he, he helps create the Cato Institute, a think tank in Washington, a libertarian think tank. Um, initially, he's very, very friendly to Austrian economics. He and the people that, you know, are working for him.
Um, but they begin to develop a different strategy about how to go about disseminating the ideas of Austrians. And one of those ideas, uh, strategic ideas, is to downplay the radicalism of Mises, okay? And to play up Hayek's contribution. Because Hayek is much more amenable to modern trends in thought, okay?
Hayek isn't the, you know, a rigid praxeologist like Mises is. Um, he's not, um, as, as, um, uh, I don't want to say rapidly, but he's not as opposed to mathematical economics as Hayek and so on. So there's a number of conferences now in which we begin to pass the message on to college students. In the early 1980s, I teach some of these, and they have names like spontaneous order conference.
And, and, and you don't see, and a lot of Hayekian topics, okay? Now, we were totally concerned about Mises and Rothbard, and there's a lot of readings from Mises and Rothbard, but the forum changes. And when the forum changes, when you try to moderate your message, eventually what you believe, what you believe begins to change. So Mises, I call it in my paper, this, the period of, um, from 1977 to 1986 Austrian economics without you know who, okay?
And you know who was Mises, we weren't allowed really to mention his name. Um, they all, IHS also, um, begins to promote the work of Lockman. Lockman is, considers himself a radical subjectivist. And, um, almost the point of nihilism, okay?
Where he believes economics can't really say anything about the real world, right? Um, he wrote a very good book on capital theory in 1956, but he became more and more radically subjectivist. And so he's brought over, he's, he's, uh, uh, funny as, is given for a program in Austrian economics in the late 1970s at NYU, and then Lockman's brought over as a bidding professor. Every other semester he comes from South Africa and teaches there.
Um, and I point out that, now what begins to happen is that you have resources being poured into, uh, uh, Kurzner's work, and, um, Lockman's work. Lockman's work, Rothbard breaks, has a, has a, uh, an ideological break, or not, sorry, an ideological strategic break with the Cato Institute. Cato, by 1983, Cato is beginning to hire Chicago economists, because they're more, uh, amenable to the mainstream, more acceptable to the mainstream, okay? So he breaks over that.
Um, I get involved, uh, my young faculty member by then, I get involved in an Austrian program for undergrad at Rutgers University for two years, I think we're giving $20,000 a year, um, to run programs. We run a massive conference on inflation in 1978, I believe it was, and the main speakers are not Austrians. I mean, there's some young Austrians, such as myself, John Edgar, um, I don't know if Roger Garrison came. But the main speakers are people like Morten Feldstein, uh, basically sort of right-wing Keynesians, or invited, okay?
Uh, uh, uh, uh, uh, Axel Lane Hoofed, who's sort of sympathetic to the Austrians, but is himself not, uh, has a very big name. In other words, Austrian economics and tribalism is beginning to be downplayed now, okay? Um, you know, I don't know what's going on, it's great, you know, these people, you know, seem to be free market. Um, you also see the divergence between the three main speakers at the South Wharton Conference, okay?
When the book comes out, if you look at it, you'll notice that on the one hand, Kersner is, is, is, is emphasizing the distinction between what he calls a rabbisian economizer, who purposefully allocates resources to given ends, ends that he knows, given his knowledge. And when he calls him, he's actually an actor who, um, is supposedly continually alert and seeking new ends, okay, always seeking for new ends and, and means to pursue these new ends. If that were true, if you, if you, if human beings were, uh, homo queerans, meaning a seeking man, rather than homo agents, which means it's acting man, means it's talked about homo agents, meaning the acting man. Um, if, if it's really someone who is continually seeking, they never act.
At some point when people act, you must act on the basis of what you know right now, and how you rank those values, okay? You're not continually seeking, okay? At the moment of action, all seeking stops, okay? So right now, um, let's say at the point where I started to give this lecture, I had been seeking for different ways to present this material, okay?
But whether or not this is the best way to present it, it's the way that I believe, you know, at the top of my value scale, okay? So, so Kerzner is, is, is moving away from his essay in Proxiology, uh, you can see that in that book. Um, and what's interesting is that Robbins, okay, who, who, who criticized quite a bit at the South Royalty Conference, based his concept of choice, specifically on Manger's Economizing Man, okay? Um, now if the, uh, Mises, I, I found out from Guido Holtzman, that Mises is, um, German Cretus, you know, precursor of, of human action, uh, had a subtitle, The Theory of Action and Economizing, okay?
So Mises believed in then, getting Economizing, which is, given your state of knowledge at this point in time, you rank your ends, and you choose those ends, which, your resources will allow you to choose which are highest, okay? Now, if you look at Lachman's paper, you can't figure out really what he's saying. He's basically saying, uh, the marker process is ruled by, you know, autonomous expectations, people expect different things continually. Uh, these expectations have nothing to do with the real world.
Um, they're detached from human purpose, judgment and property. The free market is incapable of systematically weeding out bad entrepreneurs over time. Um, I asked him, I said, don't, I, I went up to Lachman, I said, don't entrepreneurs have the ability to, um, to forecast what the, uh, revenue will be on certain decisions. They make, he says, absolutely not.
So, you know, I mean, it means, in the human action, it's a date of a human action that people have better or worse judgment on the future. We have to take that, we have to accept that. So, you know, so, so, again, once again, you know, Lachman was a very, um, uh, dignified and, um, formidable European professor. So, you know, initially, you know, I accepted what he was saying, as many of us did.
Okay. Anyway, by making, um, this is, by 1978, there's really a headlong retreat for Mises and the Pax Praetiological Paradigm. And, um, the splitting off your economics is pretty open by that point. Um, we had something called the Austrian economics newsletter, which I was a member of the Board of Editors on, and Don LaVoy.
Um, he wrote a review of the Monthly Wealthion Economic Seminole, which was held at NYU, where is your cursor report. And in one of the issues of that newsletter, um, he correctly identified two contrasting intellectual tendencies among Austrians, nihilism and accordionism. In other words, if you want to, if you didn't follow Lachman, okay, and become a nihilist, you were, you were a recardian. You were an objectivist, which was worse.
Okay. It's better to make you don't know things than, than, than, than, than to be an objectivist. Okay. Um, he went under the clear, the modern Austrian school can be used, can be used to analyze the theoretical tool of this nihilist recording spectrum.
So, the other side, I mean, he's on, he's on, he's on the, on the personal Lachman side. The other side recognizes that these two traditions are, are still with us. Okay. Or, or now there's a different sort of tradition.
Okay. Um, then they interview, uh, Shackle, who is sort of Lachman's mentor in his nihilism. And he, um, he wrote this book, Epistemics and Economics, which was very influential among young Austrians in the late 1970s. And he, Shackle, in the interview, in the ocean economics newsletter, says the following, he says, um, he admits his approach to economics, quote, is a very nihilistic position.
And I realize that. Okay. He also says, I've been saying for almost 40 years that economics isn't the science. And we ought not to call it a science, unquote.
Okay. Um, finally he says, my idea of welfare economics is that you choose an administrator, a man with a conscience himself, and board sympathy, with a generous mind. And then you say, leave it to him. What's a dictator?
Okay. So this is, this is his welfare theory. Okay. So, um, let me just sign this up and get some, some questions in here.
Uh, by late 1970, Rockwell is really deprived of, of, of an institutional base. Okay. He's teaching at small college in Brooklyn. Um, you know that many resources at his disposal.
In, in the early 1980s, after he breaks the Cato Institute, he's really alone. There's no one there, uh, you know, to give him, um, um, material, uh, sustenance. You know, his, his resource basis has, has shrunk. Um, a second PhD program, which initially, not, not now, but initially with Anthony, he's asking for a lot of meaning, is opened up at, at George Mason University, Northern Virginia.
Okay. Uh, it's not an Austrian program. It's a market process economics program. Okay.
So there, again, they're, they're, they're, they're following a strategic vision of soft pedaling. Austrian economics. Right. But regardless, because, um, Rockwell is a genius like me, he's, he continues to write on his own, comes out with a tremendous number of papers, contrary to what many, um, Austrians believe, um, in the, uh, the, uh, accepted version of the rebirth of, of the economics.
Rockwell did not leave economics in the late 1970s. He wrote papers like The Myth of Neutral Taxation, 1981, Law, Property Rights, and Air pollution, 82. The Federal Reserve is a cordialization, cordialization device in 84. The case for the genuine gold dollar in 85.
The ethical ethics of Liberty comes out in 1982, and the mystery of banking, uh, comes out in 1983. Okay. So he's continuing to write despite the deprivation of any sort of, uh, of, uh, of institutional infrastructure. Okay.
But now, this is where the Mises do comes in. In 1983, Lou Rockwell, um, founds in, or 1982, he founds in Mises Institute. Um, and it's unabashedly inspired by the scientific vision of looking upon Mises. Um, he gets together with Rockwell.
Rockwell becomes the head of the academic programs. Um, they talk about sorting a journal, which they, they, they begin the journal 1985, I believe. The review of Wall Street Economics has begun. Um, there is a boycott, Rockwell has many of the other Austrians that he, he's nothing new, such as Don LaVoy and Larry White and myself and others.
To be on the board of editors, um, and they're gonna name it the review of Wall Street Economics. Well, he gets, that's, many of them boycott it and say, no, they don't want to do it because they want it to be run like a real journal, meaning that it hasn't, you know, in fact they don't trust Rockwell who have the articles refereed. Okay. So, um, and it's sort of, and I have some of the letters that they wrote, um, because they copied me thinking that I would join the boycott, but I did not.
By then I realized that there was a split in Wall Street Economics that, um, then it wasn't me that scene and that, you know, that Rockwell was the most important Austrian economic, uh, oh, I always thought that, the most important living in Wall Street Economics at the time. So, um, Lew Rockwell then starts the institute and, um, it's really 1986 when the review of Wall Street Economics begins that you get, um, real flowering of, of, of Wall Street Economics. Okay. You have Hans Hoppe coming over in 1985 and David Gordon being discovered and, um, many others, um, Mark Fortin, uh, coming to Auburn to the PhD program.
Now, the reason to being at Auburn draws people here, um, unfortunately the PhD program was a few years ago. But, um, the, uh, the, um, the, um, Wall Street movement now is in full bloom and it continues to grow. And it grows because of the resources and the institutional infrastructure that, you know, Lew Rockwell and the Meas Institute has made available to us. Okay.
We would be nowhere as advanced as we are, had it not been for the Meas Institute. Okay. Really rescued Rothbard, uh, in the sense of giving him an institutional base and giving him, um, an audience, uh, for, for his work. Um, very interestingly, there was a big fight of what the name of the, of the journal would, would be, um, and Rothbard stuck to his guns and called the review of Wall Street Economics.
Okay, and said something like, you know, market process or something. Um, let me close with the following. In 1982, Rothbard closed his remarks on a controversy over the journal's name of the following statement. Um, he wrote, at any rate, we have a tough road ho in Austrianism, in general, to rest with from, Lockman Shackle Nihilism.
Stanford's like a, uh, probable battle. Okay. Some, some Stanford so-called Wall Street Economics is talking about probability theory. Um, modern philosophy, fuzzy hyaffeism.
All this makes a hard core institute all the more necessary. Okay. And then we have that white core institute here at the Meas Institute. Okay.
I'll stop. It's about 10 minutes for questions. Yes. Do you have any comments on the media and the letter D?
Yeah, I, I think, um, V gave, V gave, V gave Meas as an institutional base in the 1950s. I think it was very, very important. Um, Leonard Reed brought people in. See, one of Meas is the point that he makes is that it's, it's important for the academics, not just to talk to one another, or, or to government policy makers, but to reach out to the people.
Okay. And to, um, and, and Rockard once told me that he was in a meeting when they were talking about starting a graduate school at V in Austrian economics. That never panned out. But Meas kept saying that we must, as, you know, professors in this graduate school, give talks to businessmen, give talks to laypersons.
That is communicate to them, uh, Austrian economics. Why? Because Meas slowly believed that, that whole political system and economic system was driven by ideology, driven by the values that people adopted. Okay.
And that, this had to be widespread. So I think he was, uh, essential in keeping alive in the 1950s, the Austrian tradition. And I think the same thing to do with, um, Hans Sandals wrote a little article on him. I think he was an extremely underrated, but very important economist.
He is a vocational economist who has taught many, many students, who have gone out to become active in academia, or in the writing of Austrian economics. Yes. Um, what, did I get a hold of that? Did you just, did you just come out now?
You're saying, I have to look and see what? Oh, no, I didn't see that. I, no, I have to think, oh, yeah, definitely. Thank you.
No, no, no, Richard Elling is still doing a good job. Richard Elling is a good musician. Um, a little more tolerant than I am, but, you know, very, very good. Yes.
Well, cursor, cursor seeking man is someone that's continually trying to find a framework within what you can act. That is, a new framework of means it ends. Okay. Whereas, you know, if you follow that through logically, and I'm sure he would say it, I'm taking it, you know, I'm not, I'm going beyond what he's saying, you would never act.
You would never act. You're always looking for better ends to pursue, and better means to use to achieve the ends you're pursuing. Whereas, means is acting, man, or homo agents. We're acting at every point in time.
Okay. I mean, time is scarce. We're acting at every point in time. You know, right now, you know, I'm choosing the words that I'm speaking to you.
Okay. I'm doing very rapidly, and maybe not very well. But if I sat down and thought more about it, well, maybe I could have presented this a different way, maybe I could have written something down and put it here and put it up on a wall. But, you know, in order to act, you must suspend or seeking.
Now, that's not to say that you can't learn from your actions. If that's what occurs or means, that's okay. In other words, X post, you can make a mistake. It didn't turn out like I thought it would.
In similar conditions, next time I would do it differently. I would aim at maybe different ends next time. Let's say I, you know, I buy a motorcycle and I drive a motorcycle around, and after a few near brushes in New Jersey, I want to drive a motorcycle. Two near brushes with their drivers and driving the rain.
I think, you know, I shouldn't have spent that, you know, 10,000 off that motorcycle. All right. Well, if I'm in that situation again, I'll seek to do something else to find a better use of my mind. But at the time, the point is out, it's not controlled experiment.
We're never in that situation again. The exact same situation. So, I don't understand. Now, I have given, this person would not call him seeking man, okay.
He would call, you know, he would say, this is, this is, this is, this is, yeah, this is the act of discovery, okay. Entrepreneur will discover. See, in his economics, he has the entrepreneur as a person who discovers, okay, discovers opportunities for profit. And then he has these Robinson automatons, the consumers and the resource sellers that simply react to the prices that are offered by the entrepreneurs on output markets and input markets, okay.
Well, you know, and so the entrepreneur becomes a seeking man. Now, think about it. The entrepreneur never loses any money in person's world. Okay, the entrepreneur just reaches out.
He sees things that other people don't see. So, he reaches out and grabs $10 bills that are floating down. People don't see. Those $10 bills represent the difference between the input prices and the output prices, okay.
I don't like that way. What kind of entrepreneurship? The future revenue, the revenue lies in the future. You have to estimate what that revenue will be, literally lop into the contrary.
It makes some forecast about it. You have to rank the best uses of your investment capital now. You have to stop seeking at some point. Make a commitment.
When you make that commitment, you make it based on your best forecast of the future, which may be wrong, and then you use your investment capital to different resources today, and then hope for the best. And the better entrepreneurs will find that they earn a profit in the future, others will learn that it was money, okay. But those circumstances will never reproduce themselves, okay. So, I'm opposed to this whole idea of action being really tied up with discovery in some sense.
It's tied up with choice. It's choosing. And if that's what Rebenzia Maximizer is, then that's what I think was about economics. That's the core of Western economics.
I don't like the word Maximizer. I think we're just choosers, yes. You have any idea why Minger's turn the clock? You know, he got involved in arguing with the German historical school, okay.
He got off the track. He was going to write a three-volume treatise. This principle was introduced to a three-volume treatise on economics. That would have been great, okay.
He wrote two very good theoretical articles in the 1890s. They have pre-stop, you know, we have to debate with the historical school ended. And the only 90s, then after that, he didn't write much, okay. He retired in 1903, still fairly young, listened to 1921.
But Hayek went through his papers, and Hayek said that he just kept writing and rewriting, you know, his economics, and he got older and older. It just became worse and worse, and so it's almost incomprehensible with his stacks of papers that he kept rewriting. He never, I don't know, okay. Mises somewhere says that Manger and Bombavic were both very depressed because they saw the end of Western civilization coming, with the interventionism and socialism and wars and so on.
I mean, that may have sat his productivity. That Mises was very interesting in case, and I'd like to know more about that. There's also, by the way, hints. Mises hinted, I've heard this a couple times, that Bombavic could have committed suicide in 1914.
They're hints. I mean, I don't think it's true. I mean, but he was depressed. Yes, I think it's the last question, yes.
I'm curious, but he's not. Yeah, right. No, in practice, he's not in Austrian. He is a Volrasion in practice, but he doesn't know mathematics.
He's a Volrasion. That's why he believes that prices, if you know the prices of the outputs, well, and you know the available inputs, well, then you can have these imputed back without an entrepreneur. Okay, so he believes that you can directly impute prices back to the inputs, which means that you saw the problem socialism. There doesn't have to be markets for inputs.
There doesn't have to be markets for capital, but they can be collectively owned. Now, higher criticizes him, but it's not on an easy basis. Higher criticizes him because, you know, of the first knowledge problem. Not because there's no entrepreneur who's trying to appraise future prices and use his forecast to bid for bid on the markets for inputs.
Okay, that's where the price of inputs comes from. That's where your course of production comes from, and that allows you to calculate economically. So, he's an orphan by birth, but there is strains of Austrianism in German payers. No doubt about that.
Me, that means isn't, and sure, but it didn't like each other. When it means it's came to the United States, they, that once for tea, and his wife said it was very, very frigid. You know, and, but he didn't, they didn't get along. I think it was rivals in, in, in, in, in, in Bolvar's seminar.
Okay, I think we can stop here. Okay, thank you.