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Listen to Dead Economists

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Tags EducationHistory of the Austrian School of Economics

05/10/2017

The late economist Friedrich Hayek, celebrated earlier this week on the anniversary of his birthday, left an enduring body of work and a place in history as the reluctant winner of a Nobel Prize he thought suited only to the physical sciences.

But exactly how enduring his work and his legacy will remain is an important question, and not just for Hayek. The mood in the West is not friendly to intellectuals, much less dead intellectuals. We prefer social media and short videos to books and lectures. We want someone else to provide easily-digestible ideas, concepts, and news, rather than seeking original sources for ourselves. We don’t have time for context or nuance. With limited knowledge of history, we tend to fetishize new over old, modernity over tradition, and data over theory. In our hubris, we imagine ourselves in a new era where old knowledge and wisdom no longer apply. 

But we do so at our own peril. The accelerating pace of technology lulls us into believing human development is linear. Technology, not dusty old ideas from another century, seems the primary driver of change. But technology cannot answer the age-old question of whether humans choose compulsion or cooperation: it cannot create a “third way” between liberty and intervention. Ideas still rule the future, but sometimes we mistake new technology for new ideas.

Still, exciting developments abound in the physical sciences. The expanding boundaries of quantum mechanics promise to dramatically increase computing power. Biologists discover thousands of new species every year. Mathematicians prove new theories about prime numbers. Physicists and engineers make the possibility of affordable private space travel closer to reality every day. Meanwhile, advances in artificial intelligence, computer science, and information technology promise to radically alter our physical world through an emerging Internet of Things. If there’s one thing that still excites the Western imagination, it is the possibility of radical advances in technology — all due, at least in large part, to advances (and applications) in the physical sciences.   

By contrast, the social sciences and humanities are moribund, reduced to hyphenated studies and manufactured “intersectionality” disciplines. Academic work in the soft sciences is shrill and brittle, far more concerned with political and cultural crusades than teaching students or engaging in serious scholarship. Music, cinema, modern art, and literature suffer under the weight of their own pretensions and heavy-handed messaging. Historians whitewash history, English professors ignore English literature, and sociology devolves into a definitional science. It is no exaggeration to say that there is nothing new under the sun in these disciplines, at least in terms of real scholarly or professional advancement. 

Then we have economics, the orphaned social science that masquerades as a physical science. Economics has become the unwitting cousin of math, statistics, and finance, which explains why so many universities have shunted it off onto their business schools. Empiricism, the jealous impulse to apply scientific methodology to problems of human action, insists that economists have value only to the extent they successfully test and “prove” their hypotheses.  

As a result, economics has been corrupted into a predictive discipline that fails to correctly predict anything; into a prescriptive discipline that prescribes the wrong policies, and into an empirical discipline that collects data but misses the point.

This conflation of economic science with business and politics was a grave mistake, as Ludwig von Mises witnessed so clearly:

If it were possible to calculate the future state of the market, the future would not be uncertain. There would be neither entrepreneurial loss nor profit. What people expect from the economists is beyond the power of any mortal man.

The very idea that the future is predictable, that some formulas could be substituted for the specific understanding which is the essence of entrepreneurial activity, and that familiarity with these formulas could make it possible for anybody to take over the conduct of business is, of course, an outgrowth of the whole complex of fallacies and misconceptions which are at the bottom of present-day anticapitalistic policies.

Mises, perhaps more than any economist of his time, understood economics as a theoretical science. That understanding is at the heart of Austrian economics, and it is why the world desperately needs dead economists today. Carl Menger, Mises, Hayek, and Murray Rothbard, four dead horsemen of the Austrian school, have more to teach us than a thousand university professors or Ivy League PhDs at the Fed. These were serious scholars, from a time before the Pikettys and the Krugmans turned economics into a form of pop entertainment and a vehicle for promoting interventionism.   

We don’t revere dead economists to maintain their place in some academic hierarchy, or to satisfy an atavistic desire for an unchanging intellectual order. We revere them because their ideas still have purchase, because their work yields knowledge that is sorely needed today. We read them and promote them in order to understand the world as it is, filled with billions of purposeful but often irrational human actors. We need dead economists to save us from ourselves and to refute the stubborn myths of collectivism. We need them most of all because their work and their insights are far superior to those of most economists alive today. There is no "New Economics," only new academic work that painstakingly advances the the knowledge bequeathed to us.

One caution: ignore the critics, gatekeepers, and filtering by lesser minds. Go to original sources. Menger, Mises, Hayek, and Rothbard are all great thinkers who are best understood in their original and unadulterated forms.

Jeff Deist is president of the Mises Institute. He previously worked as a longtime advisor and chief of staff to Congressman Ron Paul. Contact: email; twitter.

 

Jeff Deist is president of the Mises Institute. He previously worked as chief of staff to Congressman Ron Paul, and as an attorney for private equity clients. Contact: email; twitter.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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