Wanted: Critics of Austrian Economics

by
Per Bylund
My articles My booksMy videos
Follow on:

Present-day Austrian economics suffers from a significant and rather interesting problem: a lack of critics. What I mean by this is not that there are not enough trolls, hecklers, and politically-motivated anti-economists. No, I mean that there are very few, if any, real and knowledgeable critics of Austrian economic theory.

The Austrian tradition has had an important and lasting impact on economics over the past century and a half. Much of this was due to fierce scholarly debates either started by Austrians or in which they played a prominent role. Consider Carl Menger’s debate with the German Historical School on method and theory in what came to be known as the Methodenstreit. Or Böhm-Bawerk’s takedown of Marx’s exploitation theory. Or the decades-long debate on the (im)possibility of socialism that followed Mises’s 1920 essay “Economic Calculation in the Socialist Commonwealth.” Or Hayek’s important academic and popular critiques of and opposition to the Keynesian avalanche. And that’s only in the first four generations of Austrian scholars!

Regardless of the degree to which Austrians were victorious, the debates motivated further efforts to develop and strengthen economic theory. The debates got attention from and thus made an impact on scholars in other schools of thought. When the market socialist Oskar Lange stated that “a statue of Professor Mises ought to occupy an honorable place in the great hall of the Ministry of Socialization or of the Central Planning Board of the socialist state,” it was certainly meant as a gibe—but it also recognized Mises’s important contributions in the Socialist Calculation Debate.

The closest thing we have to debates today is the Austrian opposition to the claims of Modern Monetary Theory (MMT) (see e.g., here and here), but MMT is not a scholarly or theoretical perspective, but a political one—with little to no impact on economics of any shape or form. So while MMT makes a splash online and in the media, it is largely—and for good reason—ignored by actual economists. But those same economists shy away from other debates as well, including academic and theoretical.

We could—and should—have vociferous theory debates on fiat currency, central banking, international trade and migration, economic growth, entrepreneurship, and the burden of regulations, to mention a few. A new Methodenstreit is also overdue, especially considering the constant failures of economic predictions and policy analyses. But there is nothing. This lack is to the detriment of economics in general and to Austrian economics too.

Certainly, Austrian economics does not depend on the mainstream. We nowadays have our own institutional support in the form of peer-reviewed journals (such as the Quarterly Journal of Austrian Economics (QJAE) and the Review of Austrian Economics (RAE)), conferences like the Austrian Economics Research Conference, and educational organizations like the Mises Institute, the Universidad Francisco Marroquin, Universidad de la Libertad, Universidad Rey Juan Carlos, and George Mason University. These are all important for keeping the tradition alive and keep developing sound economic theory. But this will not spur debates with mainstreamers and other non-Austrians. My own article in QJAE debunking the “chartalism” of MMT—requested by MMT champion Stephanie Kelton—was simply ignored.

This is, in part, a failure of modern economics, which is much less of a scholarly tradition than it used to be. Indeed, non-Austrians used to cast a much wider net and be overall much more scholarly and curious in their reading and were not afraid to engage with novel or alternative ideas. For example, the late Harold Demsetz of UCLA responded to Walter Block in the RAE. But now they typically hide in their ivory silos and are neither aware of nor interested in what may be going on outside of their own narrow specialization within so-called “mainstream” economics.

But the blame also falls on us Austrians. We do not do nearly enough to engage with and critique mainstream economists and their scholarship. It is certainly difficult to publish in their journals and get their attention, especially when leveraging a perspective that challenges the orthodoxy, but there are ways—and, much like the masters of our tradition, we should seek them out. 

Austrians are overall better at doing this outside of the mainstream, such as with heterodox economics (e.g., here and here) or introducing Austrian theory to business disciplines (e.g., here). But the reach of these efforts is often very limited, and they have no impact on economics or economists.

Our failure to reach out is just as obvious in public (political) debates. Austrian economics is referenced increasingly often, but it is usually intended as a dismissal of libertarian philosophy. A typical comment would demand empirical proof that “Austrian policy” has been successful. Rarely does the critic know that Austrian economics is a body of positive theory—a scholarly tradition in economics, not a political movement. And when one does, then it is obvious that society in general and economics in particular desperately needs another Methodenstreit.

All is not bleak, of course. We cannot be blamed for the very low quality of our critics. But we should do much more to assume the proper role of economists in society: as the voice of reason and rationality, the sober critic of policies based on fantasy. And, of course, our proper role in economics: as the principled, stringent, and fearless proponents of sound economics and proper theory. That is, to not give in to evil and nonsense, but proceed ever more boldly against it. 

Critics will then come forth. And they will have to rise to our level.