Academics From Austria

"I cannot help but protest in the strongest possible terms against the cartoon on page 3 of your publication of the 30th of December equating the present governments of Poland and Chile. It can only be explained by complete ignorance of the facts or by the systematically promoted socialist calumnies of the present situation in Chile, which I had not expected the F.A.Z. to fall for. I believe that all the participants in the Mont Pelerin Society conference held a few weeks ago in Chile would agree with me that you owe the Chilean government a humble apology for such twisting of the facts. Any Pole lucky enough to escape to Chile could consider himself fortunate."

"The illiterate expression ‘given data’ constantly recurs in Lange. It appears to have an irresistable attraction to mathematical economists because it doubly assures them that they know what they do not know. It seems to bewitch them into making assertions about the real world for which they have no empirical justification whatever."

"What the planning authority would have to know would not be the mere totals but the distinct, peculiar conditions prevailing in each enterprise which affect the information about values transmitted through market prices but would be completely lost in any statistical information about quantities that might reach the authority from time to time."

"There mere idea that the planning authority could ever possess a complete inventory of the amounts and qualities of all the different materials and instruments of production of which the manager of a particular plant will know or be able to find out makes the whole proposal a somewhat comic fiction. Once this is recognised it becomes obvious that what prices ought to be can never be determined without relying on competitive markets."

"A reconsideration of the discussion in which I took an active part more than 40 years ago has left me with a rather depressing view of the somewhat shameful state of what has become an established part of economic science, the subject of 'economic systems'. It appears to me that in this subject political attractiveness has been preserved by the flimsiest of arguments. The kindest thing one can say is that some well-meaning people have allowed themselves to be deceived by the vague and thoughtless language commonly used by specialists in the theory of these issues."

"These morals, or better this moral tradition, is the result of an evolution which occurred parallel to, and yet distinct from both biological evolution on the one hand, and the evolution of our intellect on the other hand."

"On the scale on which [tax cutting] is being tried, I'm a little apprehensive. I'm all for reduction of government expenditures but to anticipate it by reducing the rate of taxation before you have reduced expenditure is a very risky thing to do."

"My life has been dominated by my differences with John Maynard Keynes. That turns almost wholly on the - I believe, false - conviction that there is a simple relationship between aggregate demand for consumer goods and the volume of employment. Keynes was one of the most intelligent people I knew but he understood very little economics. He must not be blamed for his disciples. He knew the danger of inflation."

"[Milton Friedman] believes in an oversimplified quantitative relationship between a measurable quantity of money and the price level. You must leave it to the discretion of the central bank to so adjust the supply of ultimate cash reserves as to keep the price level stable."

"The social product which is now maintaining a human population of this world four or five hundred times as large as that which man could achieve in the natural hunting and gathering stage is owed only to the division of labor, skills, and knowledge. This division could never have been designed or planned, but it arose through and is now maintained by the guiding service of competitive market prices and wages that tell each person where its efforts can make the largest contribution to the total. These self-generating signals, which inform the individuals about the combined efforts of thousands of events of which they can have no direct information, bring about an adaptation of the individual efforts to the unknown. No central direction could achieve this adaptation because the knowledge of all the facts of which the market takes account is spread among thousands and cannot be known to any central authority. It is, of course, impossible to improve signals when one does not know what determines them. Wealth, which social justice would like to distribute as a reward for merit and need, is, therefore, due to the circumstance that the direction of individual efforts is guided by a choice between returns which depends largely on accidental circumstances of time and place and is effected but not conclusively determined by what the individual can know or do. Thus, the wealth which the advocates of social justice want to redistribute would not exist if social justice reigned. Social justice is a fraud, a promise to distribute what one would not have if one followed its bidding. Wealth just would not be there or would rapidly disappear if the ordering by the principles of the market that now guide its production were replaced by some others which would give to each that to which he imagines himself to be entitled."

"We have found a method of creating an order of human co–operation which far exceeds the limits of our knowledge. We are led to do things by circumstances of which we are largely unaware. We do not know the needs which we satisfy, nor do we know the sources of the things which we get. We stand in an enormous framework into which we fit ourselves by obeying certain rules of conduct that we have never made and never understood, but which have their reason."

"We do not owe our morals to our intelligence: we owe them to the fact that some groups uncomprehendingly accepted certain rules of conduct — the rules of private property, of honesty, and of the family — that enabled the groups practising them to prosper, multiply, and gradually to displace the others."

"Our morality itself is the result of a process of cultural selection. Those things survive which enable the species to multiply."

"I believe you will be shocked by my stating this so bluntly because we are still guided instinctively by those inherited "natural" emotions. But I think we must recognize that we have become a worldwide, peaceful, and prosperous society by having learned to disregard those natural instincts and to follow instead certain abstract rules of honesty—rules establishing private property and ultimately codified in the form of private law. It is the rules of property and contract on which the growth of a worldwide, peaceful, and prosperous society was based. All these are traditional rules that evolved by a process of selection, which made those groups who followed the new rules more prosperous than other groups, and which thus came gradually to govern the civilised part of the world. Those communities who adopted the new rules and, in doing so, infringed upon deeply embedded natural feelings became the successful ones, the ones who multiplied because they were more prosperous and were able to attract people from other groups."

"In a sense, we all are socialists. We are still governed by feelings that are based on what was necessary in the small group of known people among whom each had to aim at fulfilling the needs of persons he knew; where he had to collaborate with a definite group of fellows, who were given to him and whom he could not choose, to pursue common purposes. Our instincts still tell us to strive to serve the known needs of known people and that our pleasure in life is derived from the consciousness that we follow a set of common purposes with people whom we know and who share our environment."

"Our whole modern society, based on a far-ranging division of labour, is, however, essentially dependent on two factors that conflict with our natural instincts. The first is the assumption, implicit but not understood, that we can do more good to unknown people if we follow the impersonal signals of the market, which enable us to serve the needs of people whom we do not know and to make use of opportunities and facilities with which we have no direct acquaintance. The second is that for this purpose we can follow our own individual aims with freely chosen associates and are not bound to serve the concrete ends of the group into which we were born."

"I don't know what monetarism is. If monetarism just means a good old-fashioned quantity theory, of course it has not failed. If it means the particular version of Milton Friedman, I think it has because he imagines that he can achieve — ascertain — a clear quantity relationship between a measurable quantity of money and the price level. I don't think that is possible. In fact, just about 40 years ago in the opening sentences of my book, Prices and Production, I wrote that it would be a great misfortune if people ever cease to believe in the quantity theory of money. It would be even worse ever to believe it literally. And that's exactly what Milton Friedman does."

"The human groups have been selected for the effects of their habitual practices, effects of which the individuals were not and could not be aware. Customs are mostly group properties, beneficial only if they are common properties of its individual members but referring to reciprocal action. Morals have not only been designed by man, but man also usually does not understand their reason."

"All the paradigms of culturally evolved institutions, morals, exchange, and money refer to such practices whose benefits transcend the individuals who practice them in the particular instances. The result is that whole groups may be helped by them to expand into what I shall call extended orders, through the effects of practices of which the individuals are not aware. Such practices can lead to the formation of orderly structures far exceeding the perception of those whose actions produce them. They make possible the adaptation of such actions to unknown circumstances and lead to the formation of an indefinitely expansible order which can develop only through group selection, that is, a selection of groups for common attributes possessed by them."

"It is no exaggeration to say that the central aim of socialism is to discredit those traditional morals which keep us alive."

"And since any inflation, however modest at first, can help employment only so long as it accelerates, adopted as a means of reducing unemployment, it will do so for any length of time only while it accelerates. "Mild" steady inflation cannot help—it can lead only to outright inflation. That inflation at a constant rate soon ceases to have any stimulating effect, and in the end merely leaves us with a backlog of delayed adaptations, is the conclusive argument against the "mild" inflation represented as beneficial even in standard economics textbooks."

"It seems to me that my original plan is right, but I am afraid that I’ve come to the conclusion that politically, it is completely Utopian. Governments will never allow monetary competition, and even bankers do not understand the idea because they have all grown up in the system which is so completely dependent on central banks. So I think we need a roundabout way. After all, in the modern world, currency is no longer the most important money. Credit and credit cards are substitutes. While governments can stop people from issuing money, they can hardly stop them from opening accounts in something unless they introduce a complete system of exchange control. I do not expect that any bank will understand this idea. But I hope that one of the big dealers in raw materials will be prepared to open accounts which will be redeemable in so much of current moneys as are necessary to buy this list of raw materials. Through these accounts he can make his unit—call it the “solid”—the standard unit without it ever being used in circulation. People very soon will begin to keep their accounts in “solids”—the only thing which is trustworthy. Although it’s a thing where many people can compete, most of them will probably choose the same list of raw materials. If one major firm will start this, others will imitate it. So I think we can forget about existing money and existing banks, and gradually open a system of accounts which will displace the government money."

"I don't like criticizing Milton Friedman not only because he is an old friend but because, outside of monetary theory, we are in complete agreement. Our general views on what is desired and what is not are almost identical until we get on to money. But if I told him what I said before, that I very much doubt whether monetary policy has ever done anything good, he would disagree. He personally is convinced that a good monetary policy is a foundation for everything."

"I don't believe that we shall ever have a good money again before we take the thing out of the hands of government, and since we can't take them violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can't stop."

"Those who suffer from this monopoly should form a libertarian anti-labour union movement of workers directed against what has long become a deceptive farce favouring an elite that has gained dominance in a party wrongly claiming to represent the interest of all workers. Once it is recognized that the unions prevent people from getting jobs, such a movement may readily spread."

"The socialist argument continues despite its many defeats―on the impossibility of economic calculation under collectivism, the fallacious claims for the use of markets under socialism, the incompatibility of liberty and state direction of the economy, and many others. The argument is being won by the new liberals of the late 20th century. But many people still do not understand it. And most on the Left continue to resist it."

"Our basic problem is that we have three levels, I would say, of moral beliefs. We have the first instance, our intuitive moral feelings which are adapted to the small, person-to-person society where we act for people whom we know and are served by people whom we know. Then, we have a society governed by moral traditions which, unlike what modern rationalists believe, are not intellectual discoveries of men who designed them, but as a result of a persons, which I now prefer to describe as term of 'group selection.' Those groups who had accidentally developed such as the tradition of private property and the family who did succeed, but never understood this. So we owe our present extended order of human cooperation very largely to a moral tradition which the intellectual does not approve of, because it has never been intellectually designed and it has to compete with a third level of moral beliefs, those which the morals which the intellectuals designed in the hope that they can better satisfy man's instincts than the traditional morals to do. And we live in a world where three moral traditions are in constant conflict, the innate ones, the traditional ones, and the intellectually designed ones, and ultimately, all our political conflicts of this time can be reduced as affected by a conflict between free moral tradition of a different nature, not only of different content."

"I mean, it became particularly acute because Keynes, against his intentions, had stimulated the development of macroeconomics. And I was convinced that not only his particular conclusions, but the whole foundation of macroeconomics was wrong. So I wanted to demonstrate that we had to return to microeconomics, that this whole prejudice supported by the natural scientists that could deduce anything from measurable magnitudes, the effects of aggregates and averages, came to fascinate me much more. I felt in a way, that the thing which I am now prepared to do, I don’t know as there’s anybody else who can do this particular task. And I rather hoped that what I had done in capital theory would be continued by others. This was a new opening which was much more fascinating. The other would have meant working for a result which I already knew, but had to prove it. Which was very dull. The other thing was an open problem: How does economics really look like when you recognize it as the prototype of a new kind of science of complex phenomena which could not employ the simple model of mechanics or physics, but had to deal with what then I described as mere pattern predictions, certain limited prediction. That was so much more fascinating as an intellectual problem."

"Altruism is an instinct we've inherited from the small society where we knew for whom we work, whom we serve. When you pass from this, as I like to call it, 'concrete society', where we are guided by what we see, to the abstract society which far transcends our range of vision, it becomes necessary that we are guided not by the knowledge of the effect of what we do, but by some abstract symbols. Now, the only symbol which tells us where we can make the best contribution is profit. And in fact by pursuing profit, we are as altruistic as we can possibly be, because we extend our concern to people who are beyond our range of personal conception. This is a condition which makes it possible to produce what I call an extended order, an order which is not determined by our aim, by our knowing what are the most urgent needs, but by an impersonal mechanism which by a system of communication puts a label on certain things which is fully impersonal."

"I am now profoundly convinced of what I had only hinted at before, namely, that the struggle between the advocates of a free society and the advocates of the socialist system is not a moral but an intellectual conflict. Thus socialists have been led by a very peculiar development to revive certain primitive instincts and feelings which in the course of hundreds of years had been practically suppressed by commercial or mercantile morals, which by the middle of the last century had come to govern the world economy."

"The subordinate's job is not to reform or reeducate the boss, not to make him conform to what the business schools or the management book say bosses should be like. It is to enable a particular boss to perform as a unique individual."

"A manager's task is to make the strengths of people effective and their weakness irrelevant - and that applies fully as much to the manager's boss as it applies to the manager's subordinates"

"Keep the boss aware. Bosses, after all, are held responsible by their own bosses for the performance of their subordinates. They must be able to say: "I know what Anne [or John] is trying to do.""

"Never underrate the boss! The boss may look illiterate. He may look stupid. But there is no risk at all in overrating a boss. If you underrate him he will bitterly resent it or impute to you the deficiency in brains and knowledge you imputed to him."

"The postwar [WWII] GI Bill of Rights - and the enthusiastic response to it on the part of America's veterans - signaled the shift to the knowledge society. Future historians may consider it the most important event of the twentieth century. We are clearly in the midst of this transformation; indeed, if history is any guide, it will not be completed until 2010 or 2020. But already it has changed the political, economic and moral landscape of the world."

"That knowledge has become the resource, rather than a resource, is what makes our society "post-capitalist."

"In the 1950s, industrial workers had become the largest single group in every developed country, and unionized industrial workers in mass-production industry (which was then dominant everywhere) had attained upper-middle-class income levels. They had extensive job security, pensions, long paid vacations, and comprehensive unemployment insurance or "lifetime employment." Above all, they had achieved political power... Thirty-five years later, in 1990, industrial workers and their unions were in retreat. They had become marginal in numbers. Whereas industrial workers who make or move things had accounted for two fifths of the American work force in the 1950s, they accounted for less than one fifth in the early 1990s--that is, for no more than they had accounted for in 1900, when their meteoric rise began... By the year 2000 or 2010, in every developed free-market country, industrial workers will account for no more than an eighth of the work force. Union power has been declining just as fast... By the year 2000 or 2010, in every developed free-market country, industrial workers will account for no more than an eighth of the work force. Union power has been declining just as fast."

"The newly emerging dominant group is "knowledge workers." The very term was unknown forty years ago. (I coined it in a 1959 book, Landmarks of Tomorrow.) By the end of this century knowledge workers will make up a third or more of the work force in the United States--as large a proportion as manufacturing workers ever made up, except in wartime. The majority of them will be paid at least as well as, or better than, manufacturing workers ever were. And the new jobs offer much greater opportunities."

"Increasingly, politics is not about "who gets what, when, how" but about values, each of them considered to be absolute. Politics is about "the right to life"...It is about the environment. It is about gaining equality for groups alleged to be oppressed...None of these issues is economic. All are fundamentally moral."

"This society in which knowledge workers dominate is in danger of a new "class conflict" between the large minority of knowledge workers and the majority of workers who will make their livings through traditional ways, either by manual work... or by service work. The productivity of knowledge work - still abysmally low - will predictably become the economic challenge of the knowledge society. On it will depend the ability of the knowledge society to give decent incomes, and with them dignity and status, to non knowledge people."

"I think the growth industry of the future in this country and the world will soon be the continuing education of adults. ...I think the educated person of the future is somebody who realizes the need to continue to learn. That is the new definition and it is going to change the world we live in and work in."

"I would hope that American managers - indeed, managers worldwide - continue to appreciate what I have been saying almost from day one: that management is so much more than exercising rank and privilege, that it is much more than "making deals." Management affects people and their lives."

"Culture eats strategy for breakfast."

"Although he reputedly hated the label of ‘guru’, Peter Drucker was, by any standards, the greatest management guru the world has yet seen. In 1996, the McKinsey Quarterly journal described him as ‘the one guru to whom other gurus kowtow’ and Robert Heller described him as ‘the greatest man in the history of management’, praise indeed for a man who described himself as ‘just an old journalist’."

"What fascinated me about Drucker, and still does, is how he infuses his broad perspective on business issues with philosophical and historical considerations."

"The publication of Peter F. Drucker's The Practice of Management in 1954 was a turning point in the development of the discipline of management."

"Tomorrow everybody - or practically everybody - will have had the education of the upper class of yesterday, and will expect equivalent opportunities. That is why we face the problem of making every kind of job meaningful and capable of satisfying every educated man."

"For the social ecologist language is not "communication." It is not just "message." It is substance. It is the cement that holds humanity together. It creates community and communication. ...Social ecologists need not be "great" writers; but they have to be respectful writers, caring writers."

"Sören Kierkegaard has another answer: human existence is possible as existence not in despair, as existence not in tragedy; it is possible as existence in faith... Faith is the belief that in God the impossible is possible, that in Him time and eternity are one, that both life and death are meaningful."

"One of the great movements in my lifetime among educated people is the need to commit themselves to action. Most people are not satisfied with giving money; we also feel we need to work. That is why there is an enormous surge in the number of unpaid staff, volunteers. The needs are not going to go away. Business is not going to take up the slack, and government cannot."