Austrian School Economists

"It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a 'dismal science.' But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance."

"Money is different from all other commodities: other things being equal, more shoes, or more discoveries of oil or copper benefit society, since they help alleviate natural scarcity. But once a commodity is established as a money on the market, no more money at all is needed. Since the only use of money is for exchange and reckoning, more dollars or pounds or marks in circulation cannot confer a social benefit: they will simply dilute the exchange value of every existing dollar or pound or mark. So it is a great boon that gold or silver are scarce and are costly to increase in supply. But if government manages to establish paper tickets or bank credit as money, as equivalent to gold grams or ounces, then the government, as dominant money-supplier, becomes free to create money costlessly and at will. As a result, this 'inflation' of the money supply destroys the value of the dollar or pound, drives up prices, cripples economic calculation, and hobbles and seriously damages the workings of the market economy."

"Behind the honeyed but patently absurd pleas for equality is a ruthless drive for placing themselves (the elites) at the top of a new hierarchy of power."

"This, by the way, is the welfare state in action: Its a whole bunch of special interest groups screwing consumers and taxpayers, and making them think they're really benefiting."

"Harold, the young kids out there are not going to be willing to go to the barricades in defense of lowered transaction costs."

"All my life, it seems, I have hated the guts of Max Lerner. Now, make no mistake: there is nothing personal in this rancor. I have never met, nor have I ever had any personal dealings with, Max. No, my absolute loathing for Max Lerner is disinterested, cosmic in its grandeur. It's just that ever since I was a toddler, this ugly homunculus, this pretentious jackass, has been there, towering over the American ideological scene. In the fifty-five years that I have been aware of Max's presence, in all of his many permutations and combinations and seeming twists and turns, he has taken the totally repellent position at every step of the way."

"In short, the early receivers of the new money in this market chain of events gain at the expense of those who receive the money toward the end of the chain, and still worse losers are the people (e.g., those on fixed incomes such as annuities, interest, or pensions) who never receive the new money at all."

"So: if the chronic inflation undergone by Americans, and in almost every other country, is caused by the continuing creation of new money, and if in each country its governmental "Central Bank" (in the United States, the Federal Reserve) is the sole monopoly source and creator of all money, who then is responsible for the blight of inflation? Who except the very institution that is solely empowered to create money, that is, the Fed (and the Bank of England, and the Bank of Italy, and other central banks) itself?"

"The more consistently Austrian School an economist is, the better a writer he will be."

"The clear and logical thinker will always be an 'extremist', and will therefore always be interesting: his pitafall is to go wildly into error. But on the other hand, while the orthodox 'middle-of-the-road' thinker will never get that far wrong, neither will he ever contribute anything either, aside from being generally deadly dull."

"[O]ften, only extremists' make sense, while eclectics and moderates are entangled in contradictions."

"If a man has the right to self-ownership, to the control of his life, then in the real world he must also have the right to sustain his life by grappling with and transforming resources; he must be able to own the ground and the resources on which he stands and which he must use. In short, to sustain his "human right.""

"The libertarian creed, finally, offers the fulfillment of the best of the American past along with the promise of a far better future. Even more than conservatives... libertarians are squarely in the great classical liberal tradition that built the United States and bestowed on us the American heritage of individual liberty, a peaceful foreign policy, minimal government, and a free-market economy."

"The cumulative development of a medium of exchange on the free market — is the only way money can become established. … government is powerless to create money for the economy; it can only be developed by the processes of the free market."

"Money is a commodity … not a useless token only good for exchanging; … It differs from other commodities in being demanded mainly as a medium of exchange."

"It doesn't matter what the supply of money is."

"Inflation may be defined as any increase in the economy's supply of money not consisting of an increase in the stock of the money metal."

"Money … is the nerve center of the economic system. If, therefore, the state is able to gain unquestioned control over the unit of all accounts, the state will then be in a position to dominate the entire economic system, and the whole society."

"Inflation, being a fraudulent invasion of property, could not take place on the free market."

"Freedom can run a monetary system as superbly as it runs the rest of the economy. Contrary to many writers, there is nothing special about money that requires extensive governmental dictation."

"A parent does not have the right to aggress against his children, but also that the parent should not have a legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parent and depriving the parent of his rights. The parent therefore may not murder or mutilate his child, and the law properly outlaws a parent from doing so. But the parent should have the legal right not to feed the child, i.e., to allow it to die. The law, therefore, may not properly compel the parent to feed a child or to keep it alive. (Again, whether or not a parent has a moral rather than a legally enforceable obligation to keep his child alive is a completely separate question.) This rule allows us to solve such vexing questions as: should a parent have the right to allow a deformed baby to die (e.g., by not feeding it)? The answer is of course yes, following a fortiori from the larger right to allow any baby, whether deformed or not, to die. (Though, as we shall see below, in a libertarian society the existence of a free baby market will bring such "neglect" down to a minimum.)"

"The problem is that he originated nothing that was true, and that whatever he originated was wrong."

"John Stuart was the quintessence of soft rather than hardcore, a woolly minded man of mush in striking contrast to his steel-edged father."

"Shameless sponging on friends and relatives … Marx affected a hatred and contempt for the very material resource he was too anxious to cadge and use so recklessly. Marx created an entire philosophy around his own corrupt attitudes toward money."

"One gratifying aspect of our rise to some prominence is that, for the first time in my memory, we, "our side," had captured a crucial word from the enemy. Other words, such as "liberal," had been originally identified with laissez-faire libertarians, but had been captured by left-wing statists, forcing us in the 1940s to call ourselves father feebly "true" or "classical" liberals. "Libertarians"’, in contrast, had long been simply a polite word for left-wing anarchists, that is for anti-private property anarchists, either of the communist or syndicalist variety. But now we had taken it over, and more properly from the view of etymology; since we were proponents of individual liberty and therefore of the individual's right to his property. , p. 83"

"Let me take the liberty of being uncharitable but truthful.Rothbard had a problem. He thought he was a great economist, but practically nobody within the profession agreed and most of them had never heard of him. Rothbard had a solution. He was ignored because he held extreme pro-market views, which were ideologically unpopular in the academy. Rothbard had a problem. Milton Friedman held extreme pro-market views--not as extreme as Rothbard's, but far enough from academic orthodoxy so that the same effect should have existed. But Milton Friedman not only wasn't ignored, he was viewed within the profession as a leading figure--despite his unpopular political views. Rothbard had a solution--to persuade himself and his followers that Milton Friedman was really one of them instead of one of us, hence his acceptance by the profession didn't contradict Rothbard's view of the reason for Rothbard's non-acceptance.Maintaining that claim was difficult--at one point I remember being told by a Rothbard supporter, explaining why he was not going to publish a letter of mine in his journal that contained quotes from my father inconsistent with Rothbard's account of my father's views, that if Rothbard and Friedman disagreed about what Friedman's views were, Rothbard was right."

"It may come as a surprise to learn that for Rothbard the New Left's most "crucial contribution to both ends and means…is its concept of 'participatory democracy.'" … This may seem less surprising once one realizes that for Rothbard the free market is the fullest realization of participatory democracy. … The political appeal of participatory democracy for Rothbard was its requirement of decentralization, and its rejection of a layer of political "representatives" above the people. But Rothbard also found the idea appealing outside the narrowly political sphere. He wrote: "Participatory democracy is at the same time…a theory of politics and a theory of organization, an approach to political affairs and to the way New Left organizations (or any organizations, for that matter) should function." And he praised "fascinating experiments in which workers are transformed into independent and equal entrepreneurs." Traditional "socialist" goals such as workers' control of industry, then, were apparently not anathema to Rothbard.Indeed, he would later argue that any nominally private institution that gets more than 50% of its revenue from the government, or is heavily complicit in government crimes, or both, should be considered a government entity; since government ownership is illegitimate, the proper owners of such institutions are "the 'homesteaders', those who have already been using and therefore 'mixing their labor' with the facilities." This entails inter alia "student and/or faculty ownership of the universities." As for the "myriad of corporations which are integral parts of the military-industrial complex," one solution, Rothbard says, is to "turn over ownership to the homesteading workers in the particular plants." He also supported third-world land reforms considered socialistic by many conservatives, on the grounds that existing land tenure represented "continuing aggression by titleholders of land against peasants engaged in transforming the soil.""

"For Rothbard, it was precisely capitalism that was the one and only savior of mankind. Whereas Buchanan was a strict constitutionalist and a strong patriot, Rothbard was opposed to government itself—and not just the American government, but all government. According to Rothbard’s anarcho-capitalism, all state functions could be served cheaper, better, and more effectively by the free market. This included the police and even national defense."

"For Rothbard, “no government interference with exchanges can ever increase social utility,” and “[w]e are led inexorably, then, to the conclusion that the processes of the free market always lead to a gain in social utility.” Therefore, “capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism. Not only are they compatible, but you can’t really have one without the other.” For Rothbardians—as opposed to their archenemies the neocons—the worst of all government activity is war: “It is in war that the State really comes into its own: swelling in power, in number, in pride, in absolute dominion over the economy and the society.” There is no difference between a Lois Lerner and a beat cop. They are both enforcers of the state, albeit in different clothing."

"For the evangelical left, equality and fairness are universally shared goals. Rothbard’s response was a book titled Egalitarianism as a Revolt Against Nature. The idea that freedom and democracy are not only compatible but downright synonymous is taken for granted in contemporary American culture, but here Rothbard disagrees as well. The popular conception of democracy is one in which every voter envisions their ideal society and then votes us in that direction. In the anarchist perspective, this is akin to everyone imagining themselves as a totalitarian dictator and then selecting the politician who will best implement their plan into reality. Rothbard thought of the vote in a different way. By regarding all state action as illegitimate, he viewed the two political parties as literal rival gangs whose power needed to be curtailed as much as possible and hopefully destroyed altogether. He regarded the air of prestige around Congress as akin to a Mafia don’s three-piece suit, a pretense of civility masking the murderous thug within. Accordingly, the New Right still regards vulgarity toward and disrespect for the elites as important mechanisms for revealing their true inner evil. Let them drop their masks and expose themselves as the moral abominations that they really are."

"Finding no room for intellectual discussion in Rand’s sphere (and years later satirizing her in his embarrassingly juvenile and unpublished play Mozart Was a Red), Rothbard searched for other alliances. So while Buchanan was joining with Nixon, Rothbard was singing the praises of Tricky Dick’s archenemies: the New Left. Sometimes it was hard to tell if the anarchist Rothbard was simply looking for people to take him seriously, and at other times it was hard to tell how they could. For Rothbard, the way to freedom was to destroy the only thing that ever stood in its way: government. He praised the Black Power movement at first, seeing it as a useful opponent to the state (though spending little time writing about race per se, being an ultra-individualist). In 1967 Rothbard wrote that Che Guevara was “an heroic figure for our time” and “the living embodiment of the principle of Revolution.” In other words, my enemy’s enemy is my friend—a principle that the New Right struggles with to this day."

"Noam Chomsky describes Murray Rothbard's vision of a libertarian society as "so full of hate that no human being would want to live in it." (I will not attempt to dissect this insane remark here except to note how the "anti-authoritarian" Chomsky purports to speak for all human beings.)"

"Murray Rothbard said, more than once, that there was nothing wrong about a person not fully understanding economics; but that those ignorant of economic principles ought not to be proposing governmental policies to govern economic activity."

"It is my contention that Rothbardian anarcho-capitalism is misnamed because it is actually a variety of socialism, in that it offers an alternative understanding of existing capitalism (or any other variety of statism) as systematic theft from the lower classes and envisions a more just society without that oppression. Rather than depending upon the the labor theory of value to understand this systematic theft, Rothbardian market anarchism utilizes natural law theory and Lockean principles of property and self-ownership taken to their logical extreme as an alternative framework for understanding and combating oppression. ... Murray Rothbard was a visionary socialist ... Because the market anarchist society would be one in which the matter of systematic theft has been addressed and rectified, market anarchism ... is best understood a new variety of socialism—a stigmergic socialism. Stigmergy is a fancy word for systems in which a natural order emerges from the individual choices made by the autonomous components of a collective within the sphere of their own self-sovereignty. To the extent coercion skews markets by distorting the decisions of those autonomous components (individual people), it ought to be seen that a truly free market (a completely stigmergic economic system) necessarily implies anarchy, and that any authentic collectivism is necessarily delineated in its bounds by the the natural rights of the individuals composing the collective."

"The goal of liberalism is the peaceful cooperation of all men. It aims at peace among nations too. When there is private ownership of the means of production everywhere and when laws, the tribunals and the administration treat foreigners and citizens on equal terms, it is of little importance where a country's frontiers are drawn. Nobody can derive any profit from conquest, but many can suffer losses from fighting. War no longer pays; there is no motive for aggression. The population of every territory is free to determine to which state it wishes to belong, or whether it prefers to establish a state of its own. All nations can coexist peacefully, because no nation is concerned about the size of its state."

"Mises was born in 1881 in my hometown of Lvov, in what is now Ukraine. He emigrated from Eastern Europe to New York in 1940 and became perhaps the most thoroughgoing American defender of laissez-faire capitalism. Years later Milton Friedman would recount a story about the first meeting of the Mont Pelerin Society, held in 1947. The group was meant to bring together what Europeans would call liberal intellectuals and what Americans would describe as libertarians. As Friedman recalled, “We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.” Furiously and famously, Mises declared, “You’re all a bunch of socialists!” and stormed out. Much like Rand with rent control, Mises felt that once income distribution is on the table, the jig is basically up. It simply becomes a matter of haggling over how much socialism there is."

"Mises (pronounced Mee-zis) was by far the most important figure of the Austrian School of economics. The Austrians eschewed economic calculation for a more philosophical approach to issues of finance and trade. They viewed modern theories as highly mathematical, heavily conceptual, and largely divorced from reality. For them, virtually every contemporary economist is akin to a geocentrist using increasingly complicated models to predict how celestial bodies circled the Earth. Difficult math doesn’t make a calculation true, and neither does it make its practitioner smart. This disdain for statistics can be seen in the New Right’s contempt for using numeric data as a mechanism of persuasion. It’s about the story, not the numbers."

"The dictatorship of the proletariat was the logical extension of Lenin’s agitprop; Fascism was more than the logical extension of liberty – it was embraced by Ludwig von Mises (1985 [1927], 42–51), the co-leader of the third generation Austrian School, [...] Mises’ political activity was consistent with his ideology: on 1 March 1934, he joined the Austro-Fascist Patriotic Front and their Werk Neues Leben social club (Hülsmann 2007, 677, n149). Mises may also have been a victim of propaganda: his justification for this tactical embrace was that fascists would protect property – the protection of which he saw as the very essence of liberty. [...] The Jewish-born Mises was lucky to escape with his life; he devoted much of the rest of it to describing his opponents as ‘Fascists’."

"Socialists have certainly good reason to be grateful to Professor Mises, the great advocatus diaboli of their cause. For it was his powerful challenge that forced the socialists to recognise the importance of an adequate system of economic accounting to guide the allocation of resources in a socialist economy. Even more, it was chiefly due to Professor Mises' challenge that many socialists became aware of the very existence of such a problem.... [T]he merit of having caused the socialists to approach this problem systematically belongs entirely to Professor Mises. Both as an expression of recognition for the great service rendered by him and as a memento of the prime importance of sound economic accounting, a statue of Professor Mises ought to occupy an honorable place in the great hall of the Ministry of Socialisation or of the Central Planning Board of the socialist state."

"It turns out, of course, that Mises was right. The Soviet system has long been dogged by a method of pricing that produced grotesque misallocations of effort. The difficulties were not so visible in the early days of Soviet industrialization or in the post-Second World War reconstruction period. The dams and mills and entire new cities of the nineteen-thirties astonished the world, as did the Chinese Great Leap Forward of the nineteen-fifties, which performed similar miracles from a still lower base. But those undertakings, like the building of the Pyramids or the Great Wall, depended less on economic coordination than on the political capacity for marshalling vast labor forces. Inefficiency set in when projects had to be joined into a complex whole – a process that required knowing how much things should cost. As Mises foresaw, setting prices became a hopeless problem, because the economy never stood still long enough for anyone to decide anything correctly."

"I probably was ... when I began my study, called the Fabian kind of approach and convinced that there must be intelligent solution of the many dissatisfactory events of this world. And so it was as a mild socialist, that I decided I must study economics. I was very soon 'cured' of these beliefs that socialism was the solution because I came after three years, and as a direct influence of Ludwig von Mises, who had then published his great book on Socialism demonstrating that the socialist solution was impossible in a technical sense."

"...there I came to know him (Mises) mainly as a tremendously efficient executive, the kind of man who, as was said of John Stuart Mill, because he does a normal day's work in two hours, always has a clear desk and time to talk about anything. I came to know him as one of the best educated and informed men I have ever known..."

"Though I learned that he [Mises] usually was right in his conclusions, I wasn't always satisfied by his arguments, and retained to the end a certain critical attitude which sometimes forced me to build different constructions, which however, to my great pleasure, usually led to the same conclusions. I am to the present moment pursuing the questions which he made me see, and that, I believe is the greatest benefit one scientist can confer on one of the next generation."

"There is no single man to whom I owe more intellectually, even though he [Mises] was never my teacher in the institutional sense of the word."

"As readers will remember, Mises in his famous socialist calculation argument proved that a fully socialist economy would collapse into chaos. If this is right, how can ostensibly socialist economies such as Soviet Russia exist? In answer, Mises said that these economies weren’t fully socialist. They allowed scope for private enterprise, albeit of a limited sort. Mises’s point applies to the German form of socialism as well as the Russian."

"The market, even more than the wheel, is one of the great commonplace servants of man. Professor Mises powerfully defends it against those who would subvert it to the service of selfish or shortsighted ends. But it is possible that the defense is stronger when in the hands of somewhat more moderate men. One is also bound to be puzzled over who is to vote in and support the economic and political order that Professor Mises demands. He is a vigorous foe of autocrats and dictators but he also has little respect for people at large. Defending advertising, to choose one example among many, he observes: "Like all things designed to suit the taste of the masses, it is repellent to people of delicate feeling." I wouldn't suppose that the people of delicate feeling are yet in the strength to take over."

"Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null and as a debater he is of Hyde Park standard."

"While it is possible to imagine Mises without Hayek, it is not possible to imagine Hayek without Mises."

"Among Mises’s greatest personal attributes was courage. He had the force of will and character to maintain a position that he thought true even if almost no one else did."

"Just when the hopes of socialism seemed to be about to come true, Mises voiced the thoughts uppermost in the minds of so many who lacked the courage to speak out. Socialism could not work or keep its promises, he argued, because under such a system economic calculations in terms of value were rendered impossible."