Was Hazlitt an Austrian economist?

Reviews of Economics in Two Lessons are starting to come in. Here’s one, favorable but not rapturous from Diane Coyle. Another, from David Gordon at the Mises Institute is, not surprisingly, more negative.

The main (though not the only) complaint is that I treat Hazlitt as a One Lesson neoclassical economist. More precisely, in relation to opportunity cost “[Quiggin] applies the concept as it is used in neoclassical economics, but Hazlitt was an Austrian and does not use the concept in this way.” In particular, Gordon complains that I invoke “neoclassical equilibrium” a concept rejected by Austrians.

I have a couple of responses to this.

First, for the topics Hazlitt discusses, and those in my treatment of Lesson 1, there’s no obvious difference between the Austrian and neoclassical views. Both rely on the idea that market prices reflect opportunity cost, and that failure to recognise this leads to mistaken government interventions.

Here’s a piece quoted by Gordon as representative of Hazlitt’s approach

“Yet it ought to be clear that a minimum wage law is, at best, a limited weapon for combating the evil of low wages, and that the possible good to be achieved by such a law can exceed the possible harm only in proportion as its aims are modest. The more ambitious such a law is, the larger the number of workers it attempts to cover, and the more it attempts to raise their wages, the more likely are its harmful effects to exceed its good effects.”

There’s nothing here, as far as I can see that couldn’t have been written by an orthodox neoclassical economist like, say, Milton Friedman.

In terms of the history of economic thought, I don’t think Gordon is right in his characterization of Hazlitt as rejecting neoclassical economics. Here’s a long piece written in the early 1970s in defence of capitalism (which was then at a low point in terms of public confidence. Hazlitt observes that

“When production is in equilibrium there tends to be approximately the same profit margin, relative costs and risks considered, in the production of each of the thousands of different commodities and services.

and proceeds to give a thoroughly neoclassical discussion of how equilibrium is reached. Later he endorses JB Clark’s marginal productivity ethics, a position too neoclassical even for many in the Chicago school. He uses “entrepreneur” as a synonym for “capitalist”, and doesn’t even give nod to Austrian ideas about creative destruction and the like.

Doubtless, you could find quotes from Hazlitt that are more Austrian in their flavor. He wasn’t an economic theorist, primarily concerned with consistency, but a journalist and advocate, making arguments for free markets, and drawing on a variety of sources to do so.

I’ve done my best to be fair to Hazlitt, and point out where he was right as well as where he was wrong. Despite that, the Mises Institute tweet linking to Gordon’s review described my book as a “hit piece”. I hope readers, including those who agree with Hazlitt more than me, will make up their own minds about this.

Separately, I had a run-in with some Mises fans on Twitter over my passing observation that, while not themselves fascists, Mises and Hayek allied themselves with fascists (Dollfuss and Pinochet respectively) against social democrats. The discussion was an exercise in talking past one another – the Mises fans quoted passage after passage in which Mises criticised fascists, while I quoted passages where he said that, nevertheless, they were a force for good in the 1920s and 1930s.

31 thoughts on “Was Hazlitt an Austrian economist?

  1. “Was Hazlitt an Austrian economist?”

    If all else fails, take the words literally.

    The answer to the question is No. Hazlitt was not an Austrian but an American and he was not an economist but a journalist by profession. Source: Wikipedia.

  2. Mr. Quiggin, you said:

    “…the Mises fans quoted passage after passage in which Mises criticised fascists, while I quoted passages where he said that, nevertheless, they were a force for good in the 1920s and 1930s.”

    Yeah need (1) to have historical perspective and (2) understand Mises’s utilitarian assumptions.

    Mises always said that because economics was a value-free science, the economist should assume that politicians were well intentioned and that the goals they claimed the pursue were sincere. The role of the economist was only to show whether they’re proposed policies would each the desired effect. He held that assumption for all political analysis. Rothbard actually disagreed with this, but it’s an important perspective to understand Mises and other old Utilitarian thinkers.

    For historical perspective, people (1) think of Fascism as an entirely racist/anti-Semitic doctrine, but that was predominantly a Nazi thing, and Mises was referring more to Mussolini. More importantly, is Mises was writing when Fascism was actually on the rise, as a new and untried idea, before war and genocide, none of which were part of fascist selling points, obviously. They sold their ideas on the same grounds as modern Democrats (“a chicken in every pot” type thing). He’s also referring not just to the politicians but to the masses of people who supported it, coming out of the economic crises of the 1930s, that was a world-wide phenomenon.

    Many critics are mad at Mises for (1) being a utilitarian and (2) not being able to literally see the future. And when you consider that point, what you are left with is Mises being one of the only people to recognize Fascism as the disaster it would prove to be back when people in the FDR administration were requiring their employees to read books by Mussolini’s favorite economist. Many people criticizing Mises for this are the same types who, in 2018, would say things like “I’m against slavery, and I don’t care who knows it,” while patting themselves on the back for their brave adoption of a position literally everybody has, present company excluded I was just trying to make a point.

  3. The reason Hazlitt gives examples of government interventions with bad outcomes is that he thinks that many people favor the interventions he discusses, and he hopes to convince people not to do so.

    I’m having trouble figuring how that’s relevant to a general exposition of economic theory.

    Of course, it’s possible that it’s more important than a general exposition of economic theory, but that’s a different thing.

  4. Jeff P: There were plenty of people against slavery at the time (there was a war about it ,as I remember), and plenty against Fascist murderers like Mussolini and Dollfuss, even before Hitler came to power. But I agree that if you are draw the line at Hitler, while excusing the “good Fascists”, you shouldn’t be worried about the political implications of your economic position.

  5. Anyone who can write “war and genocide, none of which were part of fascist selling points, obviously.” does not know much about the fascist program. War was very explicitly a part – a major “selling point”. Genocide not so much, although I think a good many people understood that a proper Italian or Spanish empire in Africa would not have a lot of Africans in it.

  6. There are 40 million people held in slavery in the world today, so clearly it’s not the case that literally everybody is opposed to it.

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