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.
John Quiggin 
Life is too short.
Hazlitt (1971) story about capitalism competes with bedside stories with a happy ending. I do not wish to be disrespectful. I am quite serious. The story told does correspond to some empirical observations and therefore it is plausible that such observations might be made again. But it is wrong to draw the conclusion that therefore nothing else can happen. (Problem of set inclusion. Hazlitt tells a story that rings true for a sub-set of enterprises, which one may call small and medium owner-operated businesses. A multinational corporation does not fit in, nor do legal and accounting companies and banks, and human services such as child care, age care, education, medicine and fundamental research).
Adam Smith (1776), The Wealth of Nations, tells a more detailed story beside the incentive to produce the ‘right stuff’ in a market economy, which Smith envisages and advocates, in so far as he includes what later became known as the division of ownership and control. Lets note, Hazlitt (1971) is behind Smith (1776) in the time line of progress in verbal theorising.
Gordon (2019) advises his readers to ignore Quiggin (2019) and to refer back to Hazlitt Economics in One Lesson, published in the 1940s. Assuming Hazlitt (1971) has not unlearnt his One Lesson, Gordon’s advise is to repeat going back in time – going back to the future a second time!
The institutional environment in Europe and the rest of the world was different in 1776 from that in the 1940s and it is different from 2019. To name a few items in headline format: Slavery and colonialism, feudalism, fascism, democracy, monetary systems.
According to Gerard Debreu, supported by an extensive bibliography, the axiomatic approach to economic theory concerned with competitive private ownership economies of the 1950s takes its intellectual origins in Adam Smith. In this literature, words such as freedom of choice and profit maximisation, the compatibility of the behaviour of producers with what individuals want (‘the customer is king’ or the welfare of people), the finite life of the planet, resource feasibility, technological possibilities are taken seriously. Of course the notion of an equilibrium requires a little more than market clearing or marginal cost conditions. The question, is government a good thing or not, is excluded in line one by modelling an economy where the only institution is a price system. Shock and horror to the so-called realists. But, why? If one wants to have a market economy, then this is the way to do it. The model should specify exactly what verbal theoretians want and claim works. First major insight: The notion of freedom of choice makes sense if and only if everybody has enough wealth to exercise choice! This is theoretical progress. Neither the Austrians nor the neo-classical models contain this crucial assumption. (Well, neo-classical consumer choice theory in undergraduate texts show pictures where a budget line is bound away from zero. This makes sense once you know why. But none of the texts or the lectures I have come across pointed out that these pictures represent a strong assumption about income and wealth distribution. (Karl Marx and others described the misery when the picture looks different for many people. But Marx then went on to continue with verbal theorising.) So, Gordon’s argument that Hazlitt was an Austrian and not a neo-classical is of no importance because both are behind in the time line of progress in economic theory regarding market economies. Not learning the lessons shows up in for example Thomas Piketty’s (2013) Capital in the Twenty-First Century. Gordon’s advise: Ignore Quiggin, don’t look at math econ and reread Economics in One Lesson. Why? Why should I wish to be dumbed down?
The theory of incomplete markets is directly applicable to environmental degradation and, of course, global warming. Neither Hazlitt nor Gordon have anything to offer.
No need to continue beside perhaps repeating my comment on an earlier thread. Prof Quiggin used a similar method to that used by Hazlitt to update some important insights gained – learning – since the 1940s. IMO, the notion of opportunity cost is not crucial but I do appreciate it makes a lot of sense to people in the context of important contemporary problems, particularly those that involve the currently young and future populations. Surely, it is the role of governments to be concerned with the population as distinct from the current set of individuals. Surely, it can’t hurt to rattle the accountants a little regarding the meaning of economic costs.
as always I am blown away by the completeness of Ernestine’s critical powers. My only real insights are into the history of economic thought. The reason neoclassicists wish to impose their own definition of opportunity cost is because it was the central pillar of David Ricardo’s theory of Comparative Advantage. Without their definition of opportunity cost the whole foundations that support the current obsession with free trade is rocked violently. Ricardo was only interested in explaining how England could benefit from trade not in any other application of the principle of opportunity cost. It was this application that Karl Marx so strongly attacked as capitalistic imperialism. For the Twenty First century you cannot go past Thomas Piketty. His data collection steam is unparalled! Ernestine is right to advise economists to try and stick to modern day issues and not fight old academic wars. To paraphrase John F. Kennedy
“I am an economist NOT a member of some prisoner of a specific school of economic thought.”
Anon +1
JQ and Ernestine to specify and set up Office of Evaluator General.
Ernestine’s post is thought provoking, as always. In relation to crude theory and more advanced theory, one has to wonder why better theory has failed to worse theory in terms of which theory gained effective control to run and manage the extant socioeconomy. The easy answer is “politics” or “power”. However, the complete interpenetration of politics and economics in the modern socioeconomy or political economy means we are talking about one melded system, not two. In practice, every economic decision is a political decision and every political decision is an economic decision. We cannot pretend the two are different in practice.
Theory can untangle “pure economics” from “pure politics” to some extent if one makes rigorous modelling assumptions which “specify exactly what verbal theoreticians want and claim works”. This process produces new insights. Ernestine gives the excellent example: “The notion of freedom of choice makes sense if and only if everybody has enough wealth to exercise choice!” However, this unentanglement can only happen in theory. Implementing the minimum wealth condition is a matter of politics in practice.This final summation is an obvious and banal statement (by me). We need to discuss another, deeper issue.
There really is no “pure economics”. There are only pure models of verbal theoretical or extant social practice prescriptions. This stands in contradistinction to physics (as the hardest of the hard sciences) where it makes genuine sense to refer to pure physics and applied physics. I am not sure if Ernestine would agree here, but to me this means that while we may refer to pure and applied physics we should, in the case of economics, refer only to analytical and applied economics.
Ernestine has referred to the “axiomatic approach to economic theory”. Again, I do not know if Ernestine would agree, but my position is that all economics is derived axiomatically. The Austrians (at least those of the Mises Institute) explicitly avow this. They call their specific axiomatic system, Praxeology. However, all prescriptive economic theories (which is ALL economic theories) whether they avow or disavow having taken an axiomatic approach have indeed taken an axiomatic approach. Some or all of their axioms may be the same or different from those of Austrian economics.
In the context of economics, the axioms are simply the initiating or base rules of the system. Thus, axiomatic economics is simply another term for normative or prescriptive economics. In turn, all extant economic systems in practice run according to rules. They are governed by instituted rule systems meaning for example the rules of ownership and the rules and algorithms of accounting, finance and capitalization. Legal laws I term “rules” to place them in contradistinction to the fundamental laws described by the hard sciences. Rules (including legal laws) are made be humans and may be changed by humans. Fundamental laws of nature are “nature working within” [Francis Bacon] and fundamental laws cannot be changed by humans.
All economics is normative except for that sub-discipline which is analytical. It seems to me that analytical economics must attempt in the first instance to describe (model) the behaviors of a given axiomatic-algorithmic economic system with its suite of rules and prescriptions. Complex axiomatic-algorithmic rule systems developed by humans demonstrate what might be termed “chaotic emergence”. Chaotic emergence strictly speaking is not true emergence. It is rather emergence according to chaos theory. In chaos theory, complex systems are formally regarded as completely deterministic. The unpredictable nature of chaotic emergence relates to the great complexity of the system and the high sensitivity to initial conditions at any time t. Changing a rule setting, any rule setting, equates to changing initial conditions at time t.
In the above context, changing a rule setting equates to an exogenous input into the chaotic, deterministic, axiomatic-algorithmic system. The exogenous input of course comes from humans as autonomous agents. They are diverse agents, not homogenous homo economicus agents. In addition agents in aggregate show emergent behaviors; true emergence not merely “chaotic emergence”. I will have to leave that distinction aside or this post becomes too long.
It is relatively easy to demonstrate that an axiomatic-algorithmic (rule) system develops consistent long term outcomes, or asymptote tendencies, some of which were not predicted (being perhaps too complex to foresee especially through ideological lenses) but which in retrospect, after analyzing empirical outcomes, become amenable to theoretical and mathematical expression and thus formal proof. “Piketty’s Law” is such an example. I refer to r GT g. (Using the greater than symbol seems to make me fall foul of text commands on this blog.) The rules of unregulated capitalism are axiomatic-algorithmic in nature and strongly promote income flows in one given direction and thus wealth accumulation in a certain small sub-set of people to the impoverishment of the rest. Albeit, we must add that the rules of the re-distributive state (such as it exists at any time) run some flows of income back in the opposite direction.
If return on capital is greater than economic growth rate then inequality will increase. That is the full English expression of Piketty’s Law, IIRC. It’s an approach to an asymptote as Piketty explains. Clearly, something will break down in a too close approach to the asymptote so it is not a process which can persist indefinitely. In retrospect, the discovery or derivation of Piketty’s Law seems obvious and simple. One wonders why Marx in particular could not have discovered it. In general, one wonders why it remained undiscovered so long. A best guess seems to be that a secular (long term) low-growth, no-growth or negative growth economy was never seriously conceptualized by orthodox or heterodox thinkers. The blinkers were on and healthy indefinite growth (apart from cyclical dips) was such a basic assumption that nobody, it appears, noticed that is was an assumption. If the assumption had been discarded, it should have been possible to derive Piketty’s Law purely mathematico-deductively from the axiomatic-algorithmic rule set of neoclassical economics. No empirical work should have been needed to derive the expression. Rather, the expression should have been derived and then the empirical work done to prove or disprove the expression of the law in hypothesis form.
Of course, I cannot be exactly sure of Piketty’s progression in deriving his law. But my point stands. Somebody could and should have derived it much earlier. It’s implicit in the axiomatic-algorithmic rule set of neoclassical economics. That it took real world limits (if that was the cause) or an extensive economic malaise in the form of secular stagnation induced by neoliberal economics (if that was the cause) to near-expose the axiomatic-algorithmically guaranteed outcome of Piketty’s Law in a situation of market fundamentalism (such that Piketty was induced as it were to work to uncover it) is an indictment of nearly the entirety of economics, in my opinion. It points to a lack of general understanding and acceptance of the fact that normative economics (and it’s all normative with the different schools orthodox and heterodox simply have different norms) must pay much more heed to empirical outcomes and amend economic normative prescriptions (the axiomatic-algorithmic rule set) accordingly. Of course, amending mere parameters is not the same as amending the rule set. Amending rules is far more radical than amending parameters. Changing or holding steady the Reserve bank interest rate or changing tax rates is merely a matter of changing parameters in the current, given rule set. Changing the legal rules of ownership and income or changing the legal rules of finance (as examples) would begin the journey of a radical change to the current norms (the axiomatic-algorithmic rule set) of current economics.
Reading Gordon’s review, I found this
Did I miss this point in an earlier discussion here? I understand the point that’s being made here, I really do, but when I read a story about somebody throwing a brick through a window and a crowd of bystanders thinking ‘Oh, that’ll help business’, what goes through my mind is ‘That’s the thought that would occur to them? Really? Who the hell are the people making up this crowd? I don’t know anybody whose reaction to a window being broken by a thrown brick would be “That’ll be good for business”.’
Another thing that struck me about Gordon’s review is this
Gordon gives the impression of being confused about what ‘to the contrary’ means.
If you say that Hazlitt thinks it’s always bad for the government to intervene in the economy, and somebody responds ‘To the contrary, Hazlitt indicates examples where it might be good for the government to intervene in the economy’, then ‘To the contrary’ makes sense.
But if you say that Hazlitt thinks it’s always bad for the government to intervene in the economy, and somebody responds ‘To the contrary, Hazlitt indicates examples where it’s bad for the government to intervene in the economy’, then ‘To the contrary’ does not make sense.
That ‘Anonymous’ comment is mine. I guess I forgot to put in my screen-name and email for the second comment, but somehow it got through anyway. At least, I hope everybody can see it and not just me, because otherwise this comment is going to be hard to understand.
Capitalism in one lesson: defined by anger and a thought experiment by a mob not a rational human…
“Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
Ikon, what Debreu and others have called axiomatic approach for reasons I’ll indicate later on, has been named analytical by many more others.
I am not sure weather I am still up-to-date when I say in that research program, which Debreu called axiomatic, there are only 2 items in the description of ‘an economy’ which are taken as ‘axiomatic’, namely individuals’ preferences (leaving open how people get them) and finite natural resources. Everything else is open for investigation – what happens if another part in the description of ‘an economy’ is replaced with a different assumption. Perhaps it is at this point where the research program becomes analytical – I have no opinion on this though. In this context an axiom is an assumption which remains unless there is sufficient evidence that it cannot be maintained via some consensus conclusion. There is a lot of analytical work which explores the scope of the notion of individuals preferences – does it mean anything more in its weakest form than people are capable of making up their mind regarding alternative actions? From my understanding, limited as it is, the answer is No.
Any form of democracy that relies on popular vote surely presumes that people are able to make up their mind regarding alternative actions.
As for finite natural resources, I can’t see this axiom becoming challenged in the foreseeable future, least of all by natural scientists.
There are some (please don’t ask me for the authors’ names because it would take me a long time to recover the names of those I have in mind), who predict that economics will become a sub-discipline of natural science. Recently I have been listening to public debates regarding climate change on public TV in Germany (available free of charge in Sydney but not in Germany because locally there is a fee for public broadcasting – free lunch for me!) involving politicians from various parties, at least one representative from an industry, at least one person knowledgeable about economics (eg a member of the ‘Wirtschaftsweisen’ a committee of academic economists who advise governments), and at least one scientist of similar rank to the economist. It is amazing how much agreement there is between the scientists and the academic economists belonging to the group you call ‘advanced theory’. Furthermore, there is only one party, the AFD, which is ‘stuck in the time of Hazlitt’s Economics in One Lesson (given the history of Germany it is not surprising that many ask on which side they, the AFD, are on now – brown or blue so to speak).
Isn’t it amazing how much discussion JQ’s work generate. Thank you JQ.
For what it is worth, Diane Coyle’s review seem to me to be apt and fair and its usefulness is acknowledged.
I don’t understand the point of the critique or the point of the rebuttal. Did Hazlitt himself identify as an Austrian economist? Does the book say he was an Austrian economist? If no and no, then who cares what the keepers of the flame at the Von Mises Institute think?
The bigger point AFAICT, is that Hazlitt argued that free markets are just wonderful and the book extends his argument to say that is true except when they aren’t.
A more challenging project – the next book, maybe? – would be to take Milton Friedman’s Capitalism and Freedom and show why he was right only a special set of circumstances. I suspect Friedman might be a tougher target than the journalist-advocate Hazlitt.
“when I read a story about somebody throwing a brick through a window and a crowd of bystanders thinking ‘Oh, that’ll help business’, what goes through my mind is ‘That’s the thought that would occur to them?”
Recently, BP, which wants to drill for oil in the Great Australian Bight, said that if there was a spill the money spent on the clean up would be good for the economy. Obviously they haven’t read their Henry Hazlitt.
Ernestine,
I refer to your words;
“… in that research program, which Debreu called axiomatic, there are only 2 items in the description of ‘an economy’ which are taken as ‘axiomatic’, namely individuals’ preferences (leaving open how people get them) and finite natural resources. Everything else is open for investigation – what happens if another part in the description of ‘an economy’ is replaced with a different assumption.”
That looks empirically and analytically entirely supportable to me. I am particularly impressed to note that money and markets are not included in the “axiomatic minimum” if I might call it that. Note, my being even able to formulate those two sentence-thoughts owes a crucial amount to your good self via our discussions and arguments in this blog over some period of time.
I imagine in turn that what happens when money and markets are added to the “axiomatic minimum” is where matters get really interesting. Of course, money and markets should only be added incrementally and mathematically (again I owe this insight to you if you agree it is a correct characterization) commencing first with the very simplest possible instantiations of “money” and “market” possible. (Whereas our current economy has multiple instantiations or extant forms of money-like instruments and of markets). If I look at the “analytical economics” program from this angle and if I have characterized it correctly it looks like a very complex but potentially fruitful research program, analyzing matters from the minimum ground up.
Let me know if the above makes sense or needs correction from your point of view. Thanks.
Smith9, I will accept ‘corporate flacks’ as an answer to my question, ‘Who are the people making up this crowd?’
Fun fact: For a couple of decades the price of a hit of heroin (the most free market of all) was a standard $50 in Cabramatta and $80 in Kings Cross. Cabramatta and Kings Cross are a 30 minute $5 train ride apart. That free market had never heard of Walras, or Jevons, or Hazlitt. I guess their general low level of interest in literature kept the market from doing what it was supposed to do naturally.
Peter T
Is the heroin market really a free market? I suspect if anyone tried to freely enter and disrupt the market, like Uber did with taxis, they might find themselves observing the bottom of Sydney Harbour, permanently.
Not so fun questions for Peter T,
Were the hits at the two locations quantitatively and qualitatively the same with respect to weight, purity and types of cutting agents? The devils of addiction are in such details. Levels of policing at each location, as an obstacle to business or as bribe overheads (sorry for the cynicism) could affect pricing. Customers may be different (differently endowed with money) at each location too.
Many years ago, when I was young, there was a heroin addict and dealer in my acquaintanceship circle at university. I was present when someone asked him “How do you decide on the price of a hit?” His reply word for word was, “Whatever the traffic will bear.” It’s a common enough saying, I guess, made a little acerbic in its humour by the play on illegal trafficking.
I only discovered recently that this wording seems like a direct quote from Veblen.
“The absentee owner of natural resources is enabled to make them a source of free income, that is to say make them assets, by the power legally conferred on him to withhold them from use until his charge for their use is allowed him. What this charge will be is always a question of what the traffic will bear; which is the same as what will yield him the largest net return. But what the traffic will bear will vary indefinitely according to circumstances of the case, and the value of given resources as assets will vary accordingly. Aside from changes in the industrial arts, the most considerable and most widely effective of these varying circumstances is the varying degree in which competition prevails among the owners of such assets.” Thorstein Veblen – from Chapter VII of Absentee Ownership.
Of course, “what the traffic will bear” was likely an idiom from times well before Veblen. Did it refer to the price that could be charged at bridge crossings? Veblen is interesting as his discussion implicitly suggests the possibilities of monopoly or oligopoly for the absentee owner(s). It also makes one question why the absentee owner should own the natural resource to begin with. Being a free gift of nature should it not belong to all in common? The latter would imply the income going into general revenue for disbursement as some form of social wage.
Nope.
In modern English, the primary use of ‘traffic’ is to mean ‘vehicles coming and going’, and other uses like ‘trade/commerce’ are secondary; but historically it was the other way around. According to the Online Etymology Dictionary (a wonderful resource), the word was first used in English, to mean trade or commerce, in around 1500, and the sense of ‘vehicles and pedestrians coming and going’ was first recorded in 1825.
In response to J-D. My use of “to the contrary” means that Hazlitt, as I read him, does not make the universal claim that Professor Quiggin attributes to him but gives particular examples of government failure.
I thank Professor Quiggin for his attention to my review and may respond to some of his comments later.
But the market for a hit is a special case?
Users are not ‘rational ‘ and do not behave in the way one would predict.
Smith9 – violent competition among dealers is rare. They can’t be bothered (the ethnic background of dealers in New York, for instance, has changed several times over the last two decades with very little fuss). Gang violence is about “honour” much more than profit.
The heroin and cocaine was much the same, the policing varied over the years but no consistent patter (sometimes a crackdown in the Cross, sometimes in Cabramatta).
The prices were set by what the users could pay (Cross wealthier, more transient), by both sides desire to avoid complications like giving change, by custom and so on. What did change was not the cash price but the degree of credit offered, freebies, willingness to barter. This has been observed in other markets – eg car sellers prefer to vary the terms rather than the price.
Points are: “price” is often a composite of money, terms, time etc. So very hard to measure accurately. Secondly, social pressures condition the most obvious element – the posted cash price, often quite strictly. Both points tie in with the fact that money is not some universal measure but a single strand in a complicated web.
The statements ‘Government interventions in the economy always have bad outcomes’ and ‘In these particular cases, government interventions in the economy have had bad outcomes’ are not synonymous, but they are not contrary. The effect on the reader of describing them as contrary is confusing. I know it’s confusing for the reader because it confused me.
Beyond that, I’m curious to know Hazlitt’s purpose in giving examples of government interventions in the economy which had bad outcomes. Logically, such examples would disprove an assertion that government interventions in the economy never have bad outcomes, but I don’t know of anybody who asserts that government interventions in the economy never have bad outcomes. If Hazlitt had a different purpose, I don’t know what it was.
Hi J-D,
I am sorry that I sed confusing language.
Hi J-D
I am sorry that I used confusing language.
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.
“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.
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.
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.
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.
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.
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.
“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.”
Fascism has been in power in Italy for a number of years and had very effectively — and bloodily — crushed the labour and socialist (libertarian and Marxist) movements. This state violence was precisely why von Mises supported it.
It should also be noted that von Mises did more than just praise fascism — he actually advised the Austrian fascists:
http://anarchism.pageabode.com/anarcho/propertarianism-fascism
Not least, because the fascists were the ones willing to smash the labour movement — unions being, for von Mises, the main cause of high unemployment during the Great Depression. Sadly, fascist state violence against trade unionism did not cause unemployment to fall.
So von Mises did not have to “see the future” — he saw what fascism was and what it had done and was doing (cracking union and socialist heads) and supported it. He saw this as a key role for his “minimum” state, incidentally.
[…] which rejects equilibrium thinking. The same criticism was made a while ago by David Gordon and I responded by quoting Hazlitt […]