Does State Sponsorship Corrupt Economic Science

[Lilburne]

Can we start another thread regarding this topic? I would, but I’m having issues with the web site, and the only submission method that is working for me is the “Quick Reply” function. I tried, but failed, to start a new thread entitled “Does State Sponsorship Corrupt Economic Science?” with the following OP:

I’m starting this thread, because this question has come up frequently in other threads, and I think it very much deserves its own home.

I’m not prepared to offer a full argument here, but I do agree with liberty student that the answer to the question of this thread is “yes”.

In lieu of a full argument, I’ll just offer the following important, if non-conclusive, historical notes:

While the Austrian “Austrians” did serve as bureaucrats, the Austrian state did not seem to be as involved in the University of Vienna as the German Empire was in the University of Berlin. The former was the cradle of the Austrian School, and the latter was the cradle of the German Historical School, which in turn gave rise to American Institutionalism. I’d be surprised if anyone here has much favorable to say about the last two economic schools. Also the leader of the second generation of Historical School members, Gustav von Schmoller, thought himself as leading the “intellectual bodyguard of the House of Hohenzollern.” The modern PhD was born in Berlin, and its rise in America coincided with the rise of the statism of the Progressive Movement and the push for government positions for academics.

[liberty_student]

@Rooster

Since Mises was not an anarchist, isn’t he also a crank then?

Where Mises saw the possibility of the market providing, he supported the market. He didn’t support a state alternative over a market one.

Anarchism in Austrianism is a relatively new evolution. I don’t think bringing up Mises’ time working for the Austrian government, or his time in Vienna is particularly relevant post-Rothbard. There are a good number of principled Austrians who do not take government money where they can help it. LvMI, a privately funded institution, seems to be the bastion of these folks.

For sure, others claim to do work under the Austrian banner while receiving state funds procured under threat of violence. As pure scientists, economic scientists, surely they must recognize the contradiction in preferring the state over the market, particularly if they are Austrians. They must accept that their own research is being conducted inefficiently. I don’t think Mises would have disagreed with this premise.

[hayekianxyz]

I’m guessing you’re going to ignore this (although I wish you wouldn’t), but for any interest third parties, I’ll post my thoughts.

@liberty student

Where Mises saw the possibility of the market providing, he supported the market. He didn’t support a state alternative over a market one.

But this is no different from many other economists who see the market failing in various regards. The difference is that these economists see market failure as being more widespread than Mises did. Now, I don’t see why Mises should get a free pass whereas they other economists are held accountable to the extent of being called “cranks” and “hacks”. If you really wish to call them that, that’s OK, but you’d probably be better to provide some sort of scientific criteria for doing so.

@liberty student

I don’t think bringing up Mises’ time working for the Austrian government, or his time in Vienna is particularly relevant post-Rothbard. There are a good number of principled Austrians who do not take government money where they can help it. LvMI, a privately funded institution, seems to be the bastion of these folks.

For sure, others claim to do work under the Austrian banner while receiving state funds procured under threat of violence. As pure scientists, economic scientists, surely they must recognize the contradiction in preferring the state over the market, particularly if they are Austrians.

Why is it not relevant post Rothbard? Look, by your own standards in order to avoid being called a crank, Mises should have realised that the state is not necessary whatsoever. He didn’t, just like many other economists don’t. But even by your own standards your argument falls short of the mark, the government of Austria was not the minimal state that Mises proposed when he worked for it. So you’re left with the conclusion that one of the most influencial and profound defenders of the free market was unprincipled, I’m sorry, but I have to reject that.

Now, I don’t see why Austrians working for the government makes them unprincipled in the slightest. For somebody to call themself an Austrian, I’d say that all they need to demonstrate is some understanding of the teachings of Menger, Bohm Bawerk, Hayek and especially Mises (as well as others such as Kirzner, Rothbard etc.). But none of this entails the value judgement that “government is bad”. The belief that government is immoral and illegitimate is one held by libertarians, who often happen to be Austrian economists. But there is no a priori reason that they need be. Roger Koppl and Ludwig Lachmann are clearly Austrians, I don’t think either of them would consider themselves to be libertarians.

Austrian economics can show the nature of the market system and government intervention, the desirability of either of them is up to libertarian political philosophy.

@liberty student

They must accept that their own research is being conducted inefficiently. I don’t think Mises would have disagreed with this premise.

I do, Mises was a strict advocate of value freedom in economic science, following Max Weber in this regard. Mises believed that in economic discourse only means should be discussed, now, what does this mean if not that any appeal to efficiency violates value freedom.

[laminustacitus]

I was actually in the middle of splitting the original thread.

[wilderness]

ignore

[Juan]

Frankly, asking whether institutional crime and violence, i.e. the state, corrupts the pursue of knowledge and truth is like asking whether water is wet.

The problem of course is not asking the question, but the fact that in a radical libertarian site, people who supposedly are not trolls, bother to argue the benefits of the state.

This is not even a miniarchism vs. freedom issue, but a laughable defense of socialism in the realm of science.

[Juan]

market failure. two threads for the very same topic at the same time.

[wilderness]

@GilesStratton

Austrian economics can show the nature of the market system and government intervention, the desirability of either of them is up to libertarian political philosophy.

What nature of market system and government intervention does Austrian economics abstract?

[laminustacitus]

@Lilburne

While the Austrian “Austrians” did serve as bureaucrats, the Austrian state did not seem to be as involved in the University of Vienna as the German Empire was in the University of Berlin. The former was the cradle of the Austrian School, and the latter was the cradle of the German Historical School, which in turn gave rise to American Institutionalism. I’d be surprised if anyone here has much favorable to say about the last two economic schools. Also the leader of the second generation of Historical School members, Gustav von Schmoller, thought himself as leading the “intellectual bodyguard of the House of Hohenzollern.”

What came first? Just because the German Historicists were the self-proclaimed “intellectual bodyguard of the House of Hohenzollern” does not mean that they were that because of Prussian - Hegel, and the right Hegelians championed the idea that the end of history was a state very similar to 1830s Prussia, thus influencing the German Historicists’ staunch pro-Hohenzollern position. The philosophy that individuals have very much aids in the determination of their behavior, beliefs, and theories; politically, while the Austrians were influenced by the ideas of the Classical liberals, the Germans were influenced by the right Hegelians, thus explaining the differences between the two.

@Lilburne

The modern PhD was born in Berlin, and its rise in America coincided with the rise of the statism of the Progressive Movement and the push for government positions for academics.

The rise of the PhD in America. Furthermore, the rise of the PhD has far more history than its German portion, and the fact that it is latin for PhilosophaeDoctor (doctor of philosophy) gives it a rich history in Scholastic thought as well, with the Spanish Scholastics forshadowing much of today’s Neoclassical economics including the theory of subjective value, and a strong position against inflation.

In addition, one of the founders of the entire instituionalist school of thought and probably its most famous advocates, Thorstein Veblen, had a difficult staying in academia, which rejected much of his theories in favor of Neoclassical approaches.

[hayekianxyz]

Look, if you really wish to make the claim that the state corrupts science, it’s not much to ask of you that you document such behaviour on behalf of the state. By which I mean you should be able to prove that the relevant department of government has passed some law or acted in another relevant manner that has caused research universities to skew their science towards statism. But, I don’t see this as happening. The top department in the US for political philosophy is at U of Arizona, two of the faculty members there are Gerald Gaus and David Schmidtz. Who are, in case you don’t know, classic liberals. Hillsdale is a university completely free from state funding but got rid of a number of Austrians there nonetheless. GMU is a top 50 PhD university, which is nonetheless mostly devoted to Austrian economics.

Also, I don’t think the proponents of this theory can explain that fact that the rise of the state in recent years has coincided with macroeconomics that states that government policy can have little impact on the real economy.

[nirgrahamUK]

@GilesStratton

it’s not much to ask of you that you document such behaviour on behalf of the state.

are you challenging lilburne to adopt positivist methodology to demonstrate the correctness of his theory?
are you asking him to engage in historicism?

is this a joke?

[hayekianxyz]

No, I’m asking him to justify what are essentially empirical claims with empirical evidence.

[liberty_student]

@Juan

market failure. two threads for the very same topic at the same time.

Every intervention leads to a new crisis.

[nirgrahamUK]

The Science of Monetary Policy:A New Keynesian Perspective

Richard Clarida, Jordi Gali,and Mark Gertler

From the Abstract:
Among other things, we show that the optimal policy implicitly incorporates inflation targeting.

[Bostwick]

@GilesStratton

But this is no different from many other economists who see the market failing in various regards. The difference is that these economists see market failure as being more widespread than Mises did. Now, I don’t see why Mises should get a free pass whereas they other economists are held accountable to the extent of being called “cranks” and “hacks”. If you really wish to call them that, that’s OK, but you’d probably be better to provide some sort of scientific criteria for doing so.

You’re confused. A monetary crank is not a value judgement, its a specific ideology. The idea that an unlimited, or nearly unlimited, supply of money should be created in order to provide wealth to everyone.

Monetary cranks are only different from mainstream monetarists by degree.

@M. Rothbard

It is the fashionable belief that an idea is wrong in proportion to its “extremism” and right in proportion as it is a chaotic muddle of contradictory doctrines. To the professional middle-of-the-roader, a species that is always found in abundance, the demagogue invariably comes as a nasty shock. For it is one of the most admirable qualities of the demagogue that he forces men to think, some for the first time in their lives. Out of the muddle of current ideas, both fashionable and unfashionable, he extracts some and pushes them to their logical conclusions, i.e. “to extremes.” He thereby forces people either to reject their loosely held views as unsound, or to find them sound and to pursue them to their logical consequences. Far from being an irrational force, then, the silliest of demagogues is a great servant of Reason, even when he is mostly in the wrong.

A typical example is the inflationist demagogue: the “monetary crank.” The vast majority of respectable economists have always scoffed at the crank without realizing that they are not really able to answer his arguments. For what the crank has done is to take the inflationism that lies at the core of fashionable economics and push it to its logical conclusion. He asks; “If it is good to have an inflation of money of 10 percent per year, why isn’t at still better to double the money supply every year?” Only a few economists have realized that in order to answer the crank reasonably instead of by ridicule, it is necessary to purge fashionable economics of its inflationist foundations.

How is Mises different from other slightly more statist economics? Knowledge.

You’re trying to conflate Mises’ failure to formulate is own anarcho-political theory with someone else rejecting of an already formed theory. We have many more resources available to us then even did Rothbard.

[Lilburne]

@GilesStratton

No, I’m asking him to justify what are essentially empirical claims with empirical evidence.

As I stated in the OP, I don’t have a full argument prepared. I just wanted to give an ongoing topic a home for further discussion, and offer a few historical notes apropos to the subject.

[laminustacitus]

@nirgrahamUK

The Science of Monetary Policy:A New Keynesian Perspective

Richard Clarida, Jordi Gali,and Mark Gertler

From the Abstract:
Among other things, we show that the optimal policy implicitly incorporates inflation targeting.

So if an economic theory does not call for laissez-faire markets, then the only possible conclusion is that it was the result of the state’s corruption of academia?

[liberty_student]

@laminustacitus

So if an economic theory does not call for laissez-faire markets, then the only possible conclusion is that it was the result of the state’s corruption of academia?

You’ve really screwed up the continuity of this discussion by moving posts from live discussions around.

[nirgrahamUK]

good post.

[nirgrahamUK]

@NirGraham

?are you challenging lilburne to adopt positivist methodology to demonstrate the correctness of his theory?
are you asking him to engage in historicism?

is this a joke?

@Giles

No, I’m asking him to justify what are essentially empirical claims with empirical evidence.

Nir naively played the positivist game. result:-

@laminustacitus

So if an economic theory does not call for laissez-faire markets, then the only possible conclusion is that it was the result of the state’s corruption of academia?