Austrian School

"Substance aside — not that substance isn’t important — Austrian economics very much has the psychology of a cult. Its devotees believe that they have access to a truth that generations of mainstream economists have somehow failed to discern; they go wild at any suggestion that maybe they’re the ones who have an intellectual blind spot. And as with all cults, the failure of prophecy — in this case, the prophecy of soaring inflation from deficits and monetary expansion — only strengthens the determination of the faithful to uphold the faith."

"In the early 1970s, the Austrian School, then in its fourth generation, appeared to be nearing an inglorious personal and community end; after a second bout of prolonged depression (1969–1974), Hayek always carried a razor blade with which to slash his wrist (Cubitt 2006, 89). However, Mises’ death in 1973 facilitated his School’s resurrection; alive Mises had been a liability, whereas dead he could be marketed as a saint. Benjamin Rogge (1974) reported that at a Philadelphia Society meeting, David Friedman ‘first made clear to us the true fascist nature of [his father] Milton Friedman’s thinking.’ When Rothbard, Richard Ebeling, Gary North, Sudha Shenoy et al. initiated an Austrian revivalist conference in June 1974, one of the highlights was the baiting of Friedman – in person – with the accusation that his son detected ‘latent fascist tendencies’ in him (Ebeling 1974). Shenoy (2003) recalled that ‘Murray Rothbard made the whole affair fun.’ ...For a quarter of a century after World War II, the social democratic ‘middle way’ appeared to prosper. But in the 1970s, the ideological balance shifted. The regulatory wave had successfully tackled various aspects of market failure, but had actually exacerbated underlying problems when applied to the control of prices and wages. From the mid-1970s, the deregulation wave began to successfully tackle some of the welfare loses caused by regulatory capture. Schools of economics are associated with these waves: regulation with Pigouvian market failure analysis and its Keynesian macroeconomic counterpart; and deregulation with market success promotion (with Austrian, Chicago and Public Choice variants)."

"There are two big reasons todays right loves the Austrians. One is that Austrian economists reject empirical analysis, and instead believe that you can reach conclusions about correct economic policies from a priori principles. Its philosophy dressed up as economics; with the Austrians, there is never any risk that real-world events will interfere with your ideology. The other big advantage is that the main Austrian thinkers, Friedrich Hayek and Ludwig von Mises, are dead, so they cant argue with your interpretation of their work. This is especially important with Hayek, who got sort of squishy later in life."

"I am not suggesting that the Austrians are uninteresting; far from it. I love to read their work, and I find their views, bizarre and outlandish they seem to my ear, to be as mind-stimulating as a good fantasy novel, or an ethnographic account of the hunter-gatherer inhabitants of some tropical island. However, in no way are they scientists that deserve to be taken seriously. Of course, when there are Marxists all over the place trying to nationalize everything in sight, the Austrian philosophy might have some popular value as a counterweight. By the way, my reading of Americans who call themselves Austrians is that they are fooling themselves---they are really standard neoclassical public sector economists that have personal values favoring the entrepreneurial spirit."