The first generation of Cevro Institute’s PPE students conducted interviews with Peter Boettke, Andreas Hoffmann, Dalibor Roháč, Jörg Guido Hülsmann, and Mateusz Machaj. The second generation continues the tradition with an interview conducted this March with visiting professor Alberto Mingardi, who taught the course Great Thinkers in Classical Liberalism at Cevro this year.
Alberto Mingardi is Assistant Professor of History of Political Thought at IULM University in Milan. He is also the Director General of Istituto Bruno Leoni, a Milan-based free market think tank, and an Adjunct Fellow at the Cato Institute.
What are your main research interests and what do you work on?
My main research interest is in the history of political thought, which I would jokingly describe as listening to dead people and trying to understand them!
I’ve recently published a short essay on Alessandro Manzoni in The New Criterion. Manzoni was the Italian Dickens, the greatest of the country’s novelists, but also a true classical liberal, whose political teachings have been frequently misinterpreted. I have worked quite a bit on Thomas Hodgskin, who has long been considered a “Ricardian Socialist” but whom I’d rather described as a “Smithian Anarchist.” I’ve recently published a paper on Hodgskin and the Industrial Revolution (“Thomas Hodgskin, Rational Optimist”) and I am working on the English version of my book on Hodgskin.
I’ve lately also worked a bit on two papers on Sir Ernest Benn, a British Individualist, and H.G. Wells, both still unpublished. I am also editing the Italian translation of a series of letters that Vilfredo Pareto wrote in his youth to Liberty, the American anarchist journal. And soon I hope to be able to work on a new project, an intellectual biography of Hungarian-British development economist Peter T. Bauer.
Asides from my scholarly interests, the think tank I lead is an active participant in the Italian public policy debate. My main focuses in policy areas are healthcare, antitrust and some industrial policy.
You critiqued Mariana Mazzucato’s 2013 thesis The Entrepreneurial State that argued for government to undertake the role of guiding innovation and entrepreneurship for the private sector. In that regard, what do you think of Chang Ha Joon’s work on industrial policy?
I can say I find Chang’s work better than Mazzucato’s, but that’s not saying much. Mazzucato, as you know, claims the government is the true innovator in our relatively free market economies: that without government investment technological innovation would be insignificant, and that it is the government that really crafts new markets.
I think Mazzucato’s thesis would be perfectly defensible, if it was qualified. If she said: “In the second half of the 20th century, you had plenty of spillover effects from American investment in defense,” that would be hard to dispute. This doesn’t necessarily mean that government investment in technology is the way to go; everything has an opportunity cost. But certainly US defence spending had a significant impact for non-defense related technologies.
But I do find it difficult to think these are all intended consequences. The GPS has been a great innovation, developed by the military, but they hardly had in mind its later, civil uses, say GoogleMaps, when they were developing it. Professor Mazzucato wants to prove that industrial policy is glorious by looking at a country like the U.S., that most people associate with market ideas. She wants to prove that industrial policy was pervasive there too. But why does she avoid mentioning the industrial policies in states that embraced industrial policy openly and enthusiastically, like Italy, Germany or France?
The story of the “entrepreneurial state” in these countries is mostly the story of continuous malinvestment. The framework of incentives governing state bureaucracies hardly seem to be the best inducement to the development of innovative products and services. Whenever you are managing other people’s money, you are risking to be either excessively prudent or profligate. Profits and losses, in a market economy, tend to stimulate a careful risk taking, but what can play the same role in a bureaucratic organization? Even if some schemes of government incentives have sometimes worked “well” (but as compared to what?), a careful student should try to deduce some lessons from them; say, to understand how rules and systems for punishment and rewards made a certain outcome possible. This is hardly cheerleading for government and industrial policy!
A few years ago, British economist John Jewkes in a wonderful book (The Sources of Invention) made an interesting point: innovation sometimes comes from the most unlikely places.
Putting all your eggs in the basket of government research can be dangerous.
Herbert Spencer’s thinking is heavily influenced by evolutionary theory, very much in the same vein as Hayek. What do you think are some main distinctions in their thoughs?
This question conjures up another, which is how it is possible that Hayek basically made almost no reference to Spencer at all in his works. There are plenty of things in Hayek’s social theory that recall Spencer’s, but the very few references Hayek makes to Spencer are not positive. Hayek basically thought that Spencer was part of a backward, ultimately useless 19th century version of individualism, which hindered the cause of liberalism in the 20th century.
Yet there are many commonalities between the two. Hayek considers social evolution as movement from simpler to more complex social arrangements, not unlike Spencer. Spencer feared that legislators who lacked proper information and could not, as human beings, forecast the future, may greatly damage society by passing laws that would hinder innovation and progress, not different from Hayek.
I suggest an experiment for you to go online and read “Over-Legislation”, which is the best thing Spencer ever wrote. It is a relatively short essay, not a collection of tomes like his Synthetic Philosophy – you can read it! When you’ll read “Over-Legislation” you’ll see lots of arguments that read like they were developed by later liberals such as Hayek or Jim Buchanan. I think Hayek got those ideas out of his own autonomous thinking, the Scottish enlightenment, and Carl Menger. It is certainly possible that Menger was aware of Spencer’s ideas. But it would be difficult to provide you even with a sketch of a clear-cut genealogy of ideas!
Certainly, Hayek understood better the nuances of the problem of evolutionary theory. But Hayek is writing when Darwinian theory was broadly accepted, after several developments in genetics that have highly illuminated it. Hayek is also writing in a time in which badly interpreted evolutionism had been used in the past to justify terrible things such as racial supremacism, eugenics, the elimination of ‘unworthy’ people. Spencer was writing before that and his basic idea of this parallel between natural evolutionary phenomena and social evolutionary was very often misinterpreted.
When it comes to the normative contents of their liberalism, Hayek accepts lots of features of the modern welfare state. He sees that some policies may produce dangerous and yet unwanted results, but sometimes – especially in The Constitution of Liberty – he really seems to be trying to save the welfare state from itself.
Spencer on the other hand was far more radical and wasn’t as charitable with his opponents. This might have to do with the context of their times and their biography. In his youth Hayek was a socialist and later moved in the direction of classical liberalism. He had a genuine and positive understanding of the ideals, if not of the means, of the socialists. Spencer instead was a radical free trader. He saw England move increasingly away from his ideal and got more conservative in time as his optimism for the future of liberty vanished.
How do you think are Spencer’s/Hayekian teachings relevant for public policy making today?
In Spencer, Hayek and the Austrian school, there is a similar theme of the organic development of institutions that are not planned but still exist, are important, and are eminently conducive to coordination of individual plans and order in society. Thus, problems may be sorted out spontaneously without top-down intervention: this idea is highly relevant today.
I would maintain it is also relevant in the realm of public policy. A fair amount of problems that we have with political intervention these days is that government steps in too early and kills innovation when it’s still in its infancy. It is understandable, men are fearful, we do not necessarily like innovation, more often than not we dislike so-called disruptive innovation, we prefer stability. It is a human trait, but it is one of the reasons why we tend to intrude too early in the development of new things, thereby hindering developments that could be greatly positive in the longer time. Spencer and Hayek can be read as cautionary tales, as cautioning in you not to rush because you cannot really master all the relevant knowledge concerning a certain area.
For instance, Uber is not available in certain countries such as Italy, Denmark or Germany. This can be explained with the insights of public choice theory: cab drivers feel threatened by Uber, so they organise and succeeded in lobbying by getting governments to regulate Uber. The interplay of ideas and interests in society is not easy to understand, but in a sense we can say this is possible only because there exists a widespread belief that government officials can know better and be rational and perform efficient lawmaking even though they possess just the minimum amount of data to legislate something as complex as this. In this sense, this tradition of liberalism is not lacking when it comes to politics – it can be used to explain why government should not rush into doing things – but of course for this very reason politicians tend not to like it.
Another tradition, say the Utilitarian liberals’, is far more attractive to most people, because it postulates that we can design incentives properly and make things work better – rather than waiting for people to sort them out autonomously. Most of the time this tradition of liberalism is used for good but this confidence in knowing stuff and being able to design incentives in itself creates undue trust in government’s ability to regulate or legislate something while nobody really knows the direction in which it is going.
Your economic views seem to be more influenced by the Austrian school. What do you think are the strengths and shortcomings of Austrian economics as a research project and its insights as you perceive?
I’m not an economist. Therefore I am not qualified to speak about the extent to which Austrian insights have been digested by the mainstream economics discipline. I understand there is a little bit of Austrian business cycle theory in Robert Lucas, some proponents of the efficient market hypothesis think they share Hayek’s idea of knowledge, et cetera.
It seems to me there are areas in which the contemporary neoclassical tradition is not really attuned with Austrian economics. Nonetheless, it would be unfair to think that the view of competition for example that is dominant among economists these days is still the very narrow Marshallian view of competition of one century ago. But at the same time, for example, Israel Kirzner’s rich understanding of competition and entrepreneurship hasn’t been digested by neoclassical economics with the exception of someone like William Baumol.
The key point and perhaps its greatest plus with the Austrian school is that it is a scientific enterprise that understands economics as a social science therefore interconnected and strongly linked with the other social sciences. If we look at Menger and Hayek, both use a theory of institutions that you can apply to law, sociological methods, and even government in a way and that’s the great thing about the Austrian school. Austrian business cycle theory makes a lot of sense to me that can be used to explain not all but a good chunk of the unfortunate 2008 financial crisis. I think Austrian theory of competition and entrepreneurship is vindicated everyday in our digital economy.
As for its weaknesses, again I stress that I am no economist, but I perceive three problems in contemporary Austrian economics. First, there is a certain lack of applied work. A great book in the history of Austrian economics is Murray Rothbard’s America’s Great Depression which was an applied work, not an attempt to do High Theory. Contemporary Austrian economists have a tendency to continue to go back to the basics and stick with grand theories which, although understandable when it comes to the relevance of the research questions, can be a weakness because you are appreciated by people insofar as your work proves useful for understanding things. I see Austrian economics could indeed contribute much to fields like business and industrial economics, yet there is a limited amount of research here.
Secondly, Austrians sometimes seem to be fixated on doing economics “without numbers.” While this makes their works far more accessible to historians or political scientists like myself, I sense that you should be more open to the idea that people who have a very different methodological attitude than you could nevertheless contribute to your understanding of the world. Sure, there is a lot of naivety and irrelevant stuff in contemporary economics, like in any thing, but there are also lots of insights that could be used in an Austrian direction instead of saying, ‘No, we’re two different worlds and people on Mars don’t speak to people on Venus’. I may be exaggerating a little here but there seems to be the impression that Austrians tend to give to people.
Lastly, I do not think that economists working in the Austrian tradition necessarily have to agree with non-Austrian economists but they should engage, even critically, with them much more than they do. A prominent example of this at play is Mario Rizzo’s critique of behavioural economics, one of the best Austrian works I’ve read lately. It is important to do that, to engage with the Pikettys and Thalers of today and try to provide better explanations and answers instead of just brushing it off or rejecting it outright.
To any young students in PPE today, which thinker or work would you recommend as essential to look into?
I would recommend a book that makes you think about the origins and sources of modern economic growth, like Joel Mokyr’s The Enlightened Economy – a terrific work scholarship. Another economic historian to definitely look at is Deirdre McCloskey. Her old book The Rhetoric of Economics is useful to think of economics as a science. And the second book in her recent trilogy, Bourgeois Dignity, is a must read to understand how modern economic growth came about.
You can read more from Dr. Mingardi at EconLog, a blog he has contributed to since 2013.