The Future of Mainline Economics with Professor Peter Boettke

 

photo: Peter Boettke receiving PCPE 2011 Cuhel Memorial Prize, from Professor Josef Sima.


 

We had a busy summer semester here at Cevro, full of great classes from interesting visiting professors. One of them was Peter Boettke, professor of economics and philosophy at George Mason University and the director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center. He’s published countless papers (you can access many of them here), and his most recent book is Applied Mainline Economics with Matthew D. Mitchell.

It was his last full day in town after his class had finished and he could have spent his evening out enjoying Prague, but instead he sat down with a group of students to chat about politics, philosophy and economics. It was an interesting conversation, and it was long enough that we will be bringing it to ppe.life in multiple installments. This first one is focused on the new and exciting paths students can take following Austrian and Mainline traditions.

 

Friedrich Hayek is often characterized as a conservative, and the Austrian school itself is at times dismissed as a tradition that does history of economic thought, yet has little new value to add as a contemporary research program. You, on the other hand, have written adamantly about the Austrian school as a progressive research program. Could you please explain this for us?

Well, I think those are two different questions. The one about Hayek and conservatism has to do with the fact that Hayek did respect tradition, and thought of traditions as the main carriers of knowledge about what institutions work and what institutions don’t work, basically the underlying mores of society and what not. Yet, Hayek himself was quite adamant that he was not a conservative, precisely because he said that the purpose of the social scientist is to question all of society’s values. But as a social scientist you can’t question all society’s values at once. You have to treat some as given and then question on the margin. It’s an epistemological point that he is making in hisWhy I am Not a Conservative,” which I think is always important to read along withThe Errors of Constructivism to get a good sense of what he is saying in those essays.

On Austrian economics as a progressive research program, I think we have no better models to follow than both Mises and Hayek. Both of them thought of themselves as contributing to an ongoing tradition of economics that did not start with Carl Menger, but was improved by Menger’s contributions and Bohm Bawerk’s contributions. But from the beginning Mises was borrowing ideas, for example, from Max Weber, Knut Wicksell, etc. And his ideas eventually became embodied with Philip Wicksteed and those that made themselves back into the Austrian framework. So they were simply doing what they thought was good economics. But to do good economics meant that you were a subjectivist, a marginalist, and thought in terms of the processes of exchange and production and thus distribution. Not the equilibrium determinations.

So I think we still have open ended projects within the Austrian tradition. Obviously, we have the project of trying to communicate certain Austrian ideas to other economists, but even internally in the Austrian tradition, we have ideas that need to be worked out. To me that is exciting and young people should be attracted to it and should not fear doing Austrian economics explicitly, because I think Austrian economics is a growth industry, not a declining industry. Its contributions aren’t as easily recognized as in some other traditions, but nevertheless people can be gainfully employed, they can make contributions to the science, and they can influence students through their teaching. And by the way, this may be viewed as biased on my part, but if you look at the record Austrians tend to be really good teachers of economics. The reason is that one of the most important tasks of the economics teacher is to communicate an appreciation for the spontaneous order of the market. That is such a central idea to the Austrians that it is very easy for them to become great teachers of economics. So they influence students and have a disproportionate impact on getting students excited about economics, and I think that’s one of the things leading to continued growth.

 

Speaking of progressive research programs, what do you think of some of the emerging technologies being used nowadays, such as Agent Based Modeling (ABM)?

I am on dissertations and am good friends with Robert Axtell, who is one of the leading developers of ABM. He’s one of our professors at George Mason University, where he runs the Center for Social Complexity, and he wrote a fantastic book with Joshua Epstein called Growing Artificial Societies from the Bottom up.

Like experimental economics, I think ABM is a way to do illustrations of theory. I’m not sure they are fundamental theory development, but they are great tools for illustrations, and so I support them 100%.

I’m personally more in favour of students doing detailed case studies – what’s called ‘Analytical Narratives.’ I think that a proper subjectivism requires that we take the narrative stance and therefore ask what is the empirical project that allows us to grasp these ideas, and I think that’s analytic narratives as history. But I don’t think that that should limit us, because network analysis, ABM and all that kind of stuff are very valuable.

 

What are some research topics that you wish more students would be working on, or perhaps topics you feel students don’t pay enough attention to? 

I think that developing and interacting with the Kirznerian idea of the market process and the role of the price system is important. So market theory and the price system I would mention first. I think we don’t study enough price theory in general as economists. Especially students who are at non-GMU type places. They study optimization economics, and I want them to study price theory.

The University of Chicago is working on this now, they have a summer seminar to teach price theory. I think that we at GMU have our own unique way of working on price theory.  I’m actually working on a book with a former student of mine, who I think is brilliant, Rosolino Candela. We wrote a paper calledPrice Theory as Prophylactic,” which was a big paper, based on which we were invited to write a book. I think it’s really important to work on price theory and I would like more students to dig into that and try to engage the economics profession from a price theoretic point of view. So I think that’s one. Because a lot of people now, because of behavioral economics, don’t believe in economics anymore. We need to reassert economics.

But once we do that: capital theory, business cycle theory, all of those traditional Austrian projects, we need more students doing that. Of the more exotic topics, self-governance is a huge topic. What I call analytical anarchism is rife with examples. The way to think about it is unleashing your curiosity. The way to do it is to look outside the window, look at history and pick topics that appear to defy what logic would dictate, and then show why they only appear to defy what logic dictates.

Economics in the hands of the right people can be both wildly entertaining – and the best example of that I think is Pete Leeson, – and it can be deadly serious, meaning about the lives and livelihoods of millions and billions of people, and that’s like Chris Coyne’s work on defense. So I think more people should be working on defense economics, more people should be working on entertainment economics, ‘freakonomics’ style.

Finally, to be honest, I like the stuff you are working on [Rok], having to do with democracy and understanding political structures and the nature of what a true self-governing democratic society would look like. I think these are crucial questions to ask at a social philosophical level, even more so than at the grunt policy level. What does it take to have that kind of society, a free society? And the challenges we face today which are challenging this self-governing society.

We have a lot of work to do and we need a lot of talented people to do it. Given that our goal should be to have an economic and social philosophy which is inviting to more and more curious minds, and respect for the diversity of those curious minds, not trying to exclude people for thinking along these ideas. We have to open ourselves up to synthesis of thought, borrowing from different traditions, constant learning, and in my opinion diversity and a culture of criticism, not a culture of skepticism.

One of the biggest problems that is lingering within the Austrian camps that come from these earlier political debates is that they cultivated a culture of skepticism. “You believe x because you’re getting bought off” or whatever. Rather than a culture of criticism, which is: “Ok, so what is it that you are arguing? I’m not sure that argument works…” That’s how we should be arguing each other, not “oh, you believe in 100 per cent reserves you must be an idiot,” or “you believe in free banking you must be a moron” or something like that.

Instead, we should be asking what actually works, what are the ends, what are the means, and do those arguments hold water. That would create and cultivate new ideas, and I hope your generation forgets the culture of skepticism that is so entertaining to people on the internet. This is why I don’t like ‘internet Austrians.’ Because it breeds skepticism as opposed to a culture of criticism. The internet can’t really be a tool of criticism in a serious way, because you get anonymous posts, you get things like weird fake names and it’s hard to know what is going on. What we need is a culture of criticism, which is a scientific culture, not a culture of skepticism. And I hope I’m doing what I can to advance that, and to be inclusive to the entire range of ideas within Austrian economics.

 

Thanks so much for chatting with us Professor Boettke! Let’s end on one question we have been asking everyone we’ve talked with so far. Why should students favour PPE and other interdisciplinary programs over specializing in a single discipline?

I think the strongest contributions actually come from economics and then go outward. It’s having this basis in economics, in the logic of choice and the logic of situational analysis, which then goes out from there.

In our building at Mercatus, in our seminar room – which is called the Mises seminar room – we have the quote on the wall which ends Human Action:

“It rests with whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.”

And in our way of understanding this, we believe that these are the stakes. The stakes of these conversations are very very high. The existences of peace and prosperity are at stake, so the lives of millions or even billions of people are affected by how we answer these kinds of questions.

So I told you about our seminar room, but as you go into our offices the first quote you will read is from Hayek:

“Nobody can be a great economist who is only an economist – and I am even tempted to add that the economist who is only an economist is likely to become a nuisance if not a positive danger.”

And then if you go into our next seminar room, which is named after James M. Buchanan, the quotes that are in there say:

“Political economists stress the technical economic principles that one must understand in order to assess alternative arrangements for promoting peaceful cooperation and productive specialization among free men” and “to examine philosophically the scale and scope of government.”

Buchanan gives us our scholarly mission, Mises gives us our scholarly motivation, and Hayek gives us our motto. So I think these quotes together are critical in doing that. Ultimately, at the end of the day, what we are trying to do substantively is understand the underlying dynamics of how we as a people can live better together than we ever could in isolation from one another. And I don’t think we can answer that with just one discipline, we need this multidisciplinary approach and engagement, and to pursue the intellectual gains from trade between the different disciplines.

To me, looking at the program at King’s College – which is a political economy program and not a strict economics program – is very promising. Looking at the PPE program here at Cevro is amazing. You guys are guinea pigs being the first year, and if the word gets out, Cevro will have a very difficult time picking and choosing the students every year. I hope that is the case, and that the world will know about this and will have people flocking to Prague. That would be the goal.

I’m also very excited about the program in Arizona which David Schmidtz is building – the department of moral sciences – which I think is phenomenal. I think at Brown right now – the political theory project under John Tomasi – has tremendous opportunities. Also, in Canada at McGill, Jacob Levy has a new center that he is in charge of, which also has great opportunities.

And so I hope that our program at George Mason can learn from all these programs and learn from their success, and try to continually improve our programs so that we can effectively compete in the market for quality students and research.

Let me end with saying also, since you’re [Casey] going to Lubbock, that I have been a visiting professor at Lubbock – with Texas Tech’s Free Market Institute – the first year they were in operation, and then I’ve been back a few other times. What Ben Powell is doing there is nothing short of amazing. One of the things that is really interesting there is that they are interdisciplinary by design. So the Free Market Institute has faculty who are in the applied economics department, but also the business school and the political science department. They eventually will probably have philosophers and historians as well because, by design, they have not just concentrated in one department. With people like Adam Martin, who is a very very skilled thinker, one of the more brilliant young Austrians, and Alex Salter who just has a knack for knowing how to publish and really affect mainstream conversation, I think Lubbock Texas, with the youth movement there, is just going to be amazing.

 

You can follow Professor Boettke on Twitter: @PeterBoettke

 


 

You can also check out our other interviews with Andreas HoffmannDalibor RoháčJörg Guido Hülsmann, and Mateusz Machaj.

 

Leave a Reply