Austrianeconomists Thu, 19 Jul 2018 18:58:56 +0300 <![CDATA[SDAE 2015 Annual Dinner Details]]> We now have the details for the annual SDAE dinner and business meeting. The event will take place on Sunday night, November 22nd at the New Orleans Marriott. We will start with drinks and a reception from 7:00pm to 8:00pm and then continue with dinner and our program from 8:00pm to 10:30pm. The room location of the dinner and business meeting will be sent to you in the next few weeks.

We will have our usual presentation of the FEE prizes and recognition of the Lavoie Prize and Menger Contest winners, as well as Benjamin Powell’s presidential address and our business meeting. The cost of this year’s dinner is once again $100, with graduate students at half price.

The menu and entrée choices:

Classic Caesar Salad with Garlic Croutons and Shaved Parmesan Cheese

*Grilled Chicken Breast on Roasted Cauliflower, Greens, Peppers and Rosemary Potatoes
*Grilled Center Cut Filet with Wild Mushroom Demi, Butternut Squash, Green Beans and Potatoes Au Gratin
*Louisiana Jumbo Shrimp and Grits with Tomatoes, Onion, Bacon and Abita Braised Greens
*Chef’s Vegan Selection

Traditional Bananas Fosters

A cash bar will be available during the reception and dinner. All attendees will receive two drink tickets for the bar. We’re grateful to our friends at FEE and their Alumni Network for contributing to sponsoring the drinks.

Please click the following link to register and make your entrée selection (please do not email it to us):

Please respond by Friday, November 6th to ensure that we can give the hotel an accurate count. If you do not make an entrée selection by the 6th we will select the chicken entrée on your behalf.

To save time at the door, payment in advanced is encouraged. Details on paying via PayPal (preferred) or check are included in the survey.

Please feel free to forward this invitation to others you know who may be attending the meetings. I will send a couple of reminders around in the weeks to follow.

Thanks again, and I look forward to seeing you in New Orleans.

Virgil Storr
SDAE Vice President

]]> Thu, 24 Sep 2015 23:40:21 +0300
<![CDATA[The 2015 FEE Prizes in Austrian Economics]]> The Society for the Development of Austrian Economics is pleased to announce that nominations are now open for the 2015 Foundation for Economic Education Prizes for the best book and the best article recently published in Austrian economics.

The following conditions apply:

1. Authors nominated must be members in good standing with the SDAE (check the Society’s website at for information on how to join).

2. The books and articles nominated must have been published between January 1, 2013 and August 31, 2015.

3. Nominated articles should be emailed as an attachment or as a URL to the article to Virgil Storr (

4. Nominations for the book prize should include the title and all other relevant information (publisher, date of publication, ISBN #) and be sent to the above email address. Those nominating books need not send copies. Edited volumes and short monographs are not eligible for the award.

5. All nominations must be received by Virgil Storr no later than October 19, 2015.

6. Self-nominations will not be accepted.

Each prize comes with a cash award of $500 thanks to the generous support of the Foundation for Economic Education (FEE). Recipients will be required to submit a short blog post on their winning book or article for posting on the FEE website. Winners will be announced at the annual banquet of the SDAE, this year in New Orleans, LA in conjunction with the Southern Economic Association meetings from November 21-23, 2015. The SDAE dinner will be held on Sunday, November 22, 2015.

Questions may be directed to Virgil Storr (

]]> Thu, 24 Sep 2015 23:38:41 +0300
<![CDATA[The EEJ Has a New Home]]> Steve Horwitz

I’m very happy to announce that the Eastern Economic Journal has a new home. The new team of editors is a combination of faculty from St. Lawrence and Clarkson Universities. I am not one of the editors, but I will be on the board and I will certainly be refereeing papers.

My colleagues at SLU and Clarkson have all indicated they intend to continue to keep the Eastern eclectic and open to the history of economic thought, Austrian economics, and Virginia Political Economy as well as other heterodox traditions.

Young scholars looking for an outlet should consider the EEJ.

]]> Fri, 18 Sep 2015 02:14:38 +0300
<![CDATA[Don't Ever Forget What Happens If You Remove The Bare Bones of Economic Theory]]> |Peter Boettke|

Last weekend at one of our Adam Smith Fellows seminars, in response to a question about economic theory, I made reference to the idea that pure theory provides the skeleton and without it the body could not function.

Then last night I was teaching from the works of Frank Knight and he states in The Economic Organization(1951, 35) that: "Our task of putting the complex and often unlovely flesh and viscera of reality upon this clean white skeleton of abstract principles must be carried out in several stages."  No doubt, but we can never forget the underlying skeleton or this might happen to our economic thinking.


So always be aware of the professors who promise "healing" spells in the economy by removing the bare bones of economics.  As Harry says to Professor Lockhart, "No, not you."  But alas the Professor didn't listen to Harry's plea.

]]> Wed, 16 Sep 2015 14:01:40 +0300
<![CDATA[Oxford Handbook of Austrian Economics is now published.]]> |Peter Boettke|


34 chapters ranging from methodology to the financial crisis.  The book is available at Oxford and at Amazon, and a description can be read at Mercatus.

]]> Mon, 14 Sep 2015 16:08:36 +0300
<![CDATA[2015 Don Lavoie Memorial Graduate Student Essay Competition]]> The Society for the Development of Austrian Economics is pleased to announce that submissions for the 2015 Don Lavoie Memorial Graduate Student Essay Competition are now being accepted. Submissions will be accepted from advanced PhD students in economics or other relevant disciplines anywhere in the world. The competition is limited to thesis chapters and/or other research that is geared toward publication in the professional journals; submissions should adhere to appropriate standards of academic writing and should be on a topic relevant to Austrian economics. There is no word limit; and, students submitting papers to this competition will retain all publication rights to their work; however, winners are encouraged to submit their papers to The Review of Austrian Economics for possible publication.

Three prizes are given, each worth $1000, to be used to pay expenses to attend the Southern Economic Association meetings this November 21-23, 2015 in New Orleans, LA, where the winners will present their work on a special panel. Prize awards are contingent on attending the SEA meetings and the SDAE’s annual business meeting and awards banquet on Sunday, November 22.

The prize committee consists of:

• Peter Boettke, Committee Chair, George Mason University

• Emily Chamlee-Wright, Washington College

• Steven Horwitz, St. Lawrence University

• David Prychitko, Northern Michigan University

• Virgil Storr, Mercatus Center at George Mason University

Deadline for submissions is October 9, 2015. Decisions will be made on or around October 16.

Please include a copy of your CV with your submission. All questions and submissions should be sent electronically to Eric Celler at

]]> Sun, 13 Sep 2015 18:49:44 +0300
<![CDATA[Happy Birthday to Professor Donald Boudreaux]]> |Peter Boettke|

Wishing my wonderful colleague a very happy birthday.  

I would describe Don as a "joyous economist" -- one who celebrates the beauty of basic economic reasoning and fully embraces joyously our role as teachers of that basic economic reasoning.  Don's approach is, I would argue, one committed to clarity of thought and clarity of expression.

So please join me in wishing this joyous economist and very happy birthday. 


]]> Thu, 10 Sep 2015 14:02:37 +0300
<![CDATA[Hayek's Modern Family in Cato Policy Report]]> Steven Horwitz

My new book Hayek's Modern Family:  Classical Liberalism and the Evolution of Social Institutions will be available tomorrow from Palgrave and at Amazon. An excerpt from the book's chapter on parental rights is now available as the lead article in the September/October  Cato Policy Report. It also includes my response to Rothbard's argument that parents can neglect their kids. A snippet is below.

A key part of Hayek’s intellectual framework is the idea that knowledge is dispersed, contextual, and often tacit. No one knows everything, and it is those closest to choices and their direct consequences who are in the best position to know what to do. This argument is at the core of Hayek’s objections to socialism and his case for the market: by establishing well-defined and well-protected property rights, we allow people to develop and use their local knowledge in ways that make the best use of resources. In the same way, it is parents who have the right incentives and best relevant knowledge to know what is best for their children. Establishing well-defined and well-protected parental rights encourages parents to act on this local knowledge and thereby helps to ensure the best outcomes for children.

The intimacy of the family provides parents with deep and often tacit knowledge of their child that can be deployed in finding the most effective ways to transmit social rules and norms. A great deal of the parent-child socialization process works through imitation, as imitation is a way to pass on knowledge that otherwise cannot be articulated. The family provides an ideal setting for this sort of imitative learning.

]]> Thu, 10 Sep 2015 02:02:55 +0300
<![CDATA[Juan Ramon Rallo and Lawrence H. White Discuss Free Banking Theory and Policy]]> |Peter Boettke|



]]> Sun, 06 Sep 2015 18:53:05 +0300
<![CDATA[Social Contract, Social Cooperation, and Endogenizing the Rules of the Social Game]]> |Peter Boettke|

Liberty Matters is hosting once again a very interesting discussion dealing with the work of Anthony de Jasay.  The lead essay is by Hartmut Kliemt and the first response has been authored by Chris Coyne.  Additional commentary will be provided by Michael Munger and Edward Stringham.

Back in 1987 in an essay long forgotten -- Virginia Political Economy: A View From Vienna -- see pp. 10-12 -- I argue that Buchanan's decision to treat the rules of the social game parametrically creates a serious problem for the student of political economy who want to understand the origin of real world property rights arrangements.  The social contract apparatus clearly can serve some very useful purposes in thought experiments but understanding the evolution of social cooperation requires a different intellectual move.  In the constitutional moment of post-communism a few years later, I was a bit more sympathetic to Buchanan's constitutional project, but even there rather than seek an alternative to what Kliemt catalogues as 'contractarian', 'evolutionary', and 'natural rights' as he argues de Jasay offered, I blend them into an explanation for how you can forge a new constitutional order in post-communism. See Why Perestroika Failed -- pp. 108-112.  The evolutionary, or Hume-Hayek, program is capable of absorbing within its focus on endogenous rule formation both a "convention" notion of natural rights, and a "contractual" notion of the institutionalization of the social convention.  It is this intellectual path, I believe, which leads to the research program of the positive political economy of 'anarchism' that Coyne so eloquently discusses in his reply to Kliemt's lead essay.

I hope the conversation continues, and that it inspires young scholars to look at the window and allow their natural curiosity to guide them to study the real world anarchism that is evident all around them -- from the pressing and troubling reality of failed and weak states to the beauty and source of human flourishing in private governance mechanism in the advanced material states of the world.  Endogenous rule formation, rather than restricting our vision to only what legal centralism and constitution making from the top down enables us to see, is the more productive path to progress in social theory.  

]]> Fri, 04 Sep 2015 16:25:19 +0300
<![CDATA[Hayek at GMU 1983]]> |Peter Boettke|

Last night I conducted my first graduate class in the newly established Mises Seminar Room, which is part of the office suite of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics.   Mises and Hayek.  I have had in my office since the mid 1980s a picture of Mises and Hayek together looking over a manuscript.  I don't know if the photo was staged, but it has always been to me the imagined relationship as we should understand it if we want to see Austrian economics as a progressive research program in the contemporary context.  It is a shared research program, not a conflicting one.  Human Action and Individualism and Economic Order are foundational texts in our educational programs, and have been for the history of the Mercatus Center.

GMU became an independent university in 1972, roughly a decade later the university established a PhD program in economics.  In 1983, F. A. Hayek visited and delivered a talk dealing with ideas that would later be published in The Fatal Conceit.  One productive way to read Hayek's work in this area is his attempt to restate Mises's argument for the Law of Association and the rules than enable free individuals to engage in productive specialization and live in peaceful cooperation with one another.  Mises's argument was more rationalistic, Hayek's more evolutionary -- but both were striving to identify those rules that enable human actors to live better together than they could apart.  To realize the gains from social cooperation, men must live by the rules of just conduct.  To Hayek, human reason is a by product of these rules, not the source.  As he put it in The Constitution of Liberty and even more clearly in Law, Legislation and Liberty, we have reason because we followed rules, we didn't follow rules because of our reason.


In the current issue of The Review of Austrian Economics there is a wonderful tribute to Hayek by James Buchanan from 1979.  One highlight from this tribute from the vantage point of today looking back on the situation in academic economics in 1979 is the following:

We are now winning a few battles in the ongoing war of ideas, but we cannot lapse into complacency. The islands of comparative strength in modern American academia (Miami, VPI, UCLA, Chicago, Rochester, NYU, Washington)—these must be strengthened and new islands (Auburn, Colorado) must be created. The diverse approaches of the intersecting “schools” must be the bases for conciliation, not conflict. We must marry the property-rights, law-and-economics, public-choice, Austrian subjectivist approaches. And we must continue to be able to secure sufficient independent and external financial support to ward off threats from the academic enemies within our institutions.

This, of course, was written before the GMU island was forged with the move of Buchanan and the Center for Study of Public Choice and the joining of forces with Rich Fink's Center for the Study of Market Processes through Karen Vaughn's academic entrepreneurship.  The Mercatus Center, which evolved out of CSMP, has always been grounded in the work of Mises and Hayek, but took seriously the Buchanan message of conciliation of the diverse schools of thought -- property rights, law and economics, public choice, and market process analysis -- and has let that effort be the defining guide in our research and graduate education programs.

]]> Wed, 02 Sep 2015 15:18:50 +0300
<![CDATA[What is Canonical Neoclassicism?]]> |Peter Boettke|

I give my first lecture in modern history of economic thought class tonight, and we are starting with Alfred Marshall's Principles, Book I and Book V. We are also discussing Baumol's QJE (2000) article on what Marshall knew and didn't know about modern economics.


In my lecture I am presenting what I consider the 5 canonical models of neoclassicism and then discussing how those models are interpreted by various streams of economic thought. I will also be discussing the nature of modeling and how economists have understood that intellectual exercise through the years. It turns out Marshall is an outstanding starting point for these sort of discussions.

My selection of the canonical models are (1) Max U, (2) Edgeworth Box, (3) Supply and Demand, (4) Perfect Competition, and (5) Production Possibilities Frontier.

Which 5 models would you include, and why? 

]]> Tue, 01 Sep 2015 13:58:22 +0300
<![CDATA[10 Years After]]> |Peter Boettke|


A report on our research and the lessons learned.

]]> Mon, 31 Aug 2015 14:35:58 +0300
<![CDATA[Nathan Rosenberg and How the West Grew Rich]]> |Peter Boettke|

Nathan Rosenberg (1927-2015) passed away on August 24th.  When I was in graduate school, Rosenberg and Birdzell published their popular study, How the West Grew Rich (1986).  The book had a profound impact on me both for its presentation of alternative hypotheses, and its interpretation of the historical facts. It is through this work that my interests shifted from primarily the battle between socialism and liberalism, to the broader questions of economic history and development. This work wasn't representative of Rosenberg's technical contributions to economic change, but it was a masterpiece of putting all the pieces together into a bigger picture.  The upshot, to paraphrase McCloskey -- Smith 1, Marx 0. 

Roseberg and Birdzell

But Rosenberg was a brilliant historian of technological change and innovation.  Here is a very insightful appreciation of his work by Richard Langlois.

Nathan Rosenberg was a masterful economist -- he thought clearly, and he wrote clearly.  I expect we will continue to learn from his clear thinking for generations to come.

]]> Tue, 25 Aug 2015 19:51:00 +0300
<![CDATA[Hayek Symposium in Review of Austrian Economics, 28 (3) September 2015]]> |Peter Boettke|

The September 2015 issue is now in print and available online.

September RAE 2015

]]> Mon, 24 Aug 2015 16:30:07 +0300
<![CDATA[Private Governance]]> |Peter Boettke|


Are all of the rules and regulations governing economic activity a product of central planning or legislation? To what extent does privately produced and enforced governance play a role? In his latest book, Edward Stringham argues that much of what is orderly in the economy can actually be attributed to governing mechanisms devised and enforced by private groups and individuals.

Please join the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University for a panel discussion on Thursday September 3rd from 2:00-3:30 in the Johnson Center Cinema featuring Edward Stringham and his new book, Private Governance: Creating Order in Economic and Social Life (Oxford University Press, 2015). We will be pleased to hear from author Edward Stringham, as well as panel chair Peter Boettke, and commenters Jason Brennan and Bruce Benson. For any further questions, please contact Bethany Stalter at or (703) 993-4889.

]]> Fri, 21 Aug 2015 18:16:08 +0300
<![CDATA[Prices -- what do they do?]]> |Peter Boettke|

The imaginative and penetrating economic thinker Glen Weyl has posted a revised version of his forthcoming paper "Price Theory" to SSRN.  This is a very important paper for a variety of reasons, and I cannot deal with it in the detail that it demands in this post.  But I want to highlight a very simple point that I think matters a lot for what we want to get out of "price theory" which is the backbone of economic theory more generally.

As Weyl states plainly in his abstract, he defines price theory as "neoclassical microeconomic analysis that reduces rich and often incompletely-specified models into "prices" (approximately) sufficient to characterize solutions to simple allocative problems."  In the model, in other words, prices are sufficient to assure that the most willing suppliers and the most willing demanders are perfectly coordinated with each other -- their plans dovetail.  Can we identify the "prices" that characterize that equilibrium state of affairs?  In Weyl's discussion the contributions of Mises and Hayek can be summed up as the claim that prices are a parsimonious way to communicate the relevant information for allocative efficiency.

Without denying this "economizing" role that prices play in coordinating the plans of numerous and diverse actors throughout the economy, I think it is a mistake to push the argument that prices are a sufficient statistic for a competitive equilibrium.  The mistake is that this perspective too easily glosses over the underlying institutional environment that is required for prices and monetary calculation to emerge and serve their function within an economy --- namely private property, freedom of exchange, profit and loss accounting, sound money, fiscal responsibility, etc. --- and it too easily glosses over the guiding role that relative prices play in accommodating change and resulting in the necessary adjustment of economic plans.  In other words, the prices as sufficient puts too much emphasis on the role of equilibrium prices, and ignores the role that disequilibrium prices play within a theory of the market process, let alone the institutional infrastructure that enables the competitive market and a functioning price system to operate.

I understand that different models or theoretical frameworks have different purposes, and in many instances the economic theorist is not attempting to understand how prices guide decisions, but instead wants to explore the equilibrium properties of a system and thus how the equilibrium price will reflect that solution.  For Weyl's purposes, his depiction is completely unobjectionable and he has done a great service to the economics literature by providing a survey and relating this work to modern trends in theory.  However, besides his rather narrow reading of Mises and Hayek, I think there are at least 3 critical sins of omission in this survey: Hayek's 1937 paper on Economics & Knowledge; the work of Armen Alchian on economics forces at work that can be found from his classic paper on evolution and uncertainty to his work on some economics of property rights to his introduction to economic reasoning found in University Economics; and James Buchanan's discussion of "What Should Economists Do?" and the exchange paradigm versus the allocative paradigm in economic theory.  I am partial to the Alchian phrase -- economic forces at work, because the prices as sufficient perspective emerges in discussing economic forces after they have worked.  Prices are sufficient for a solution, they are not -- to use Buchanan's phraseology --- seen as part of the guides to adjustment in the evolution toward a solution.  In Hayek's brilliant 1937 paper, he is clear that such issues such as full and complete information, and optimality conditions such as P=MC or min AC, are by-products of the competitive entrepreneurial market process, not assumptions going into the analysis of the market theory and the price system at the start.  In fact, to make those assumptions is to lead the analysis into paradoxes that are problematic for market theory if taken seriously, e.g., the paradox of perfect foresight that was identified by Morgenstern.  Again, perfect foresight is a defining characteristic of an equilibrium after all economic activity has been adjusted so that the underlying variables of tastes, technology and resource availability are perfectly reflected in the induced variables of the market --- in that state of affairs, and only in that state of affairs, can prices be said to be sufficient for a solution to a problem of allocative efficiency.

Prices as solutions is a different theory than prices as guides to adjustment which brings about a solution.  In my alternative reading of the history of economic thought, I would argue that from Smith to Hayek the critical theoretical task was two fold (a) identifying the underlying institutional environment that enables individuals to better realize the gains from productive specialization and peaceful cooperation, and (b) identifying the role that prices play in guiding the process of exchange and production so that the most willing supplies and the most willing demanders will be brought into coordination with each other.  Prices are guiding a process of necessary adjustment, they are, as Hayek wrote in The Use of Knowledge in Society, "a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movement." 


]]> Wed, 12 Aug 2015 19:31:34 +0300
<![CDATA[Robert Conquest (1917-2015)]]> |Peter Boettke|

The great historian Robert Conquest passed away on 3rd of August 2015 at the age of 98.  Conquest exposed the brutal reality of the Soviet socialist experiment, and in so doing played a major role in ultimately changing the course of human history.  In works such as Kolyma, The Harvest of SorrowsThe Great Terror, as well as books on Lenin and Stalin he made the socialist ideal confront the reality of socialist practice in such a blunt way that only ideological delusion and the lust for pure political power could sustain the socialist experiment.  That the 'dream' persisted until the late 1980s is testament to how blind those can be who take comfort in the ideology of socialism.

Conquest wrote bravely about a grim reality, but also with a gifted pen.  Please honor him by reading one of his books over the next few weeks.  

Here is a gala dinner in his honor from 1992 sponsored by the Independent Institute.


]]> Thu, 06 Aug 2015 16:16:56 +0300
<![CDATA[Milton Friedman's Student Notes From Viner's Economic Theory Class]]> |Peter Boettke|

Irwin Collier at Economics in the Rear-View Mirror continues to provide treasures from the archives.  Recently he posted material from Milton Friedman's student days.  It is fascinating to look at what Viner expected his students to read for his class.

[Handwritten notes by Milton Friedman]

Assignments given by Viner in 301, 1932

Marshall Bk III ch 3 + 4; Bk V ch 1 + 2

[Alfred Marshall, Principles of Economics (London: Macmillan and Co. 8th ed. 1920).
Book III: On wants and their satisfaction.
Chapter 3: Gradations of consumers’ demand;
Chapter 4: The elasticity of wants.
Book V: General relations of demand, supply and value.
Chapter 1: Introductory. On markets;
Chapter 2: Temporary equilibrium of demand and supply.]

Schultz Meaning of st[atistical] de[mand] cur[ves] pp 1-10; 25-41.

[Henry Schultz. Statistical Laws of Demand and Supply with Special Application to Sugar. Chicago: University of Chicago Press. 1928. 118 pages]

Mars[hall] Bk V ch 3, 4, 5, 12; App H

[Book V: General relations of demand, supply and value.
Chapter 3: Equilibrium of normal demand and supply;
Chapter 4: The investment and distribution of resources;
Chapter 5: Equilibrium of normal demand and supply, cont., with reference to long and short periods;
Chapter 12: Equilibrium of normal demand and supply, cont., with reference to the law of increasing returns.
Appendix H: Limitations of the use of statical assumptions in regard to increasing return.]

Viner Cost Curves […]

[…and Supply Curves, Zeitschrift für Nationalökonomie. Bd. 3, H. 1 (1931), pp. 23-46]

Cunynghame “Geometrical Political Economy”, ch. 3

[Henry H. Cunynghame. A Geometrical Political Economy: Being an Elementary Treatise on the Method of Explaining Some of the Theories of Pure Economic Science by Means of Diagrams, Oxford at the Clarendon Press. 1904.
Chapter 3: Demand curve.]

Smart, Introduction to theory of value pp. 64-83

[Smart, William (1891). An Introduction to the Theory of Value on the Lines of Menger, Wieser, and Böhm-Bawerk. London and New York, Macmillan and Co. 1891.
Chapter 12: Cost of production;
Chapter 13: From marginal products to cost of production;
Chapter 14: From cost of production to product;


“Ultimate standard of value”, Annals of Am[erican] Academy Sept. [sic] 1894

[Eugen von Böhm-Bawerk. The ultimate standard of value. American Academy of Political and Social Science, Philadelphia. Publications, no. 128. June, 1894, 60 p.]

“One word more on ult. st. of v. [ultimate standard of value] E.J. Dec. 1894

[Eugen von Böhm-Bawerk. One word more on the ultimate standard of value. Economic Journal, Vol. 4, No. 16 (Dec., 1894), pp. 719-725.]

Marshall Bk V, ch 6; Bk V, ch 14

[Book V, ch 6: Joint and composite demand. Joint and composite supply.
Book V, ch 14: The theory of monopolies.]

Viner JPE. 1925 pp 107-111 (objective test of comp.[etitive] price appl[ied] to cem[ent] ind[ustry])

[Jacob Viner, Objective tests of competitive price applied to the cement industry. Journal of Political Economy, Vol. 33, No. 1 (Feb., 1925), pp. 107-111.]

J.S.Mill “Outline of Pol. Economy” Bk II, Ch 11, sec 1; Bk I, ch VI, sec 1

[Note: Outline of Political Economy is the title of Nassau Senior’s book.
John Stuart Mill, The Collected Works of John Stuart Mill, Volume II – The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II), ed. John M. Robson, introduction by V.W. Bladen (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1965).
Book II, ch XI, sec. 1: Distribution. Of wages.
Book I, ch VI, sec. 1: Production. On circulating and fixed capital. ]

Henry George, “Progress + Poverty” Bk I, ch 1,3,4

[Henry George, Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth, The Remedy (Garden City, NY: Doubleday, Page, & Co. 1912).
Book I: Wages and Capital.
Chapter 1: The current doctrine of wages–its insufficiency;
Chapter 3: Wages not drawn from capital, but produced by labor;
Chapter 4: The maintenance of laborers not drawn from capital.]

F.W. Taussig, Principles, vol II, ch 39, 51

[Frank W. Taussig, Principles of Economics. 2nd revised edition. 2 vols. (New York: Macmillan). 1915. Note: a later 3rd revised edition from 1921 has a chapter 51 “Great fortunes” that does not appear as good a fit to this course’s content, so I conclude the reference is to the second edition.
Chapter 39: Interest, cont. The equilibrium of demand and supply;
Chapter 51: General wages.]

J.B. Clark “Dist[ribution] of Wealth”, ch 1, 7, 8, + Preface

[John Bates Clark, The Distribution of Wealth: A Theory of Wages, Interest and Profits (New York: Macmillan). 1899.
Chapter I: Issues That depend on Distribution;
Chapter VII: Wages in a Static State, the Specific Product of Labor;
Chapter VIII: How the Specific Product of Labor may be Distinguished.]

F.A. Walker, Political Economy P[reface] + IV, ch 4,5,8 + V [sic, should be VI], sec 5

[Francis Amasa Walker, Political Economy (London: Macmillan) 3rd revised and enlarged edition. 1892.
Part IV: Distribution.
Chapter 4: Profits;
Chapter 5: Wages;
Chapter 8: The reaction of distribution upon production.
Part VI: Some applications of economic principles.
Section V: The doctrine of the wage-fund.]

A. Smith Bk I, ch 10

[Adam Smith An Inquiry into the Naature and Causes of the Wealth of Nations, Edwin Cannan, 3d. London: Methuen & Co., Ltd. 5th edition, 1904.
Book I, Chapter X: Of wages and profit in the different employments of labour and stock.]

J.S. Mill Bk II, ch 14

[Book II, ch 14: Distribution. Of the differences of wages in different employments.]

Cairnes “Polit. Econ”, P[reface] + I, ch 3 [art.] 4,5

[J.E. Cairnes. Some Leading Principles of Political Economy Newly Expounded. New York: Harper & Brothers, Publishers. 1874.
Part I: Value.
Chapter 3: Normal value]

Taussig Principles, ch 47

[Chapter 47: Differences of wages. Social stratification.]

J. B. Clark Ch 9, 13

[Chapter IX: Capital and Capital-Goods Contrasted;
Chapter XIII: The Products of Labor and Capital, as Measured by the Formula of Rent]

Böhm Bawerk Bk 2, ch 1-5; Bk 5, ch 1-4; Bk 6, ch 1,2,4,5,6; Bk 7, ch 1,2

[Book II: Capital as instrument of production.
Chapter 1: Introductory;
Chapter 2: Capitalist production;
Chapter 3: Historical development of the conception;
Chapter 4: The true conception of capital;
Chapter 5: The competing conceptions of capital.
Book V: Present and future.
Chapter 1: Present and future in economic life;
Chapter 2: Differences in want and provision for want;
Chapter 3: Unerestimate of the future;
Chapter 4: The technical superiority of present goods.
Book VI: The source of interest.
Chapter 1: The loan and loan interest
Chapter 2: The profit of capitalist undertaking. Principles of explanation.
Chapter 4: The profit of capitalist undertaking. The labour market;
Chapter 5: The profit of capitalist undertaking. The general subsistence market;
Chapter 6: The profit of capitalist undertaking. The general subsistence market (continued).
Book VII: The rate of interest.
Chapter 1: The rate in isolated exchange;
Chapter 2: The rate in market transactions.]

Marshall Bk VI, ch IX

[Book VI: The distribution of the national income.
Chapter 9: Rent of land.]

Ogilvie Marshall on Rent Econ J. 1930

[F.W. Ogilvie. Marshall on Rent. Economic Journal 40 (March) 1930: 1-24]

J.B. Clark ch 23

[Chapter XXIII: The Relation of All Rents to Value and Thus to Group Distribution]

Source: Hoover Institution Archives, Milton Friedman Papers Box 5, Folder 12 (Student years)


[typed list of reading assignments]

Assignments in Viner’s Economics 301
(In order of assignment)

Marshall, Bk III, ch. 3, 4; Bk V, ch. 1, 2

Böhm-Bawerk, Positive Theory of Capital, Bk IV, ch. 4

Schultz, Meaning of Statistical Demand Curves, pp. 1-10, 25-41.

Marshall, Bk. V, ch 3, 4, 5, 12; App. H

Viner, Cost Curves [and Supply Curves, Zeitschrift für Nationalökonomie. Bd. 3, H. 1 (1931), pp. 23-46]

Cunynghame, Geometrical Political Economy, Ch. 3

Smart, Introduction to the Theory of Val., pp. 64-83

B. B. [Böhm-Bawerk], Ultim. Stand. of Val., Ann. of Am. Ac., Sept. 1894

One word More on Ult. S. of V., Econ. Jour., Dec 1894

Marshall, Bk. V, ch. 6; Bk. V, ch. 14

Viner, Objective Tests of Comp. Pr. appl. to the Cem. Ind. JPE, ‘25

J.S. Mill, Outline of Pol Ec. [sic, Principles of Political Economy], Bk II, ch. 11, sec. 1; Bk I, ch. 6 sec. 1

Henry George, Progress and Poverty, Bk I, ch. 1, 3, 4.

F. W. Taussig, Principles, Vol II, ch 39, 51.

J. B. Clark, Distr. of Wealth, ch. 1, 7, 8, preface.

F. A. Walker, Pol. Ec., Part IV, ch. 4, 5. Part VI, Sec. 5

Adam Smith, Bk. I, ch 10

J.S. Mill, Bk II, ch. 14

Cairnes, Pol. Ec., Part I, ch. 3, arts. 4, 5.

Taussig, ch. 47

J. B. Clark, ch. 9, 13

B.B. [Böhm Bawerk], Bk II, ch 1-5; Bk V, ch 1-4; Bk. VI, ch. 1, 2,4,5,6; Bk. VII, ch. 1,2.

Marshall, Bk. VI, ch. 9

Ogilvie, Marshall on Rent, Econ. Journ., March, 1930

J. B. Clark, ch. 23

Source: Hoover Institution Archives, Milton Friedman Papers Box 115, Folder 13 (Class Exams circa 1932-1938)

Image Source: University of Chicago Photographic Archive, apf1-08490, Special Collections Research Center, University of Chicago Library.

Look how much Bohm-Bawerk was on that reading list.  In the Buchanan archives, one can find a similar set of notes -- from 1946 -- by Buchanan and the typed reading list that was expected of all PhD students at Chicago.  Not only is Bohm-Bawerk still a presence in the common core of theory, but so was Wicksell, Wicksteed, Mises and Hayek.

Given the exposure to these ideas that Friedman had as a student, and Buchanan had as a student, it is puzzling as to the opposite reaction both had to grappling with Austrian ideas about subjectivism, the economic interaction process, the price system and even industrial fluctuations.  Friedman as a diligent student was required to read through Bohm-Bawerk's capital and interest theory as well as Bohm-Bawerk's value and price theory presentations.  So how could Hayek's presentation of array of relative prices impinging on the arrangement of productive assets in an economy present any sort of mystery to him?  As Buchanan pointed out in his essay "On Hayek", which was written in 1979, but we are publishing in a forthcoming issue of the RAE, Hayek's theory of the trade cycle was a microeconomic theory, a price theoretic theory, an economic theory worthy of that name.  There are of course points of agreement and disagreement, but there is no denying it is a relative price theory story, and it should not be mysterious to any trained Chicago price theory economist.  It makes much more sense that the theory should be viewed as mystical to a Keynesian economist --- if the price system is broken, then you cannot look to the price system for the explanation or the solution.  Thus, as Keynes put it, Hayek's Prices and Production was "an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam ..."  Compare that to Armen Alchian's discussion of Prices and Production in his interview with Hayek, and how important Alchian thought the emphasis on relative prices was for economic understanding.

So why would Friedman seem to be more in-line with Keynes than with Alchian and Buchanan?  I think one possible explanation is that Friedman's framework of analysis shifted from his student days and from his teaching of price theory to his work as a macroeconomists and monetary theorist.  In short, during the critical decades of his development as the major intellectual opponent to the Keynesian dominance in the economics profession, Friedman was a critic from the inside of that system.  He was for all practical purposes a Keynesian, but one that argued that the system had different underlying empirical relationships with regard to consumption behavior, public and private investment, and monetary policy.  In a document recently uncovered at the Buchanan archives, there is a letter from Hayek to Arthur Seldon at IEA dated May 13, 1985 in which Hayek bemoans the fact once again that he didn't review Keynes's General Theory, but then also adds that he regrets not having gone on the offense attack of Friedman.  "Milton," Hayek writes, "was for a time a Keynesian" and was one of the primary reasons why the "whole macroeconomic nonsense" grew rather than was abandoned as it should have been.  He hesitated to write up his critique because he didn't want to see MPS divided into a Hayekian wing and a Friedmanite wing, and thus he avoided stating his views too bluntly, but that a "good detailed critical analysis of macroeconomics would be very desirable" and then he mentions Lachmann and Hutt as potential go-to sources, but fears their advancing age might not be conducive to such an endeavor.

Food for thought for sure.


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<![CDATA[New Mercatus Study on the Barriers to Upward Mobility]]> Steve Horwitz

I have a new policy study just out today from the Mercatus Center titled “Breaking Down the Barriers: Three Ways State and Local Governments Can Improve the Lives of the Poor.” The following provides a convenient summary of the argument:

Many discussions of poverty and inequality are bogged down in debates about tax rates and government spending, trapped under the assumption that the cause of some people’s poverty is other people’s wealth. One key factor preventing upward mobility is state and local regulations that make it more expensive and time-consuming for the poor to open new businesses or enter a new profession. By eliminating burdensome business regulations such as occupational licensing and zoning restrictions and by refraining from imposing sin taxes, policymakers can let the poor help themselves move up and out of poverty.

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