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Austrian economics behind the iron curtain: The rebirth of an intellectual tradition

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This article documents the spread of the Austrian school of economics in central and eastern Europe following the fall of the Berlin Wall. Extensive research based on interviews, fieldwork and archival analysis records the development of distinct epistemic communities throughout the region and the subsequent networks that have emerged to unite them. In doing so, we provide a rare history of ‘centre-right’ political ideas in eastern Europe, a chronology of the development and influence of libertarianism, cursory intellectual biographies of neglected Austrian economists and empirical evidence that contributes to the epistemic communities approach to the study of idea diffusion. The findings support the view that the policy reforms during the transition process were built on neoclassical orthodoxy rather than ‘neoliberalism’ or ‘market fundamentalism’ but point to a fast-growing epistemic community that has had increasingly significant policy influence.

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  1. See Salerno (2007) for a critique of his account of the Austrian school.

  2. Also note Gloria-Palermo (2002), which is an edited collection of Austrian economics from a distinctly ‘diffusion’ approach: Volume 1 looks at ‘multi-directions’ by focusing on protagonists, volume 2 is called ‘the age of dispersal’ and investigated points of tangency with other schools (such as neo-classicists, constitutionalists, neo-Austrian and post-Keynesians) and volume 3 moves ‘towards a broader paradigm’.

  3. Although Austrian economics possesses a sociological concurrence with libertarianism, it is important to stress that the two are analytically distinct. See Rothbard (1976) and Rizzo (1992) for the Austrian predilection for Wertfreiheit—the position that economic science is neutral with regard to ultimate ends. Also, for an answer to ‘Why are there no Austrian socialists’, see Boettke (1995).

  4. Interview with PBS ‘Commanding Heights’.

  5. ‘Caplan on the Myth of the Rational Voter’ an interview with Russ Roberts, June 25th 2006 (

  6. Hayek (1971, p. 15; page reference refers to the pdf version).

  7. Doherty (2007, p. 68; from Hayek 1971).

  8. And in addition to this, Böhm-Bawerk’s city of birth was Brno, now in the Czech Republic. See Accessed 6th August 2007.

  9. Comments made to Austrian Scholars Conference, March 16–18 2006, Auburn, AL.

  10. Note that we refrain from taking a genealogical approach. This would entail taking the leading protagonists and tracing their student lines. However, the sheer absence of Austrian economists in Ph.D. granting institutions in CEE that produced students who went on to teach in Ph.D. programs, in contrast to Vaughn (1994), makes this form of analysis impossible.

  11. For a more detailed treatment of these issues, see Boettke (1994).

  12. See Lavoie (1985), Boettke (1993) and Boettke and Leeson (2005) for applications of the ‘Austrian’ position.

  13. In particular Murray Rothbard, Israel Kirzner, and Ludwig Lachmann.

  14. Cited in ‘Czechs on their way toward discovering liberal ideas’ by J. Sima (unpublished).

  15. Accessed 6th August 2007.

  16. As always the availability of information plays a role in the selection of cases. Some cases were selected over others on account of better access to personal interviews.

  17. See Jan Pavlik’s introduction to the Austrian sympathetic Bastiat 1998; cited in Sima (unpublished).

  18. Cited in Sima (unpublished).

  19. Cited in Sima (unpublished).

  20. Remarks made a 1997 Annual Hayek Memorial Lecture at the Institute of Economic Affairs London. June 17, 1997 (cited in Sima and Stastny 2000, p. 162).

  21. Junglich et al. (1998, p. 133); cited in Sima and Stastny (2000, p. 163).

  22. Klaus (1991, p. 41). Cited in Sima (unpublished).

  23. Klaus (1996, p. 256). Cited in Sima (unpublished).

  24. Accessed 6th August 2007.

  25. Cited in Sima (unpublished).

  26. Heyne (1990; in co-operation with the Prague University of Economics).

  27. Comments made to Austrian Scholars Conference, March 16–18 2006, Auburn, AL.

  28. Sima (unpublished).

  29. For example, Slovak Juraj Karpi first became aware of Austrian ideas in 1996, through the Czech Liberalni Institut. Email correspondence, Juraj Karpi, August 28th 2007.

  30. Source:;

  31. Email correspondence, Juraj Karpi, September 10th 2007.

  32. Email correspondence, Matus Posvanc, September 10th 2007.

  33. Email correspondence, Peter Gonda, August 28th 2007.

  34. Taken from website, Accessed 9th September 2007.

  35. This was not the first Mont Pelerin Society meeting to be held in Eastern Europe—in 1991, it was held in Prague. It is also important to note that prior to this eastern European economists would travel to attend meetings in places such as Vienna.

  36. Interview with PBS ‘Commanding Heights’.

  37. ‘That is why a Marshall Plan would have been needed, particularly for Russia, the Ukraine, or Belarus.’ Interview with PBS ‘Commanding Heights’.

  38. ‘That means to even out the development of the whole continent of Europe, to simplify the equalization of planning and development, because we will otherwise collide... without planning, then we will choke.’ Interview with PBS ‘Commanding Heights’.

  39. Interview with PBS ‘Commanding Heights’.

  40. He also visited Britain in the 1980s and became familiar with Margaret Thatcher’s economic policies. Interview with PBS ‘Commanding Heights’.

  41. Interview with PBS ‘Commanding Heights’.

  42. Interview with PBS ‘Commanding Heights’.

  43. He also makes a comment on Janos Kornai’s work on shortages: Whereas Kornai (1980) blamed them on a ‘soft budget constraint’, Rostowski blames them on rigidities and hence saw price liberalisation as the solution.

  44. Interview with PBS ‘Commanding Heights’.

  45. Accessed 6th August 2007. Hayek’s Individualism and Economic Order was translated into Polish in 1996 by Centre for Publishing Development’s ‘CEU Translation Project’.

  46. He also had an earlier article, ‘Overcentralization’, which was available to a Western audience in 1953.

  47. ‘Walking on Water: How to Do It’. Paul Belien interviewing Mart Laar, The Brussels Journal weblog

  48. Pajula’s CV, available at

  49. Email correspondence, Kaire Poder, October 8th 2007.

  50. Kitsing’s CV, available at

  51. Email correspondence, Kaire Poder, October 8th 2007.

  52. Also see Leonidov (1988).

  53. For an explanation of the transition process, see Avramov and Guenov (1994a, b) and especially Avramov and Antonov (1994).

  54. Email correspondence with Roumen Avramov, July 27th 2007.

  55. Plus Nonovsky also cites the influence of Albert Aftalion ‘It is little known that the great French interwar economist Albert Aftalion (1874–1956) was born in Ruschuk (today Ruse) in Bulgaria. His “psychological theory of money and exchange rates” has a symbolic significance in today’s Bulgaria which in 1997 chose stabilization based on a currency board. In many ways this is similar to stabilization devices adopted elsewhere after the War. At the time, Aftalion was exceptionally popular in Bulgaria, perhaps owing to the fact that numerous Bulgarian economists had studied or obtained postgraduate degrees in France’ (Nenovsky 2006).

  56. The founders of the Bulgarian Hayek Society also include Georgi Kirov, Georgi Angelov, Dimitar Chobanov, Svetlin Alexandrov, Petya Lozanova, Darina Koleva, Kalina Dimitrova, Janeta Nikolova, Boris Petrov and Kalin Hristov.

  57. See Evans 2006; interview conducted Summer 2005. According to Lisl Biggs-Davison, a well-known story is that a soldier from the Russian army once found a book by Hayek in the army library—the significance of this anecdotal evidence points to the dearth of material in these countries at the time.

  58. According to Sachs, ‘In stopping the hyperinflation, the key is to stop printing money’. Interview with PBS ‘Commanding Heights’.

  59. Interview with PBS ‘Commanding Heights’.

  60. Interview with PBS ‘Commanding Heights’.

  61. Interview with PBS ‘Commanding Heights’.

  62. Interview with PBS ‘Commanding Heights’.

  63. Interview with PBS ‘Commanding Heights’.

  64. Interview with PBS ‘Commanding Heights’.

  65. Interview with PBS ‘Commanding Heights’.

  66. Interview with PBS ‘Commanding Heights’.

  67. Interview with PBS ‘Commanding Heights’.

  68. See Gerasimenko (1992). Cited in Boettke 1993.

  69. Petrakov (1992). Cited in Boettke 1993.

  70. See Leontyev (1992). Cited in Boettke 1993.


  72. ‘From Socialism to Social Democracy’ Commentary by Lew Rockwell. Reprinted from The Free Market, Auburn, AL: Ludwig von Mises Institute, July 1991. Accessed 27th August 2007.

  73. ‘Curriculum vitae for Tom G. Palmer,’ updated February 5, 2007. Accessed 27th August 2007.

  74. Accessed 5th August 2007.

  75. Notice that The Central and Eastern Europe (CEU) Translation Project (an attempt to release basic texts in the Social Sciences into local languages throughout the region) only began in 1995.

  76. The likes of Boris Jordan (who went on to help launch the first Russian stock market and privatize state assets) was educated in the USA and only arrived in Russia in 1987. ‘Oligarch’ Vladimir Potanin worked in the Ministry of Foreign trade, giving him exposure to foreigners. According to Gorbachev, this was ‘a new generation, a generation that was free of dogma; people of the postwar generation, men and women of the 1960s who were fired up by the 20th Congress of the communist Party, Krushev’s secret report, and the criticism of Stalin.’ Interview with PBS ‘Commanding Heights’


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Correspondence to Anthony J. Evans.

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This article is based on Chapter 7 of ‘The Neoliberal Revolution in Eastern Europe: Economic Ideas in the Transition from Communism’ (co-authored with Paul Dragos Aligica), Cheltenham: Edward Elgar. Presented at the Eastern Economic Association, Boston, March 2008. I appreciate funding from the Mercatus Center at George Mason University to conduct some of the fieldwork upon which this paper is based. I express sincere gratitude to the many people who were willing to be interviewed and acknowledge useful comments from two anonymous referees and incalculable support from Paul Dragos Aligica; the usual disclaimer applies.

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Evans, A.J. Austrian economics behind the iron curtain: The rebirth of an intellectual tradition. Rev Austrian Econ 23, 243–268 (2010).

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