Abstract
Recently a number of scholars, including Tony Judt and Corey Robin, have attempted to discredit Austrian economics by emphasizing the (cultural) distance between the context in which the Austrians made their contributions and our current society. This article argues that the cultural and social context is indeed relevant for how we understand the contribution of the Austrians, but that the critics fundamentally misunderstand or misrepresent the Austrian and Habsburg context. It is argued that the relevant context, particularly for the interwar contributions of Mises, Schumpeter, Hayek and Popper is the despair about the breakdown of their civilization, which includes the rise of mass political movements such as socialism and fascism. It is only against this background that we can understand the intent of their work, and the problems which they sought to address. It is further argued, in contrast with earlier work which has tended to emphasize the philosophical and methodological context in which they operated, that this cultural and social context is at least as relevant to understand the meaning of their work.
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Notes
Carl Menger wrote for a variety of liberal Austrian newspapers, before becoming professor at the university and tutor to the Crown Prince.
Translation by Joachim Neugroschel.
Many of these thmes are further developed in Hayek’s ‘The Trend in Economic Thinking’ (1933).
There is in fact a more direct lineage from Nietzsche concept of the Übermensch through the work of Wieser to Schumpeter’s notion of the entrepreneur (see also Reinert & Reinert 2006). That lineage however is quite distinct from the more general analysis of the power of ideas as developed by the Austrians.
It is in this sense that the project of the Austrian economists has much in common with Karl Polanyi’s ‘Great Transformation’ (1945). Its original title makes this even more clear ‘Origins of our Time’.
The Ordo-liberals in Germany, too, are convinced that this type of determinism or fatalism is the most important intellectual enemy (Böhm et al. 1936/89).
See the introductions to ‘The Road to Serfdom’ (“One need not be a prophet to be aware of impending dangers”) and ‘The Open Society and its Enemies’ (“we may become the makers of our fate when we have ceased to pose as its prophets”).
Hayek has at other times criticized Mises for his rationalism, and indeed in the same book ‘Socialism’ one can find statements which suggest that cultural norms were designed by human beings: “Human society is an issue of the mind. Social co-operation must first be conceived, then willed, then realized in action” (Mises 1922/51: 509). See also the foreword by Hayek to the Liberty Fund re-issue of Mises’s Socialism (von Hayek 1981).
The Weberian-Austrian approach suggested by Boettke and Storr (2002) is in line with this broader notion of understanding approach.
The causes for this are multifold and too complex to examine here. Reisch examines some of them for the reception of the Vienna Circle in Cold-War America (Reisch 2005).
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This article draws upon the arguments developed in my Ph.D dissertation ‘The Viennese students of Civilization’ (Dekker 2014).
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Dekker, E. Left luggage: finding the relevant context of Austrian Economics. Rev Austrian Econ 29, 103–119 (2016). https://doi.org/10.1007/s11138-014-0295-3
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DOI: https://doi.org/10.1007/s11138-014-0295-3