Must a journalist listen to the true believers in Austrian economics?

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Greg “PrestoPundit” Ransom e-mails, with regard to my parsing of the views on recessions of Paul Krugman and Tyler Cowen, which contained a very brief discussion of Austrian business cycle theory:

Krugman’s attacks on Hayekian economics are considered ridiculous, embarrassing — if not brain dead — by those who actually know Hayek’s work.  It’s pathetic stuff, really.

I would be good ethics as a journalist (and scientist?) to report this truth of the matter.

And, no, I don’t count Tyler Cowen as a reliable reporter of the work of Hayek.  There is much evidence that Cowen is familiar with the work of Murry Rothbard.  But Hayek, not so much.

Cowen gets some of the core of Hayek’s work wrong, just for starters.

So why don’t you go to people who actually know the Hayekian account — economists like Roger Garrison and Steve Horwitz.

This would be honest journalism, and honest science.

TIME is known for such stuff, right?

All I was doing in my post was comparing a couple of recent opinion pieces by prominent economists, not trying to render a comprehensive verdict on Friedrich Hayek’s 1920s writings about business cycles. (I didn’t even mention Hayek in my post.) But Ransom raises an interesting question: If I’m going to write about something like Austrian economics, should I rely on the likes of Cowen–a knowledgeable (Ransom’s snide comments notwithstanding, Cowen has written a very serious-looking book called Risk and Business Cycles: New and Old Austrian Perspectives that cites Hayek extensively, so I think he’s familiar with the man’s work) and by my reckoning fair-minded observer–or a true believer?

I should note here that “Austrian economics” really means two different things. One is the Viennese economic tradition, begun in the 1870s by Carl Menger, that produced such greats as Eugen von Böhm-Bawerk, Joseph Schumpeter, Ludwig von Mises, Friedrich Hayek, Gottfried Haberler, Oskar Morgenstern, and Fritz Machlup. It’s a pretty broad tent, with its members sharing a free-market bent and a preference for words over equations but not a whole lot else. The works of several of them are well-embedded in the economic mainstream.

People in the U.S. who self-identify as believers in Austrian economics, though, tend to follow a much narrower path, that of Mises and his American disciple Murray Rothbard. They are extremely libertarian (at the first meeting of the Mont Pelerin Society, a libertarian group organized by Hayek in 1947, Mises stormed out saying “You’re a bunch of socialists”). They yearn for a return to the gold standard. Many possess a near-religious conviction that their beliefs are correct and that all other economic theories are pure folly. Some of them–I’m thinking here mainly of the crowd around Lew Rockwell–combine these beliefs with far loopier stuff. Others–such as financial pundits Peter Schiff and Michael Shedlock–often let their rabid Austrian leanings overpower (and, to my taste, ruin) otherwise trenchant economic analyses. Am I going to go to these people for perspective on the business cycle or Austrian economics? No, I don’t think so.

On the other hand, I’m not going to do like Krugman and dismiss Austrian economics as “about as worthy of serious study as the phlogiston theory of fire.” Just because something is outside the mainstream doesn’t mean it’s wrong. I guess the best thing for me to do would be for me to read more of the source material myself. I’ve dabbled in Hayek and Schumpeter and even Rothbard. If I devoured all of Menger’s Grundsätze der Volkswirtschaftslehre, in German, that ought to give me a certain authority, right?

That’s not going to happen anytime soon, so I’ll keep relying on Tyler Cowen. I will also try to follow Ransom’s advice, though. Roger Garrison of Auburn and Steve Horwitz of St. Lawrence University, the two modern Austrian-school economists he recommends, seem on first examination to be more interesting than loopy or strident, so I’ll start looking out for their writings. First step, adding the Austrian Economists blog, to which Horwitz contributes, to my feed reader.

Update Lew Rockwell weighs in on my taxonomy of Austrians:

The author hilariously sees Austrian economics as divided into two parts: the nice one, entirely in the super-wealthy Koch Brothers ambit, and the mean one, in mine!

A little background: when I started the Mises Institute (an organization unmentioned by Time) 26 years ago, the head of the Koch Family Foundation angrily pledged to destroy me if I went ahead. “We have worked too hard to rid Austrian economics of Mises,” he said. Hayek, he claimed, was their man, though, of course, he was far better than that, and a good supporter of the Institute. But the real problem turned out to be Murray Rothbard. It was the greatest of the Misesians and the founder of modern libertarianism whom the Koch World Empire longed to smash, and still does. Murray, founder of Cato, was the one man in the ambit to say no when the Kochs decided to jettison Mises for reasons of DC preferment. Otherwise, they felt, it would be harder to curry favor with the Fed and the Republican party. Hayek’s views on central banking, gold, conservatism, and competitive currencies are no more DC-friendly than Mises’s and Rothbard’s, but they are ignored, and just his name invoked.

Update 2 By the way, the reason I didn’t mention or link to the Ludwig von Mises Institute (which Lew Rockwell founded and runs) in my original post was that I didn’t want to tar it with the “far loopier” brush that I applied to LewRockwell.com. I was and am of the impression that the Mises Institute generally sticks to economics while Rockwell’s own site ranges more widely and at times strangely.

Well, that and the Mises Institute is in Auburn and I’m part of the vast global conspiracy of Alabama fans.

Update 3 More on the topic.

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