The Next Austrian School Renaissance

Having recently completed forty-one years as a university economics professor I am convinced that books like Human Action in particular, and the Austrian School in general, are more needed than ever if Western civilization is to be saved from the onslaught by the current generation of “cultural” Marxist totalitarians. All socialists, Mises wrote in Socialism, are first and foremost “destructionists” who want to destroy the existing institutions of society first, then proceed to create their never-defined utopian fantasy world. They are succeeding and must be stopped. Only the power of superior ideas can stop them.

As for the role of economics, several fairly recent incidents stand out in my mind as examples of what “mainstream” economics has been teaching. One is when a senior economics major at my former university said to me about midway through the semester that, and I quote: “I had no idea there were different schools of thought in economics; I thought economics was just a series of mathematical equations.” That is what he had been taught as an economics major for three-and-a-half years after his parents spent nearly $200,000 on his “education.”

Another senior economics major in one of my classes said to me: “I’ve taken all the courses in monetary theory, macroeconomics, and money and banking, including mathematical macroeconomics, and I had no idea that there were criticisms of the Fed.”  Yet another student once told me that she attended Mises University in her senior year because, having been a Virginia Tech economics major for three years, she “wanted to learn some economics” before graduating since her classes had been exclusively exercises in math and game theory.

These are not isolated anecdotes. I believe they are representative of what the majority – probably a very strong majority – of economics students have been taught for quite a few years now. In other words, they are not taught real economics but various mathematical social engineering/central planning schemes, tall tales about allegedly pervasive “market failure,” and descriptions of government bureaucracies like the Fed as literally beyond criticism. Investor and author Doug Casey had a point when he wrote that “Most economists are political apologists masquerading as economists” and the discipline of economics “has been turned into the handmaiden of government in order to give a scientific justification for things the government . . . wants to do.”

The typical introductory economics textbook starts out with a quick run through of supply and demand, opportunity cost, and the effects of price controls. So far, so good. But then there is chapter after chapter of “market failure” stories. Pollution is supposedly caused exclusively by free markets, ignoring the fact that pollution was far worse in the twentieth-century socialist world where free markets were outlawed and that the Pentagon is arguably the biggest polluter in the world. All markets “fail” because they don’t match up with the utopian never-never land of “perfect” competition (as though anything on Earth is perfect). Perfect politicians and bureaucrats must step in to correct these “failures.” 

 The free-rider problem supposedly requires government financing and provision of “public” goods, ignoring the historical record of how private markets have done a better job of it for generations with everything from road building to lighthouses. We don’t spend enough on national defense (!), the prototypical “public good” example in the textbooks for generations tells us. “Free riders” must therefore be forced to pay taxes to “ride” on the train of aggressive military interventionism around the world.

Private businesses supposedly “lock in” inferior technology so that wise and benevolent politicians and bureaucrats should be given the power to decide which technologies are appropriate. This conveniently ignores such facts as that it was only in 2019 when the U.S. government quit using 1970s-era eight-inch floppy discs to operate its nuclear weapons arsenal! Defense contractor lobbyists are supremely successful at “locking in” their employers’ obsolete military technology when superior technology is available. It is corrupt government and its bureaucracies, not competitive markets, that routinely “locks in” obsolete technology. 

Public utilities are said to be “natural” (i.e., free market) monopolies despite the indisputable fact that every one of these monopolies became a monopoly by governmental edict, not competition. 

Mutually advantageous trade takes place in free markets because people often value the same goods differently. If I value my used car at say, $10,000, and you are willing to pay as much as $15,000 then we have some bargaining room to strike a deal. Such differences in opinion are denounced by the “mainstream,” however, as yet another market failure from “asymmetric information.” Thus, the whole reason for trade – different information and preferences in the minds of market participants — is condemned and Nobel prizes handed out to the inventors of this crazy, non-economic theory. 

Students are taught that we need federal regulatory agencies like the Food and Drug Administration to protect our food and drugs when in reality they have always been nothing more than monopoly cartel enforcers for the food and drug industries and thereby threats to food and drug safety. The same is true of virtually all other regulatory agencies. 

Of course, as Mises wrote in Human Action, there have always been students who see through the myths, superstitions, half truths and lies of higher education’s “nurseries for socialism.” There has always been a remnant, in other words. Thank God for the Mises Institute and great books like Human Action and the mountain of literature that now exists in the Austrian School tradition accessible via Mises.org to anyone in the world at the click of a button on a computer or phone. The remnant may be a minority, but it has the ability to be especially well “armed” in the war of ideas.

We at the Mises Institute intend to commence a much-needed new renaissance in real economics—Austrian economics—with our May 16-18, 2024 Human Action conference to be held at the Mises Institute in Auburn, Alabama. Top Austrian School scholars will give presentations which will be published in a commemorative book. Registrants will be given a copy of a special edition of Human Action along with the commemorative volume of essays.

The Mises Institute’s online version of Human Action is still downloaded tens of thousands of times each year because of the enduring power of its ideas and their relevance to our time, and any time. Don’t be left out of this historic event. Join us in Auburn in May for a celebration of the greatest piece of economic scholarship of the twentieth century, discussions of how it affected the lives and careers of so many scholars in attendance—and will continue to do so—and its importance for the future!