Hayek wins Nobel Prize at age 50 – Econlib

Tomorrow is the Nobel Prize in Economics award ceremony. announced.

Perhaps no event had a greater impact on the early success of Israel Kirzner and Murray Rothbard’s efforts to revive interest in the world. Austrian School of Economicss In the academic practice of economics and scholarship. F.A. Hayek won the Nobel Prize in 1974. South Royalton Conference Just last summer.

i use italic The above is meant to emphasize the academic aspect of the discussion. There has always been a small but deeply committed support base for the Austrian economy among free market types in business and public policy. My own undergraduate teacher, Hans SenholzHe, to whom I am deeply indebted, focused his energies in this direction, giving public lectures and focusing on policy-related writing for the masses. It is important to emphasize that the influence of the Austrian school of economics had become almost non-existent by the early 1970s, due to the Keynesian revolution and, more importantly, the hegemony of the Samuelsonians in scientific economics. Older Austrian economists like Fritz Maschrup of Princeton University, although very proud of their scientific origin story, had long ceased to identify as “Austrian.” there was. They believed that the great and long-standing contributions of the Austrian School had now largely been absorbed into the conventional wisdom of neoclassical economics.

The only professionally prominent resisters to this trend are: Israel Kerzner Ludwig LachmannMurray Rothbard. They include such notable economists as Armen Alchian, Kenneth Boulding, James Buchanan, Ronald Coase, Harold Demsetz, Axel Reijonhuvd, Henry Mann, GLS Shackle, Gordon Tulloch, and Leland Jaeger. You’ll get sympathy. These people played important roles in supporting Kirzner’s efforts in various fields, especially in the 1970s and 1980s.

By the early 1970s, Rothbard had shifted his focus primarily to libertarianism and the construction of architectural systems in economics, ethics, and political theory. This is an impressive body of work, ambitious in scale and scope; moving. However, Rothbard shifted his focus from techno-economics to this broader project, and his research was aimed at a broader interdisciplinary audience rather than a narrow specialist audience.

Lachmann spent much of the 1950s and 1960s working in academic administration, and it was not until the early 1970s, after his work on the theory of capital, that he returned to the subject he had begun working on in the 1950s: the study of Max Weber and institutions. I started. . The Austrian revival led him to re-engage with issues of subjectivism, expectations, market processes, and social science methodology. This can be seen in his 1976 work. gel article “From Mises to Shackle”.

But most of the heavy lifting in trying to get a public hearing on Austrian school donations is within Authority in the scientific world fell to Israel Kirzner. Kerzner is of As a self-identified Austrian who teaches at a top-level PhD program (NYU), I am capable of supervising your thesis and helping you start your career. However, such efforts were extremely difficult as they ran counter to the hegemonic Samuelsonian paradigm.

The challenge of scientific progress remained the same throughout Kirzner’s life, but with Hayek’s Nobel Prize winning in 1974 and the subsequent development of the world of thought, namely the collapse of society, opportunities for progress were replaced by insurmountable odds. Simply moved to very long probabilities. Keynesian consensus and the world of practice (stagflation in the 1970s, the collapse of communism in the 1980s). Hayek’s Nobel Prize opened an intellectual space for ideas in adjacent economic sciences, such as: property rights Economics (Archia), law and economics (course), economics of public choice (Buchanan and Tullock), Entrepreneurial Market Process Economics (Baumol and Kirzner).

It must be acknowledged that Hayek’s experience with the Nobel Prize was unique. First, he shared the award Gunnar Myrdalan economist who was ideologically the opposite of Hayek, and neither liked the other. Second, Hayek’s toast at a banquet. Hayek told the audience that if he were asked whether there should be a Nobel Prize in economics, he would say no. He says: “The Nobel Prize gives an individual authority in economics that no one should have.” Third, in his Nobel Prize LectureHayek begins by clearly stating that economists have messed up in the policy world and have nothing to be proud of. He then argues that economists have messed things up by following the wrong theoretical framework (i.e., Keynesianism and the corresponding theory and practice of aggregate demand management), and that they have followed this wrong framework. He argued that this was because he had adopted the wrong philosophy of science (which he argued was called scientism).

Economics is the science of complex phenomena, not simple phenomena. What is appropriate for one is completely inappropriate for the other. In fact, Hayek argued that: largely scientifically, in reality it would be even a littlewhat seems unscientific may be the most scientific. Hayek went on to say that unless economists correct their mistakes, economics will not only approach impostorism, but its practitioners will become tyrants over their fellow citizens and destroyers of civilization.

I think it is no exaggeration to say that Hayek’s Nobel Lecture was the one in the history of these lectures that most actively criticized the scientific community. A charlatan, a tyrant, a destroyer – it is difficult to imagine a harsher condemnation. Other award winners such as Buchanan, Coase, North and Ostrom will no doubt also be important. However, Hayek’s criticism was harsh and indicted the entire post-World War II enterprise in terms of theory and application. Hayek wasn’t there to win friends or influence people, he had a take-no-prisoners mentality that was a radical departure from modern custom.

Correctly understood, economics is a tool for social understanding, and it is a pathological perversion to think of science as a tool for social control. He needs to get his message clear to his fellow scientists, to challenge their intellectual complacency and the special privileges bestowed upon them by the government authorities they are obsessed with. there was. carl mengerthe founder of the Austrian School, described economics, practiced as a science of management, as a “Prussian police science,” but this was not a compliment. In order to become experts in the fine-tuning and efficiency of the state, economists must engage in work that requires knowledge that cannot be achieved through their own scientific enterprises, and therefore demand and provide it. To pretend is to destroy the scientific and intellectual heritage of a great nation. The tradition of political economy since Adam Smith. Scientism kills science. The pretense of knowledge comes from scientism, do not have Scientific research.

This year marks the 50th anniversary of Hayek’s Nobel Prize winning. Cato’s Podcast Bruce Caldwell and I sat down to discuss this and other topics. Caldwell wrote a great paper a few years ago Hayek’s experience of winning the Nobel Prize was detailed, including his reactions to lectures by experts. Hayek’s Nobel Lecture is the only essay to receive a recommendation to “revise and resubmit” when submitted for publication in the laureate’s “home journal.” In Hayek’s case, it was the LSE Journal Economicawhere he previously served as editor. He chose not to make any revisions and instead published it. Swedish Economic Journal.

We hope that by reading this essay and the links provided prior to its publication, you will reflect on the implications of the Nobel Prize for the subsequent advancement of scientific research programs and consider some important points. missed opportunity This decision by the Nobel Committee may have had a significant impact on the advancement of the Austrian school of economics within the scientific establishment of economics.