March 31, 2011

Demonize and Delete the Austrians (II)

As we noted last time, Mr. Ferrara oddly chose to cite Hebrew University’s Sharon Gordon’s unpublished research on Carl Menger.  No citation at all, however, supports his assertion of a broad thesis morally implicating thought leaders of the Austrian School of Economics (ASE) in the downfall of Christian civilization.
Mr. Ferrara gave priority to conveying his view of the import of laissez faire over his   responsibility to define the meaning of his key term. It is, in the first place, opposition to a government’s use of its monopoly of the means of coercion to regulate economic exchange, to determine whether something may be produced or not, at what rate, and sold for what price. That is, he allowed a particular connotation—“the primary dogma of economic liberalism that emerged as part of the Enlightenment’s overall attack on the Christocentric social order of Catholic Europe” (7)—to crowd out its denotation in his exposition.
The words “emerging as part of” an “overall attack” on “Christocentric social order” can excite the Christian reader’s glands, but his or her exigent mind may wonder what role Carl Menger and the ASE played in those events or their aftermath. He or she may also wonder, as do we, about the viability of an allegedly Christocentric social order that was so easily undone, and ask about any role that agents of that order unintentionally played in the unraveling.
In vain does one search in TCATL for a causal story that shows how one may impute to opponents of interventionism even partial culpability for the demise of a putatively healthy social order.  (I find such a possibility antecedently improbable.)  Identifying Anne Robert Jacques Turgot (last name only, however) as a leader of the Physiocrats (undefined), who in turn “helped” (in some vague way) the Encyclopaedists (also undefined) “pave the way” to the French Revolution is an opinion, rather flabbily expressed, not a cautiously framed hypothesis. 
Mr. Ferrara translates “Laissez faire, laissez passer!” as “Let do [or “let be”] and let pass!,” but doesn’t tell us what he thinks of the forced cartelization and privileges (and suboptimal consequences for the consumer) that mercantilism represented and against which “Laissez faire!” was a protest.  If his counter-revolutionary proposal is not accurately summed up by, say, “Restrain and obstruct!,” he should have made that clear. 
In his biographical essay on Turgot, “Brief, Lucid, Brilliant,” which I recommend as an antidote to Mr. Ferrara’s gossip, Murray Rothbard showed how Turgot anticipated many insights of the ASE.  (Mr. Ferrara both claims that his book “is not concerned with ‘economics’ as an academic discipline” [11] and that he will make exceptions to that stipulation, unavoidable in a book critical of the ASE.)  Mr. Ferrara takes a swipe at “the fallen bourgeois minister Turgot,” without telling his reader what it means for something to be a fallen bourgeois minister.
Unlike Mr. Ferrara, Ms. Gordon mentions Menger’s tutelage of Rudolph, Crown Prince of Austria. So what? Well, His Imperial and Royal Highness, Carl Menger, and Eugen von Böhm-Bawerk were all Catholics, and the environment of their marginal revolution in economics was the Catholic Austro-Hungarian Empire; that of the anti-liberal, Junker-supported German Historical School (GHS), Protestant.  (Again, Ms. Gordon mentions the GHS, Mr. Ferrara does not.)
In other words, Mr. Ferrara missed an opportunity to link his own, early 21st century concerns to their close parallel in late 19th, inevitably referred to in the literature by the misleading tag Die Methodenstreit.  Rather than a “debate” over “method,” however, it was a bitter polemic over the very nature of economics.  Is economics a value-free (except for the value of truth, of course*) science, or a political instrument of extra-scientific interests (framed, of course, in the language of ethical concern)? 
Ironically, Mr. Ferrara and his modern Catholic Social Teaching camp have championed the Protestant rather than the Catholic side of this divide.  We will return to this theme.  For now, however, let a passage from an unedited lecture of Murray Rothbard provide us with a marker for such future reference:
It’s no accident that the . . . epistemological value and value climate in Austria is completely different than it was in Germany and Britain . . . Austria was Catholic and always had been Catholic, whereas northern Germany was Protestant . . . . Menger and Böhm-Bawerk were . . . steeped in natural law and natural rights and Aristotelian epistemology in general. Northern Germany and England and Britain were influenced by Calvinism and Protestant Evangelicalism, which tossed out the so-called scholastic method. . . . . So we have the Austrians steeped in a very different tradition, religious and philosophical tradition than either the Germans or the British.
Rothbard, “Menger and Böhm-Bawerk,” fourth in a series of six lectures on the History of Economic Thought. Transcribed and Donated by Thomas Topp.
Rothbard then praises Barry Smith’s work on this philosophical division.  Smith noted:
Austrian philosophy is marked . . . by the absence of entrenched Kantian and Hegelian elements, philosophical education in the Habsburg lands having been dominated instead by textbooks whose content was drawn from Catholic school-philosophy and from the Leibnizian-Wolffian Popularphilosophie that had been current also in Germany until the time of Kant. It is against this background that both the Brentanian movement and the Austrian school of economics grew up and became established. 
Barry Smith, “Carl Menger: On Austrian Philosophy and Austrian Economics,” Austrian Philosophy: The Legacy of Franz Brentano, Open Court Publishing Company, 1995, 300.
In the same lecture, Rothbard highlighted the importance of this background:
. . . Menger . . . was reacting against the historical school, which was dominant in German-speaking countries, headed by Gustav Schmoller, who believed there were no economic laws, partly because he was interested in building up the state power in Prussia and the rest of Germany. It was inconvenient to have any economic laws out there which might contradict or confound government degrees and actions. As a matter of fact, the famous phrase of Schmoller, which Mises liked to mention from time to time, is that the function of the University of Berlin—which, of course, was the creation of the Prussian state—the function of the professor of the University of Berlin is the intellectual bodyguard of the House of Hohenzollern. That was the dynastic Prussian monarchy. When Menger’s Principles of Economics was published, it was greeted with hatred—bitter derision and hatred—by the Schmollerites of Vienna, that organized a contrary campaign against it. Then Menger got [caught?] up in the mythological conflict, explaining why there is such a thing as economic law. [My emphasis.—A.F.]
Mr. Ferrara’s attack on the ASE only mirrors the “bitter derision and hatred” first displayed by his ideological forebears in the GHS.
To Be Continued

* Frank van Dun, a Belgian professor of the philosophy of law in the ASE tradition and a member of the Academic Advisory Board of The Rothbard Institute, argues that no science can be absolutely value-free because every scientific pursuit presupposes the value of truth. See Frank van Dun, “Economics and the Limits of Value-Free Science,” Reason Papers, No. 11 (Spring 1986) 17-32. The underlying value of truth unites them all but distinguishes none.  Truth is their (internally) constitutive value, but each also has its own  (externally) motivating value.  The motivating reason for one's undertaking the study of economics, however, has no logical bearing upon (is logically independent of) the explanatory reason for one's doing so.  Mr. Ferrara conflates (if not confuses) these two kinds of reasons.  That is, he will not consider causality in economics without at once considering how he thinks it bears on the ethical propositions to which he is committed. (It is good that such confusion does not reign in military science, and so officer-candidates do not pout when they're assigned to play the "bad guys" in an historically based scenario.)  This logical blunder haunts his critique of the ASE.