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Austrian Economists Look Beyond the Fatal Conceit

By: Daniel Duarte - @dduart3 - Nov 25, 2014, 11:50 am

EspañolAttending an economics conference may sound like the most boring possible way to spend a day. However, an Austrian economics conference, like the one held in Rosario, Argentina, is always about much more than just economics. By the end of it, conference attendees will have learned about politics, law, history, philosophy, and even literature.

According to this school of thought, which originated in Vienna, Austria, economics is inseparably linked to all forms of human action.

Over a hundred people from Europe and the Americas attended the conference.
Over a hundred people from Europe and the Americas attended the conference. (PanAm Post)

The Fifth International Congress: “The Austrian School in the 21st Century,” organized by the Bases and Friedrich Naumann foundations, put into practice the words of Nobel laureate Friedrich Hayek: to be a good economist, your knowledge base must expand far beyond economics. This interdisciplinary spirit could be found in each of the presentations, but it was especially prominent in the lectures offered by one of the most influential libertarian intellectuals in Latin America: Alberto Benegas Lynch.

If in the Anglo-Saxon libertarian world it is cliche to say “it all started with Ayn Rand,” the same is true for a large portion of young Latin Americans whose paths toward liberty were inspired by the work of this Argentinean economist. While delving into law, epistemology, and the philosophy of rights, Benegas Lynch offered a passionate lecture on free will and egalitarianism — the well-intentioned desire to bring about “social justice” that often has disastrous consequences.

Unfortunately, discussion among Austrian economists in both the Northern and Southern hemispheres is often limited by language and ideological barriers. While Latin-American academics are generally well aware of the latest work emerging from North America, those in the Northern hemisphere are far less familiar with important work produced elsewhere.

The work of Gabriel Zanotti is an excellent example of the need for a greater diffusion of ideas. Thanks to the revitalization of a project initiated decades ago by the late Don Lavoie, an economist from George Mason University, Zanotti’s brilliant articles recently crossed the borders of South America. Unfortunately, it will likely be several years before his reinterpretation of the work of Ludwig von Mises will find solid footing in Latin America.

Latin-American academia has had greater contact European philosophical traditions, which could provide long sought after answers to fundamental economic questions. This is a bridge that Zanotti has been attempting to construct; but it is also a bridge that has always existed: the origins of Austrian economics have much in common with European hermeneutics. This was the precisely the theme of the presentation offered by Gabriel Calzada, of Francisco Morraquín University, which showed the significant influence of German thinkers in Carl Menger’s semanal work.

The commonalities between these academics traditions was a common thread between many of the lectures offered at the conference. The presentations of Mexican economists Luis Sánchez-Mier and Fernando Valdés centered on the connections between general equilibrium theory and Austrian economics, and the need to merge the priorities of economists and philosophers for the good of the free market; while the presentation offered by Adrián Ravier claimed the Chicago and Vienna schools are more like close cousins, who would gain much more from by leaving aside their differences and learning from one another.

It is clear the tenants of the Austrian school have begun to infiltrate more mainstream intellectual circles. Peter Boettke said large parts of his theoretical work has been adopted by his contemporaries, and everyone in the room celebrated Mark Skousen‘s announcement regarding a new way to measure economic performance.

Skousen said the new measure, Gross Output (GO, bases on Friedrich Hayek’s economic theories, could replace economic measures like Gross National Product (GDP).

Skoussen has espoused this new economic indicator since the 1990s, and is now regularly published by economic institutions in the United States. It provides a more accurate perspective of the productive sector’s role in the creation of wealth, and helps dispel one of the most commonly accepted myths of Keynesianism: that consumption, not savings and investment, is the driving force of an economy.

One of the conference’s more unsettling presentations offered an even more encouraging sign of the acceptance and influence Austrian economics is gaining in the wider intellectual world. Classical liberals, and Austrians in general, have always assumed a central power must exist, albeit limited, to promote a climate of cooperation and order. However, Ben Powell, advancing the theories of Murray Rothbard, put forth the theory of “pieces of anarchy,” which contends that throughout history social arrangements have functioned better than actual government.

Even international commerce could be conducted without some overarching authority. The work of Powell, Edward Stringham, and Peter Leeson demonstrates that in many cases the existence of a state is not only unnecessary, but produces less cooperation and a lower quality of life. To support this theory, Argentinean economist Martín Krause presented the case of nautical clubs in Rosario, Argentina. These clubs created their own navigation services in the bay where they sail by installing buoys equipped with GPS navigation technology, which they feel represents the creation of a public good through private means, without state support.

It is nice to see that more and more Austrian economists are leaving ideological entrenchments behind, opting instead to build bridges of understanding between different disciplines. This is not surprising, given that Hayek disciples should be well aware that intellectual conceit can be fatal.

Translated by Alex Clark-Youngblood.

Daniel Duarte Daniel Duarte

Daniel Duarte is an editor and translator with the PanAm Post. Based in Paraguay, he is currently finishing a bachelor's degree in philosophy, after moving back from France. Follow @dduart3.