Archives for posts with tag: History of economics

Most people reading this blog are probably already aware of the “dehomogenization” charges lead by Joseph Salerno. In an essay first published in 1992 Salerno argues that Friedrich Hayek’s thought should be dehomogenized from Ludwig von Mises’, strongly implying that the latter is better than the former. This distinction builds on Hutchinson’s (1981) distinction between “Hayek 1” and “Hayek 2.” As the argument goes, somewhere around the publication of the “Economics and Knowledge” essay in 1937, Hayek switched from Mises’ a priorism to Karl Popper’s falsificationism. This assertion is very convincingly challenged by Bruce Caldwell’s 1988 essay, Horwitz’ 2003 essay suggest that there really isn’t much to heterogeneity and that if there is any it’s complementary, and you’ll find an interesting discussion arguing that Hayek in fact was methodologically a Misesian in Roger Koppl’s Big Players and the Economic Theory of Expectations, and also arguing interesting bits and pieces on this debate in Pete Boettke’s Living Economics, among many other essays. Readers might also enjoy the numerous posts on the topic over at Punto de Vista Economico.

I’ve been reading Ross B. Emmett’s 2007 essay titled “Knight’s Challenge (to Hayek): Spontaneous Order Is Not Enough for Governing a Liberal Society” in the volume Liberalism, Conservatism, and Hayek’s Idea of Spontaneous Order edited by Peter McNamara and Louis Hunt. According to Emmett, a constant in Frank Knight’s criticism of Hayek is the role of discussion. This is seen the the capital theory controversy between the two, but also in his reviews of The Road to Serfdom  and The Constitution of Liberty. According to Emmett (p. 69–70);

While the substance of their “capital controversy” need not detain us, Knight drew some interesting conclusions from their exchange regarding the prospects for liberalism; these conclusions foreshadow his criticisms of Hayek some 30 years later. During the controversy the two men corresponded about their differences, and Knight believed they were making progress toward a common understanding through the give-and-take of discussion about specific questions and responses. But then Hayek, unbeknownst to Knight, published an article on the theory of capital that made only a passing reference to Knight’s criticisms. Knight interpreted the article to mean that Hayek would make little effort to respond directly to the specific objections of Knight and others to Austrian capital theory.

Emmett documents how Knight emphasized the role of discussion both from methodological and political philosophy perspectives.  According to Knight, discussion not only has role in science, but also in law making. The idea of a free society for Knight being ‘the search for agreement by discussion, which advances in response to “specific questions” or particular problems, rather than a “systematic exposition” of abstract positions’ (ibid). Knight thought these two forms of discussion, scientific and politic, were absent in Hayek.

Let’s however concentrate on the methodological portion of Knight’s criticism. It is more obvious and explicit in his reply to Hayek’s early work (pre-1937), but it’s really present throughout. What I thought was highly interesting is that, at least in Knight’s criticism, Hayek is the one having a Misesian methodology (Knight calls it a “systematic exposition”) and Knight is the one adopting the more Popperian position concerning the role of discussion among scientists (“the meeting of specific questions is the way to ‘advance knowledge'” from Knight’s 1934 letter quoted in Emmett). I’m not sure whether this is enough of a distinctive and unique trait of Popper’s methodology. It’s pretty central in his French essays but seems not to be really a focus in the Anglo-Saxon secondary literature on Popper.

I would be interested in hearing from people more familiar with Knight and Popper than I am on this topic.

Something I’ve been hearing a lot is that the French classical-liberal school of economics disappeared, somewhere around the end of the 19th century and the beginning of the 20th century, because of the professionalization of economics. The argument, as it goes, is that classical-liberals had been petitioning the government for Chairs of political economy in Law faculties for nearly 40 years. When they were finally created for provincial faculties in 1883, only the agrégés de droit, doctors in French and Roman law who had passed a public contest, were allowed to fill these jobs. These agrégés, it is said, were both not sufficiently formed in political economy, and opposed to classical liberalism as a professional deformation. They were naturally inclined to accept the teachings of the German historicists. “Thus the liberal school which, in blatant contradiction to its own politico-economic principles, had campaigned long and hard for a State solution to a perceived educational problem, was hoist with its own petard” writes Salerno.

In a sense I am sympathetic to this interpretation, why would the Chairs of political economy have bitten the hand that feeds them? However, the situation is much more nuanced than this account allows for. It is not the case that “not one of the liberal candidates was an agrégé and only two or three were docteurs en droit”. Out of 13 newly created Chairs, at least two were occupied by classical-liberals. Those were Alfred Jourdan, in Aix-en-Provence, and Edmond Villey in Caen. Even the historical Chair at the Paris Law faculty was at the time occupied by a classical liberal, Paul Beauregard, later substituted by Auguste Souchon (also classical-liberal) before he accepted a newly created Chair of rural economics. Other Chairs, outside Law faculties, were also created and given to classical liberals, such as that of the Collège de France to Henri Baudrillart, and later to Pierre-Émile Levasseur. Classical-liberal economists of the Say-Bastiat kind were among the newly professionalized economists, though other sensitivities were perhaps disproportionately represented.

The charge that classical-liberals that weren’t agrégés de droit disappeared because they were barred from entry into the Chaire d’économie politique is also more nuanced. Starting in 1891, the law agrégation featured an economics option, and starting in 1896, before classical-liberals can be said to have disappeared, economics had their own distinct agrégation. The classical-liberal had their representative on this jury through Pierre-Émile Levasseur. It is however good to remember that there were very few agrégés jobs to be granted, and Chairs were at the time “handed from father to son invoking cooptation, from father-in-law to son-in-law, from uncle to nephew and nephew through marriage”, in a way that left very little place to them. The classical-liberals were not strangers to this brand of corporatism, as this previous quote is from Walras’ autobiography and describes his experience with the classical-liberals and their early stranglehold over French institutions.

The opposition, still according to Salerno, was embodied by the journal co-created by Charles Gide to compete with the Journal des économiste, the main classical-liberal publication. Indeed, the Revue d’économie politique was created in 1887 by those agrégés de droit holding Chairs, seemingly in direct reaction to an attack by French free banker Jean-Gustave Courcelle-Seneuil on the quality of economic teachings in Law faculties. Yet, among its editorial committee, half were classical-liberals for the first few years, until Alfred Jourdan passed away. While it did publish German historicism, it also published decidedly “Paris school” oriented articles, and even the writings of Austrian economists such as Menger and Böhm-Bawerk. Even its mission statement was not  dedicated to the “avowed programme of reaction against the doctrines of the optimist Liberal school, and the propagation of foreign, especially German economic schools”, like Charles Gide would later retcon, but an eclectic mix of all those things and more, like sociology, reflecting the very diverse influences of French law professors holding Chairs of political economy. If it should be linked to Charles Gide’s person, it could be said that it reflected Charles Gide’s ‘jack of all trades’ interests rather than his penchant for German historicism, or even interventionism.

So, why did the French liberal school disappear? There are several reasons, that do include French corporatism in Law faculties that had been adverse to them. A large chunk of the explanation, I believe, lies in the fact that eventually the classical-liberals became dilettante, more interested in doing politics and other activities than publishing. Their production diminished, and eventually disappeared only to have to be “rediscovered” in France in the 1970s. The disappearance of the French liberal school, in a certain sense, is to be found in too little professionalization rather than too much. The attraction of German historicism also shouldn’t be neglected, as the Methodenstreit seems to have made in France much more adepts of German methodologies rather than the Austrian’s. It would require more research, but it might even have “turned” some classical-liberals.

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