Conservatives & The Austrian School of Economics (Part 1)

By Kyle-Anne Shiver and Lee Cary

There may be something new on the shelves of your local bookstore – works representing the Austrian School of Economics.

In the post-World War II decades, the U.S. and Great Britain largely adopted the thinking of economists John Maynard Keynes, and then John Kenneth Galbraith, as representing conventional wisdom. In comparison, scant references were made in undergraduate collegiate academia to F.A. Hayek and Ludwig von Mises of the Austrian School of Economics.

With the re-emergence of Hayek’s The Road to Serfdom, he and Mises have begun attracting attention among general readers. They wrote before, during and in the years after World War II when capitalism was under heavy ideological assault by the two collectivisms of the 20th Century: Fascism and Marxism.

Today, in their writings, we can today find an articulate defense of capitalism and a rapier attack on socialism and collectivism in general. Both economists offer an alternative to Galbraith, and to a current leading proponent of Keynesian economics, New York Times columnist Paul Krugman.

Here are several quotes from Mises’s Bureaucracy, first published in 1944, but holding relevance for today.

“The characteristic feature of present-day policies is the trend toward a substitution of government control for free enterprise. Powerful political parties and pressure groups are fervently asking for public control of all economic activities, for thorough government planning, and for the nationalization of business. They aim at full government control of education and at the socialization of the medical profession. There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities. In their eyes, state control is the panacea for all ills.” (p. 4)

“America is faced with a phenomenon that the framers of the Constitution did not foresee and could not foresee: the voluntary abandonment of congressional rights. Congress has in many instances surrendered the function of legislation to government agencies and commissions, and it has relaxed its budgetary control through the allocation of large appropriations for expenditures, which the Administration has to determine in detail.” (p. 5)

“Today the fashionable philosophy of Statolatry has obfuscated the issue [of tyrants versus popular government]. The political conflicts are no longer seen as struggles between groups of men. They are considered a war between two principles, the good and the bad. The good is embodies in the great god State, the materialization of the eternal idea of morality, and the bad is the ‘rugged individualism’ of selfish men. In this antagonism the State is always right and the individual always wrong. The State is the representative of the commonweal, of justice, civilization, and superior wisdom. The individual is a poor wretch, a vicious fool.” (p. 76)

“The fading of the critical sense is a serious menace to the preservation of our civilization. It makes it easy for quacks to fool people. It is remarkable that the educated strata are more gullible than the less educated. The most enthusiastic supporters of Marxism, Nazism, and Fascism are the intellectuals, not the boors. (p. 108)

“The main propaganda trick of the supporters of the allegedly ‘progressive’ policy of government control is to blame capitalism for all that is unsatisfactory in present day conditions and to extol the blessings which socialism has in store for mankind. They have never attempted to prove their fallacious dogmas or still less to refute the objections raised by the economists. All they did was to call their adversaries names and to cast suspicion upon their motives. And, unfortunately, the average citizen cannot see through these stratagems.” (p. 111)

[The Middle Way] “The most detrimental outcome of the average citizen’s repugnance to a serious concern with economic problems is his readiness to back a program of compromise. He looks upon the conflict between capitalism and socialism as if it were a quarrel between two groups – labor and capital – each of which claims for itself the whole of the matter at issue. As he himself is not prepared to appraise the merits of the arguments advanced by each of the parties, he thinks it would be a fair solution to end the dispute by an amicable arrangement: each claimant should have a part of his claim. Thus the program of government interference with business acquired its prestige. There should be neither full capitalism nor full socialism, but something in between, a middle way.” (pp.117-118)

And, as Hayek explains elsewhere, the middle way is only a byway on the highway to more socialism.