Great economists come in many varieties. There are path-breakers, who forge new analytical tools; there are synthesizers, who discern principles capable of explaining disparate phenomena; and there are debunkers, who root out error, strangling it in its own contradictions so that truth may flourish. Most of those designated great by their inclusion in 15 Great Austrian Economists did all three.
In this volume, editor Randall Holcombe, professor of economics at Florida State University, has assembled 14 economists of no small stature themselves to discuss these great ones. Among the most prominent contributors are Murray Rothbard, Israel Kirzner, Roger Garrison, Joseph Salerno, and Hans-Hermann Hoppe. They cover over 400 years of “Austrian” economics, from the mid-sixteenth century to the closing years of the twentieth.
That early starting date demonstrates that the ideas today labeled “Austrian” did not emerge from Carl Menger’s fecund mind out of nothing. Thus, the first five chapters feature pre-Mengerian writers who made use of such quintessentially Austrian themes as subjective value, entrepreneurship, time preference, and the ability of markets to coordinate plans to explain economic phenomena. They include Juan de Mariana, Richard Cantillon, A.R.J. Turgot, J.B. Say, and Frederic Bastiat.
Mariana, a Spanish Jesuit in the scholastic tradition, is probably the least well known. The chapter dealing with his contributions actually covers a number of Spanish scholastics. The reader will learn that their serving as sources of ideas for Menger was no accident, given the close relations between Spain andAustria resulting from their having once been part of the same Hapsburg Empire.
The authors of these essays are steeped in the history of economics, not just the Austrian school. Salerno’s piece on Carl Menger, for example, provides a fine description of the strengths and weaknesses of classical economics, a necessity in demonstrating what was so distinctive about Menger’s opus. In Menger we see all three aforementioned hallmarks of greatness. The path-breaking analytical tool for which he is perhaps best known is subjective marginal utility. In addition, his theory of imputation and his distinction between goods of higher and lower orders were to become building blocks for Austrian capital theory. Furthermore, Menger constructed an original value and price theory that not only linked consumer and producer behavior in ways classical economics never was able to, but also demolished the intellectual foundations of the labor theory of value. I’d say that qualifies for greatness.
Yet this book is not titled 15 Great Economists, but rather 15 Great Austrian Economists. No comprehending reader could come away from these pages without a clear picture of what constitutes Austrian economics. The praxeological method, that is, the use of logical deduction from indisputable axioms, is shared by every economist profiled in these pages. Not far behind is the recognition of the role subjective value plays in economic activity. Thus the classification of Phillip Wicksteed and W. H. Hutt as Austrians can be justified by their application of subjectivism to cost and labor supply, respectively.
Interestingly, not taking subjectivism seriously enough was a criticism cast in Eugen von Böhm-Bawerk’s direction from within the Austrian school. This criticism notwithstanding, Roger Garrison’s chapter makes clear that by building on Menger’s depiction of the role of time in the production process to create a theory of capital that serves as the foundation of Austrian macroeconomics Böhm-Bawerk secured his position in the pantheon of great Austrian economists.
Fittingly, with the exception of Menger, Ludwig von Mises receives the most extensive treatment of all. Murray Rothbard’s essay describing Mises’s achievements relates not only how he integrated monetary and value theory, leading to his business cycle theory and radical critique of socialism, but also how his personal integrity cost him numerous opportunities for academic positions. In addition, it shows how Mises went one step further than his predecessors in political economy, taking their “rather vague commitment to the market economy,” and hammering it into “a logical, consistent, and uncompromising adherence to laissez-faire.”
Mises left us not only a formidable system of economic analysis, but also a number of talented students who built on that system. Two of them, Rothbard and F. A. Hayek, earned places among the 15 great Austrians of this volume. Both made contributions within Austrian economics itself: Hayek in business cycle theory, the role of knowledge, and competition as a discovery procedure, and Rothbard in welfare economics. The essays in this volume also touch on their scholarship beyond the realm of economics: Rothbard’s forays into history, using Austrian economic theory as an interpretive framework, and his integration of Austrian economics with libertarian theory to develop a theory of liberty, and Hayek’s influential Road to Serfdom and works on psychology, philosophy, and politics.
The volume is rounded out with discussions of Frank Fetter, Henry Hazlitt, and Wilhelm Röpke, whose main achievements were clarifying the valuation process for capital goods, providing a blow-by-blow refutation of Keynes’s General Theory, and exploring the ethical foundations of market economies, respectively.
There is plenty in this slim volume to stimulate interest in Austrian economics and its greatest proponents. It belongs on every economist’s bookshelf.