Why No IEA in the United States?

    

That is actually a rhetorical question that Professor Gordon Tullock put to me and some others standing around Harper Library at the old Institute for Humane Studies complex in Fairfax when I was a graduate student. We all were puzzled because this was the early 1980s and free-market think tanks were in full bloom. Cato had recently moved to D.C., where Heritage and AEI were already in operation. New grassroots groups such as Citizens for a Sound Economy were being established as well. FEE was entering its post-Leonard Read phase, but it still was publishing The Freeman and conducting seminars. And, of course, this was in the middle of the Reagan Revolution, with the Hoover Institution brain trust commuting between D.C. and Stanford. But Tullock persisted: None of these groups was like IEA.

And as he pushed us, we began to understand. IEA was an economic think tank where the persistent and consistent application of economic theory to questions of public policy took precedence over current policy debates.  Its publications provided an intellectual bridge between serious scientific economics and the everyman’s interest in economic issues – whether those interests were aimed at pure understanding of the forces that explain how the world works, or the policy options currently being debated.  A look at IEA publications immediately revealed something different from what one saw at the American think tanks. This difference had a lot to do with Arthur Seldon.

I met Arthur Seldon during this time, along with Lord Harris. Seldon seemed very comfortable in his role as an economists’ economist, as well as someone who wrote economics for the everyman. He wasn’t trying to be a British Henry Hazlitt since he wasn’t an economic journalist and popularizer.[4] He was an LSE-trained economist who sought to make the teachings of economics understandable to the general public. In this regard, Seldon was more or less a public economist. In the process, not only did he work to keep Hayek’s ideas alive within the economic conversation, through his work as the editorial director at IEA he spread the ideas of Ronald Coase and property rights analysis; the ideas of Milton Friedman and monetarism; and the ideas of James Buchanan, Gordon Tullock and Public Choice to the English public.

As John Blundell points out, Seldon was a student of Coase, Hayek, and especially Arnold Plant. Any history of the LSE during this time would be incomplete without an extended discussion of Plant and his influence on the younger generation of economists (including Coase). Of course, there were many “big players” at LSE in the 1930s, with Lionel Robbins and Hayek being the towering figures among the free-market liberals, but their direct influence on younger market-oriented economists was not as widely acknowledged as that of Plant. Instead, from the accounts I have read, the influence of Robbins and Hayek was more indirect through their research and mentorship of graduate students and young faculty. But discussions of Plant often stress the impact of his lectures and the questions he raised for students to think about.

What were the components of Seldon’s public economics? First, it appears he was not interested in cultivating sectarian schools of thought within the economic discourse, but instead insisted on clarity of argument and a straightforward appeal to evidence. While introducing readers in his editorial capacity to the insights of Hayek, Coase, Friedman, Buchanan, and Tullock, he made no appeal to exotic ideas of some forgotten brand of economics. Instead, the arguments were presented as plain old commonsense economics based on sound economic theory and attention to the empirical details. In short, Seldon wasn’t producing “Austrian economics,” “monetarism,” or “Public Choice”; he was producing good economics, encouraging debate on monetary policy, and making sure that modern knowledge of political economy was incorporated into the economic conversation.

Second, as an editor Seldon was aiming an audience of generalists in academia, economic policy decision-makers, and those charged in the media with covering economic ideas and economic policy. IEA books are sophisticated intellectual works, but largely without jargon.

Third, Seldon entertained the most radical implications of the consistent and persistent application of the economic way of thinking to the policy question under examination. He was a radical classical liberal.

So let’s come back to Tullock’s claim and fit that in a larger argument about the spread of ideas in a society. Hayek postulated in “The Intellectuals and Socialism” that the reason socialism was so successful as an intellectual movement in the nineteenth and early twentieth centuries was that they had captured not only the intellectual imagination of the scholarly class, but also the secondhand dealers in ideas. These secondhand dealers, through their work as teachers, journalists, writers, etc., in turn influenced the policymakers and general public. IEA under Seldon’s editorial direction, as I understand it, focused on translating the technical scientific work of the economists of the scholarly class into jargon-free, yet intellectually rigorous prose for the second-hand dealers.

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To put this in perspective, consider the following comparative cases: Thomas Jefferson Center at the University of Virginia and American Enterprise Institute/Heritage Foundation. Warren Nutter and James Buchanan were fellow graduate students at the University of Chicago after World War II. Economics was in the process of transforming itself on two fronts: 1) the neo-Keynesian synthesis with its emphasis on macroeconomic aggregates, and 2) mathematical formalism and statistical testing as the scientific mode of economic expression and analysis. Nutter and Buchanan agreed that the great discipline of political economy – the ideas of Adam Smith, John Stuart Mill, and Frank Knight – were under threat of expulsion from the consciousness of the young generation of economists. They decided that if they ever found themselves teaching together they would work to “save the books.” Such an opportunity did arise in the mid to late 1950s at UVA, where they founded the Thomas Jefferson Center for the Study of Political Economy. Nutter, Buchanan, Coase, Tullock, and Leland Yeager were the primary faculty, and the group of graduate students they worked with went on to have significant scholarly impact within the economics profession over subsequent decades. Their focus was on the scholarly/scientific class exclusively.

Compare that with AEI/Heritage, both of which were founded with the purpose of informing the policy discussion among politicians in D.C.  Their concern was more politically immediate. The model of a policy think tank has since spread through the United States at the state level, and internationally as well. Ironically, many of these think tanks are the byproduct of an initiative of Sir Antony Fisher – who founded IEA on Hayek’s advice. But they didn’t have Arthur Seldon as an intellectual leader, so they replicate not the IEA model, but the Heritage model. They are policy think tanks focused on politicians, or grassroots think tanks focused on the voting public. What they don’t provide is intellectually rigorous arguments directed at the second-hand dealers of ideas to impact their general framework of analysis about economic issues.

This is a huge hole in the U.S. think-tank market. Tullock was right: There is no American IEA, and that is because the individuals in charge did not have the intellectual temperament and disposition of Arthur Seldon. Organization leadership matters; and strategic focus especially matters. IEA was able to make a difference because under Seldon’s editorial direction its authors contemplated not merely day-to-day policy, but rather applied the economic way of thinking consistently and persistently – regardless of what was regarded as politically impossible.

[4] My remark is somewhat unfair to Hazlitt. He was in fact much more than a journalist and popularizer of economic ideas. As I argue in a pair of papers, he was an intellectual middleman who also attempted to make original contributions to philosophy, politics and, economics.  See Boettke, “The Economists as Public Intellectual: The Case of Henry Hazlitt,” online at: <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2030464>; and Boettke and Liya Palagashvili, “Henry Hazlitt as an Intellectual Middleman of ‘Orthodox Economics,’” History of Political Economy (2013). Still there is something different about Hazlitt, who earned his livelihood as a journalist, and Seldon, who worked full time as what I refer to as a public economist.