The Rebirth of the Austrian School and the South Royalton Conference: Marking the Fifty-Year Anniversary (June 2024)

Introduction

I have no disagreements with Richard Ebeling’s recounting of the rebirth of the Austrian School. As one who lived through this experience as well, I can only praise what he has done. Richard was, and is, a major actor in this revival. He has tirelessly recounted, developed, and expanded the Austrian tradition. He even discovered new documents that help us understand the tradition better than ever before.

So what is there left for me to do? I will give my own personal perspective on events that preceded, constituted, and followed the South Royalton conference. The pre-history and post-history are necessary for the broader context. I don’t want anyone to think that this perspective is definitive. No one has the full view. We each have partial views from where we stood during this time. I hope that my perspective, arising as it did in the context of much interaction with some of the major players, may be of interest to people.

For me it all began with Henry Hazlitt’s Economics in One Lesson. In the summer of 1962 as I prepared to enter Regis High School, I came across Hazlitt’s book in the neighborhood public library. I had been interested, in a general way, in economic issues since the Nixon-Kennedy debates in 1960. I preferred Richard Nixon – the only one to do so in my Catholic eighth grade. I thought he would prevent inflation. And thus prevent the rise of comic book prices.

Hazlitt’s book gave me the opportunity, as I saw it, to gain expertise in economics in just one lesson. Why not? So I read the book. I found it exciting. I also noticed that there were references to other books by Henry Hazlitt, Ludwig von Mises and F. A. Hayek. I took a look at some of them, but they were too advanced for me to really understand them at that time.

In high school I was on the debate team which gave me the opportunity to study some economic issues like free trade, government provision of medical care, and so forth. I always favored the pro-market position. And my schoolmates playfully teased me about Ludwig von Mises.

Fast forward to college: In the fall of 1966 I entered Fordham College. I was certain that I wished to major in economics and so I did. I had the good fortune there to meet James A. Sadowsky, S.J. a professor of philosophy and a libertarian who was very interested in free-market economics, and Gerald P. O’Driscoll, Jr. a fellow economics student one year ahead of me. These friendships led me to Murray N. Rothbard’s living room where I met “all” of the other Austrians in the U.S. – not much of an exaggeration. Notably, I met historians Ralph Raico, Ronald Hamowy, Leonard Liggio, economists Walter Grinder, Walter Block (who was not yet an Austrian but a Chicagoan), and Laurence Moss. Eventually I was invited by Walter Grinder to hear a lecture by Israel Kirzner at New York University. All of these were thrilling experiences.

At one point in 1969 James Buchanan published a book Cost and Choice. It offered an Austrian-LSE contribution to the concept of cost. Murray and the rest of us were quite excited by this development. During that year Fritz Machlup lobbied successfully for the American Economic Association to give a distinguished fellow award to Ludwig von Mises in recognition of his contributions to economics, especially in the matter of socialist calculation. Another good sign, we thought.

At Fordham, I had the good fortune to meet Austrian economist Professor Louis M. Spadaro, at first the chair of the Economics Department and later the first dean of the Graduate School of Business at Fordham University. (Eventually Spadaro became president of the Institute for Humane Studies.) I took his graduate history of economic thought course and was able to write a paper on Eugen von Böhm-Bawerk’s capital theory. Also at Fordham, unrelated to Spadaro’s course, I wrote a paper with Jerry O’Driscoll on Austrian Business Cycle theory for a course on monetary theory.

Certainly a highlight of my Fordham career was the acceptance of an invitation my libertarian friends and I sent to Ludwig von Mises to lecture at Fordham before a joint meeting of the libertarian, philosophy, and economics clubs. We had asked Mises to speak on the epistemological problems of economics. He declined that topic and said he wanted to speak on money problems and inflation. Daringly, we tried to get him to change his mind. So he said as a compromise, “I will speak on epistemological problems of money.” On November 22, 1968 he spoke on money problems and inflation. Exactly what he wanted in the first place.

Finally, thanks to Lou Spadaro I had the opportunity to meet F.A. Hayek during a trip he made to the US probably in 1969. Hayek didn’t pay much attention to me – a college kid. But I did get my copy of Prices and Production signed.

Then I went to graduate school at the University of Chicago. (Murray Rothbard didn’t like my choice because he viewed the Chicago School poorly. He thought I should have chosen UCLA.) I put my Austrian interests more or less on hold while there so that I could learn what they had to offer. It was a very challenging program.

In 1974 when I heard that the Institute for Humane Studies was sponsoring a conference on Austrian economics, I was very excited to be invited. I would be able to meet “all” of the Austrian economists. Unfortunately, Hayek could not be there but there were many others. I made many friends for my entire career.

I did not, at the time, realize just how important this conference would turn out to be. So my memory of what exactly went on (aside from the lectures which were later published) is not great. I do remember that some of the fissures among Austrians were evident there, even at the “beginning.” Amazingly (to me), Ludwig Lachmann, Kirzner, and Rothbard were not each saying the same thing. Of course, there was unity on certain basic principles but the application of those principles, especially subjectivism, led in sometimes different directions. Lachmann questioned the inevitable equilibrating nature of market processes. Kirzner emphasized the equilibrating entrepreneur. Rothbard didn’t like the Kirznerian concept of alertness as an adequate explanation of entrepreneurship. I wondered whether Hayek would have straightened everything out if he had been there.

Milton Friedman was invited and arrived at one of the dinners. He was polite. But when he said that there was no such thing as Austrian economics – only good and bad economics, I was quite annoyed. His narrow-mindedness and intolerance of other methodologies and philosophies of economics were unacceptable to me. Why could he not have said: Let a thousand flowers bloom?

Narrow-mindedness and intolerance was not all on Friedman’s side. Rothbard was quick to put Lachmann in the Keynesian camp and to dismiss Kirzner’s entrepreneurial ideas as “un-Misesian.” His view of Austrian economics was that it was a fairly closed and essentially completed system as exemplified in Mises’ Human Action and Rothbard’s own Man, Economy, and State.

Nevertheless, the overwhelming majority of the young people there did not come away with doubts about Austrian economics or its viability as a research agenda. Interest was heightened. But, as Ebeling says, many had to go about really learning the Austrian tradition now if they wanted to contribute to its enrichment.

More conferences were called in 1975 and 1976, thanks to the Institute for Humane Studies, and the revival was well on its way.

New York University played an important role in the post-South Royalton revival of Austrian economics. Israel Kirzner decided, with the invaluable help of several foundations and the assistance of Leonard Liggio and George Pearson, to start an Austrian Program in the Department of Economics at NYU. Ludwig Lachmann began a series of academic visits to the Department in 1975. In the early spring of 1976 I was called by Israel Kirzner to determine whether I was interested in a postdoctoral fellowship at NYU. I ultimately accepted his offer and started at NYU in the fall, 1976. Later I became an assistant professor. Gerald O’Driscoll soon also joined the Department as an assistant professor. Fellowships were created for Ph.D. students. And we had a full program. The rest of the NYU story is one of major achievements and major disappointments. That story will not be recounted here.

The main thing to be noted about this point in time is that O’Driscoll and I decided a major contemporary statement of the basic principles of Austrian economics was necessary. Partly this was to educate many would-be Austrians and to let the outside world know what was going on. So we wrote a paper appropriately called “What is Austrian Economics?” The paper was not published until 2015 (O’Driscoll and Rizzo, 2015, 17-46) but, at the behest of René Olivieri, the editor at Basil Blackwell, we decided to turn it into a book. In the discussions and writings that preceded the book, the character of what we intended to do changed. We decided that we would try to produce a more thoroughgoing statement of subjectivism that would provide a basis for the process-orientation that was being more and more fully developed in the Austrian tradition. And then to link various more specific economic ideas to that basis. The first edition of the book came out in 1985 as The Economics of Time and Ignorance.

Initially, it was not well-received by the older generation. Neither Kirzner nor Rothbard liked the book. Kirzner even said that he thought the book would “confuse the students” and ultimately harm Austrian economics in a significant way. Rothbard ridiculed the book for, among other things, its reliance on some of the ideas of the philosopher Henri Bergson. Of course, Ludwig Lachmann (to whom we had dedicated the book) liked it, although he had reservations about whether we had tried too hard to keep some role for equilibrium.

Over the years, however, perhaps spurred on by the book and definitely by Peter Boettke’s open-mindedness and willingness to engage many different streams of thought compatible with Austrian economics, the Austrian school became more open to absorbing good ideas from whatever quarter. The distinctiveness of the tradition was not, and still is not, lost. Boettke and others (including Don Lavoie, Jack High and Richard Fink) established a program at George Mason University which has continued and enriched the Austrian tradition to the present day. Many other programs have also been founded. Austrian economics has developed almost in accordance with the wild dreams of the college kid who met Hayek in 1969. We have not gotten to where many of us hoped we would be, however, because scientism still dominates the profession, even more so than before. For further advances, we may have to wait until the scientistic preoccupation exhausts itself. Nevertheless, the revival thus far of Austrian economics demonstrates the fundamental attractiveness and fruitfulness of its core ideas. I hope and expect that this great intellectual adventure will continue for many more years.

O'Driscoll, G. P., & Rizzo, M.J. (1985), The Economics of Time and Ignorance. Oxford: Basil Blackwell.

O’Driscoll, G. P., & Rizzo, M. J. (2015). Austrian Economics Re-examined: The Economics of Time and Ignorance New York Routledge. Open Access. Available at: https://www.taylorfrancis.com/books/oa-edit/10.4324/9781315776736/austrian-economics-re-examined-gerald-driscoll-jr-mario-rizzo

Richard Ebeling has done an admirable job of extensively surveying the Austrian economics landscape. In doing so, he has shown great familiarity with the economics literature. I particularly like his point that the restating of Austrian economics that so many young Austrians did in the 1970s and 1980s was “necessary and essential” for the revival of the Austrian tradition. It’s easier to know where to go when you know where you’ve been and where you are.

I will not try to compete with Richard in knowledge of Austrian economics. He has already beat me, and not on points, but with a knockout. The one small criticism I would make is that he should have mentioned some of the promising work being done by younger scholars in the Austrian tradition, notably Robert Murphy and Patrick Newman.

In the rest of this essay, I’ll discuss particular experiences I had at the South Royalton conference, experiences that, hopefully, readers will find interesting. They involve Richard Ebeling, Milton Friedman, Rose Friedman, Frances Hazlitt, Israel Kirzner, and William H. Hutt.

Like Richard Ebeling, I was excited to attend the first Austrian Economics conference in South Royalton, Vermont. My motivation was different from Richard’s. I didn’t regard myself as an Austrian economist, but I did find Friedrich Hayek’s work on the socialist calculation debate, and Ludwig von Mises’ work more generally, profoundly insightful and important. I was also a big fan of Hayek’s The Road to Serfdom, the first thing by Hayek that I had read. I had read Hayek and Mises in the late 1960s when I was a young undergraduate mathematics major at the University of Winnipeg. I never took a course in Austrian economics: all of my reading was on my own. In the fall of 1971, when I applied for the Ph.D. program at UCLA, I knew a lot about UCLA’s strong free-market orientation and was looking forward to taking classes from Armen Alchian, Harold Demsetz, and Sam Peltzman, the three UCLA economists whose work I had read. While I knew that none of them was an Austrian economist, I hoped that some of them would be sympathetic. So I took a chance on my application letter, writing, “I would like to be in a graduate program where, if I refer to Mises, people don’t assume that I’m mispronouncing the name of a childhood disease.” It worked, if you judge by the outcome: I was offered full tuition plus a 2-year teaching assistant position paying $440 per month for a 9-month year. That was more than this kid from rural Manitoba had imagined he could get and, more relevant, more than I was offered at my second choice, the University of Chicago.

The person who had motivated me to get into economics was Harold Demsetz, whom I had met in January 1970, when he gave 3 talks at the University of Winnipeg. I was hooked on economics. Although I almost always took Demsetz’s advice—he was my dissertation advisor and my mentor—in this case I went against his advice. I told him that I had received an offer to attend the South Royalton conference at someone else’s expense, and the program looked interesting. The three main speakers were Murray Rothbard, Israel Kirzner, and Ludwig Lachmann. I had read, and been impressed with, much of Rothbard’s Man, Economy, and State. Demsetz’s friend and colleague Ben Klein had assigned Israel Kirzner’s Competition and Entrepreneurship in his industrial organization class earlier that year. While I don’t recall Klein saying why he liked the book, I think one reason was that Kirzner rejected the idea that perfect competition had anything to do with perfection. I do remember that Ben liked the idea of dynamic evolving competition that Kirzner, and the Austrians in general, refreshingly brought to the economic discussion.

So I was surprised that Demsetz discouraged me from going to the South Royalton event. He told me that, now that my course work was done, I should be digging into my dissertation immediately. But I needed a break after two intense years, and this “busman’s holiday” seemed like what the doctor ordered. I probably batted a thousand on Demsetz’s advice: taking it on every other issue and rejecting it on this one. The conference was well worth it.

My fellow Canadian and fellow UCLAer Harry Watson and I showed up early on a Sunday afternoon at a small run-down hotel in South Royalton. One other person who got there early was Richard Ebeling. Richard had a keen sense of humor. I still remember his exact line as he introduced himself, first to Harry and me, and then to other budding young economists as they showed up: “Hi, I’m Richard Ebeling from Sacramento State; if you like Marxism, you’ll love Sac State.”

While I had thought at the time that Richard might be exaggerating, fifty years later he filled in the blanks, noting that two of his professors were Stalinist Marxists who said that the world was a sadder place after Stalin had died. I doubt that was the view of millions of Ukrainian survivors of Stalin’s reign of terror.

Bit by bit that afternoon, various participants arrived and then, unexpectedly to me, Milton and Rose Friedman showed up. They had a summer home, Capitaf, nearby. At the time I thought they had crashed the party, but I learned many years later that they had been invited by Ken Templeton of the Institute for Humane Studies, which funded the event.

I had met Milton twice before, once, in May 1970, when I showed up at his office at the University of Chicago and he gave me ten minutes of attention and again, in November 1971, when he did an extensive Q&A at a libertarian event at Columbia University. I had read a lot of his work and was a fan.

Given his well-deserved reputation for civility and warmth, Milton caught me by surprise by angrily calling me a nasty name when I advocated an immediate end to Social Security. But two hours later, when I ran into Rose just before the dinner and told her that I had talked to her son David three days earlier when he was out in Los Angeles, Rose grabbed my hand and told me to sit with her and Milton so he they could see how David was doing. (Remember that this was in 1974, when long-distance phone calls were still expensive, and so my guess is that they hadn’t talked to David in over a week.) I did so, Milton seemed fine, and I was quick to forgive. Indeed, seeing that he had earlier reacted to my proposal like a human caused me to think even better of him.

One unexpected event at the Sunday dinner was that Milton got up and gave what appeared to be an impromptu talk. As Richard Ebeling noted, he did say something jarring that, at least temporarily, deflated the excitement that a lot of people had about the conference. He said that there was no such thing as Austrian economics; there was only good economics and bad economics.

For some reason, I had shuffled positions and was no longer sitting with Rose when this happened. Instead, I was sitting with Henry and Frances Hazlitt. A few minutes earlier Frances had noted my Afro hairdo and delightedly ran her fingers through it. I immediately liked her and remember thinking that she would have been a wonderful grandmother. When Milton made his comment about there being no such thing as Austrian economics, Frances said, in a voice that could be heard by those around her, “Yeah, Milton, and is there no such thing as the Chicago School?” I chuckled.

I think the person most upset by Milton’s talk was Murray Rothbard. He had had a long feud with Milton, and he probably thought, “Look, this is our event and Milton even gets to speak at our event and put it down.”

The formal conference started the next day and, truth to be told, I don’t have a strong memory of the presentations or of the specific things I learned. But one memory does stand out, and it made me think even more highly of Israel Kirzner.

Kirzner was discussing the price system and noted that Richard Nixon’s price controls were still on some items. He said that when you have economy-wide price controls, you can no longer apply economic reasoning to the economy because prices are not allowed to rise and, therefore, can’t communicate information. That struck me as too extreme, and I wanted to come up with a counterexample to make the point. By the time the Q&A came around, I had one. I said, “Professor Kirzner, you’re saying that when there are price controls, you can’t do economics. But in saying that, you’re implicitly saying price controls make information more costly and, therefore, people have less information. Aren’t you therefore doing economics by applying the law of demand? When the cost of something rises, people do less of it.”

I was ready for him to argue and get defensive about his point and so I was ready to go at it another way. I didn’t have to. Kirzner said, “You’re right.” I was temporarily dumbfounded but delighted.

One of the participants in the conference was the venerable William H. Hutt. What a delightful man. Typically, when he would stand to make a point or ask a question, he would lead by saying, “I’m not an Austrian; for one thing, I don’t speak German” and then go on to make his point. One night several of us were up late talking and laughing with Murray Rothbard, enjoying his cackling laughter. I broke from the group relatively early, at least measured in Murray time, and went upstairs to my room. It had been raining. Remember that this was an old hotel. In the hallway, I saw someone who looked like a character in a Charles Dickens novel. He had on a white nightgown and a night hat. It was William Hutt. He was upset, understandably, because the rain was coming in right on his cot. I sympathized but that’s all I did. In retrospect, I wish that I had been the person my parents raised me to be and offered him my very dry bed.

These are my memories of South Royalton. I have other memories of the 1975 Austrian Economics conference in Hartford, Connecticut. One is of my conversation with Friedrich Hayek after he showed up in a yellow cab and I offered to carry his suitcase to his room. Another is of a sweet moment between Joe Salerno and Hayek when Joe was presenting a paper. Yet another is of some behavior of mine and others on a bus tour in which we tormented the hired guide whenever she mentioned some government building. I’m still ashamed of what I did. But all of those are another story.

Richard Ebeling, in his usual fashion, has given a first-rate recounting of both the circumstances surrounding and the legacy of the 1974 South Royalton Conference. His essay, however, does not dwell on the conference itself—the talks given, the discussions and disagreements, the social aspects—but rather on the lasting significance of that week and its ripples through late twentieth and early twenty-first century economics. Anyone interested in the history of Austrian economics, either in America or globally, would benefit from a careful reading of Richard’s recollections and evaluations. His essay is broad and thorough; his mastery of the historical context and the dizzying growth of the subsequent literature are on full display.

By the end of the essay, however, I found myself disturbed by a nagging feeling of unease. I located the source of this unease in Richard’s reference to “the remnant,” and what I think it has to do with the state of Austrian economics today. Before turning to this unease, I offer an interpretation of why the South Royalton Conference was so successful in contributing to the success of Austrian economics in the intervening fifty years.

Richard is undoubtedly correct that South Royalton marks a “rebirth” of Austrian economics, especially in the two to three decades following the conference. Significant events have a half-life of their own that naturally diminishes their influence over time. So it seems it would have to be with something like South Royalton; it is no doubt life-changing for those in attendance, and a point of inspiration for others who are proximate to attendees, but as the ripples work further from the impulse, they diminish. The beginning of the Austrian renaissance lies in South Royalton because that conference and the broader context in which it took place planted the seeds for the success of Austrian economics both as a scientific research program and as an intellectual movement.

Peter Boettke has put forward a formula for thriving research programs in academia. He says, “The advancement of a scientific research program requires at least three things: ideas, funding, and academic positions.” (Boettke 2012, 34) Austrian economics, in this respect, became and remains a progressive scientific research program in part due to South Royalton. At present, it seems likely that the set of ideas encompassing Austrian economics is more successful as a research program (in terms of funding and academic positions) than it has ever been—or at the very least since the 1930s or 40s. Richard’s delightful and thorough recounting of recent scholarship across the various strands of modern Austrian economics gives proof to this assessment.

Along the lines of Boettke’s “ideas, funding, and academic positions” for a scientific research program, the success or advancement of an intellectual movement requires at least three things: ideas, individuals, and institutions. (I am here using the term institution to mean an organization, not a rule of the game and its enforcement.) Ideas are a necessary part of success for both scientific research programs and for intellectual movements. Richard correctly notes that for many of this “first generation,” a return to the texts was necessary and beneficial. The ideas of the “older,” European Austrian School, expressed in the writing of Karl Menger, Eugen Böhm-Bawkerk, Friedrich von Wieser, Ludwig von Mises, F. A. Hayek, and others, have inspired generations of students, scholars, researchers, pundits, and activists. Austrian economics has never suffered from a lack of ideas; what made South Royalton so important for the future of Austrian economics was that it successfully combined individuals and institutions.

In an intellectual movement, ideas are the sine qua non, but while necessary, they are not sufficient by themselves. Intellectual movements are social phenomena, and, as such, are the results of human action but not of human design. Among the most important and significant of these human actions are the interactions of individuals in a learning environment. Succinctly, a thriving intellectual movement relies on teachers. What truly distinguished the faculty participants of the South Royalton Conference—Israel Kirzner, Ludwig Lachmann, and Murray Rothbard—is perhaps less their stature as researchers and intellectual luminaries but their stature as passionate, inspiring teachers.

I never had the pleasure of meeting Murray Rothbard or Ludwig Lachmann personally, and so I must rely on retellings. The stature of the former is widely known and attested by the devotion his students maintain to this day. For Lachmann, I rely on the witness of a smaller number who nevertheless defend his intellectual breadth and the depth of his intellectual charity. As for Kirzner, I can offer a personal anecdote. In the summer of 2006, I attended the Austrian Economics seminar at the Foundation for Economic Education (FEE) then still in Irvington-on-Hudson, NY. At that seminar, Professor Kirzner gave his famous lecture on the history of the Austrian school through the 20th century. Afterward, I waited my turn to speak with him and asked him about the equilibrating and dis-equilibrating forces of entrepreneurship in the market process. Despite the fact that he must have heard this question hundreds of times from scores of upstart graduate students, he nevertheless patiently and carefully took me through a chain of reasoning that left with me no conclusion but the one that he had written and published so often before. The carefulness of his argument, however, made less of an effect on me than his patience and willingness to engage with a student he barely knew.

Without individuals to pick up, reshape, and share them, ideas lie fallow, their fecundity preserved but unused. Just as individuals serve ideas in spanning across time and in reaching a wider audience, institutions, or organizations, allow the impact of individuals to go beyond what would normally be possible with the scant years of life we are given. Institutions can both amplify the effect of an individual and provide continuity of vision and influence well beyond that individual’s lifetime. In this respect, institutions can tie together individuals over great time and distance, allowing for this essential connection that lies at the heart of an intellectual movement.

As Richard notes, the Institute for Humane Studies sponsored the South Royalton Conference. Without significant institutional support, the conference might never have occurred. Because of the conference, connections between and among individuals were formed and, over time, flourished. With those connections came deeper understandings and a gradual expansion of the ideas at the core of the intellectual movement. Austrian economics was reborn in the wake of the South Royalton Conference and Hayek’s 1974 Nobel because ideas, individuals, and institutions came together. Austrian economics has enjoyed relative success over the last fifty years because it has, for much of that time, been both a scientific research program and a vibrant intellectual movement.

I found myself ill-at-ease upon completing Richard’s truly lovely retrospective essay because I wonder whether the same institutional structures are in place that had been for much of the past fifty years, during which the Austrian school has experienced a rebirth and resurgence. Richard’s reference to the students and early professionals gathered in Vermont back in 1974 as a “remnant” is, I suspect, a nod to the famous essay “Isaiah’s Job” by Albert Jay Nock (Nock 1936). In that essay, Nock cautions his audience not to judge success by whether they achieve popular success or acceptance. “The masses” will neither understand nor have the personal fortitude to accept a difficult or important lesson. Better, argues Nock, to live one’s own life according to said principles, rightly understood, and, if one is to reach and influence anyone else, it will be those among the remnant. The remnant, by necessity, must be a small minority of all people.

Where Nock’s essay has always sat awkwardly with me is his insistence that “the remnant will find you.” (Nock 1936, 646) Simply, I remain skeptical that Nock is correct in asserting that the remnant will manage to hear the message and find their way. But even if I concede that Nock is right about discovering ideas and finding their way to their “prophets,” I’m left wondering what we do with the remnant who have identified themselves. Do we have the institutional structures today to connect and bind together those individuals into a thriving intellectual movement?

I do not in any way begrudge Richard’s characterization of those motley individuals fifty years ago as part of the remnant; indeed they were a crucial part of a faithful remnant. What gives me unease about the current state of affairs is what we are doing to reach the remnant in our society today and what that remnant will find waiting for it beyond these bare ideas. Both the South Royalton Conference and Hayek’s Nobel sparked a renewed interest in the ideas of Austrian economics, but it was the efforts of individuals and institutions that turned those interested people into students, students into scholars, and scholars into educators.

Boettke, Peter J. 2012. Living Economics: Yesterday, Today, and Tomorrow. The Independent Institute: Oakland, CA.

Nock, Albert J. 1936. “Isaiah’s Job.” The Atlantic. Vol 157, No 6. June 1936, 641-649.

Polanyi, M. 1962. “The Republic of science.” Minerva, 1, 54–73.

I want to start by thanking David Henderson, Geoffrey Lea, and Mario Rizzo for their reminiscences, reflections, and reactions to my lead essay. I greatly enjoyed all three of their responses.

David and Mario told their stories of discovering Austrian Economics and how they came to be invited to and attending the South Royalton conference. In my case, I had the good fortune of meeting two guys in Hollywood, California, where I was living, when I was 16 years old, and they introduced me to the ideas of Ayn Rand. Her non-fiction writings, especially, Capitalism: the Unknown Ideal, had numerous references to books by Ludwig von Mises, Henry Hazlitt, Carl Menger, and Eugen von Böhm-Bawerk that led me to start reading the Austrians at that tender age. When people used to say, “It usually begins with Ayn Rand,” in my case that also included a discovery of the Austrian Economists (Ebeling, 2023, 97-106).

After I moved to Sacramento, two friends took me to meet Floyd “Baldy” Harper, the founder and first president of the Institute for Humane Studies, when IHS was still headquartered in Menlo Park, California. Also at that meeting were George Pearson and Ken Templeton. (After Baldy died in April 1973, Ken ran IHS for several years with financial support of the Koch Foundation.) I clearly made enough of an impression on them that in the early spring of 1974, while still an undergraduate at California State University, Sacramento, I received an invitation to attend that first Austrian conference in South Royalton.

They only offered to pay my bus fare to the conference in Vermont. So, I boarded a Greyhound bus in Sacramento, and headed east on a more than three-day ride across the country. In the middle of the Nevada desert, the bus broke down; all the passengers had to wait hours in the midday heat until a replacement bus came to continue us on our journey. In Des Moines, Iowa, new people boarded the bus as it went on to Chicago. Overnight, a young man and woman who clearly had never known each other before getting on the bus and who were sitting next to each other in the row right behind me, proceeded to have sex together – and more than once before the sun appeared on the eastern horizon! They disembarked in Chicago, kissed, and walked away in opposite directions. Then, in eastern Pennsylvania, a one-year-old baby “did its business” in its diaper, but the baby’s mother had left all the extra diapers in her luggage in the baggage section in the lower part of the bus. The remainder of the ride to New York City was a most “aromatic” one!

I changed buses in the New York Port Authority bus terminal to go on to Vermont in the evening. The person sitting in the same row across the aisle from me turned out to be also going to the Austrian conference. We talked (quietly) most of the night before arriving at South Royalton in the very early morning hours of June 15th. But I must confess, I cannot for the life of me remember who it was with whom I had that delightful conversation.

We walked across a bridge over a stream to get to the actual town of South Royalton. It was spooky. The entire town was seemingly abandoned. Buildings facing the town square had open doors and music seemed to come from some of them, but not a human soul was in sight or responded to a “hello.” The hotel where the conference was to be held was open and empty except for a cleaning lady who knew nothing about the conference or with whom we should check in. I felt like I had entered Rod Serling’s The Twilight Zone.

In a few hours, however, more people began to show up, including Ed Dolan, the local coordinator of the conference. I was assigned to a room on the second floor of a two-story building around the corner from the hotel. The floor in my room sloped on a decline, with the bed situated under a window. I practically had to hold on to the sides of the bed not to slide out of the window!

Meeting Israel Kirzner, Ludwig Lachmann, and Murray Rothbard that first day was, for me, like meeting intellectual gods from an Austrian Mount Olympus. I had read their books and articles – practically memorizing many of them to better argue with my Keynesian and Marxist undergraduate economics professors during class times. I only knew Rothbard from the pictures on the dust jackets of some of his books. I imagined him to be thin, tall, and extremely serious. What a shock to be face-to-face with this relatively short, rotund, squeaky-voiced individual constantly laughing and cackling away as he told stories.

David Henderson mentioned late night sessions with Rothbard during the conference. Rothbard would hold court every evening until way past midnight. He would sing political songs from across the political spectrum in several languages, tell humorous anecdotes, and explain why Austrian Economics was so important. I remember one night at about two in the morning, Rothbard’s wife, Joey, came downstairs and told him it was time to go to bed since he was the first speaker that morning. Joey took Rothbard by the hand to take him upstairs, and as he was being led away Murray said in a forlorn child’s voice, “But I don’t want to go to bed.”

One evening someone tried to make a phone call from the hotel phone and from a public phone across the street and found the lines dead. Also, there seemed to be barking dogs on the edges of the town. Rothbard hypothesized that this was a Keynesian-Chicago School conspiracy to isolate this remnant of the Austrian School from the outside world, maybe even to wipe it out. The next morning at breakfast one of the attendees, property rights theorist Svetozar Pejovich, who was originally from Yugoslavia, said that he had lived under the Nazis during World War II and experienced communism under the Tito regime in his home country. But after hearing Rothbard’s explanation that we were all going to be wiped out by the mainstream of the economics profession, for the first time in his life, he slept with the light on!

To describe South Royalton as “rustic,” would be a gross understatement. One day while walking with Ludwig Lachmann around that town square with the statue of the Civil War Union soldier, I asked him what he thought of South Royalton. He replied in his slow, gravely, German-accented voice, “Well, Mr. Ebeling, it has been very interesting to find out what life was like in nineteenth century America.”

Geoffrey Lea observed that I had failed to explain the conference proceedings itself. I only did not in my opening essay due to the limitations of space. But I might mention that I wrote a piece detailing what had gone on at the conference in an article, “Austrian Economics on the Rise,” which appeared in Libertarian Forum (October 1974), a bimonthly newsletter edited and mostly written by Murray Rothbard. My article is conveniently accessible on the Mises Institute website (Ebeling, 1974).

Finally, one of the most valuable and enjoyable consequences of my attending that Austrian conference in South Royalton were friendships that have continued for, now, half a century, among those friends are David Henderson and Mario Rizzo. Alas, some of the attendees have now left us. One of them that I especially miss is Don Lavoie, with whom I attended graduate classes at New York University that were taught by Ludwig Lachmann and Oskar Morgenstern. And also, the many late night conversations with Don at his Brooklyn apartment, made even more stimulating after we had smoked a joint or two. (I know, “shocking,” but this is the twenty-first century, and I think I’m beyond the statute of limitations in confessing this.)

Another that I would be most remiss in not mentioning is Sudha Shenoy. Her father B. R. Shenoy heard F. A. Hayek deliver his famous Prices and Production lectures at the London School of Economics in January 1931. He went on to become one of the leading free market economists in India in the postwar period. Sudha, with her Brahmin dot on her forehead and wearing her beautiful Sari dresses, spoke with a most upper class British accent. Warm and charming, she was a walking encyclopedia on all things Hayek. Sudha and Gerald O’Driscoll had co-authored a paper on Hayek’s business cycle theory that was delivered at the South Royalton conference in an extra session during the week. It was included as a chapter in the South Royalton proceedings volume, The Foundations of Modern Austrian Economics (Dolan, 1976, 185-211). Sudha was constantly seeing the logic and relevancy of Austrian capital theory in numerous episodes of economic history. I always made a point of taking advantage of delightful conversations with her whenever I could over the years before she passed away in 2008.

In the decades ahead, if anyone writes a new history of the Austrian School the South Royalton conference, no doubt, will be marked as a milestone in the School’s history. But as Geoffrey Lea said, crucial to the continuity of a set of ideas across time are the human connections and the memories of shared experiences and bonds of beliefs. This has been an inseparable part of this reborn Austrian School of Economics.

Dolan, Edwin G., ed. (1976). The Foundations of Modern Austrian Economics. Kansas City: Sheed & Ward.

Ebeling, Richard M. (1974). “Austrian Economics on the Rise,” Libertarian Forum, October. https://mises.org/mises-daily/austrian-economics-rise

Ebeling, Richard M. (2023). “My Life as an Austrian Economist and Classical Liberal: The Starting Point and Early Years,” in Jo Ann Cavallo and Walter Block, eds., Libertarian Autobiographies: Moving Toward Freedom in Today’s World. Cham, Switzerland: Palgrave MacMillan.

Geoffrey Lea says that “as the ripples work further from the impulse, those ripples diminish in magnitude.” Taken literally, this is no doubt true. But there are some processes that amplify over time. I will argue that Milton Friedman’s little speech at the South Royalton dinner in 1974 is a case where the, at first, mere ripple was somehow magnified over time. To be sure, it was not the speech itself, but the fundamental idea in it that has worked to the disadvantage of a cause he cared deeply about: liberalism.

David Henderson gives the context of Freidman’s comments at that dinner. He had indeed been invited and was encouraged to say something. But when he said that there is no such thing as Austrian economics but only good and bad economics, he was making a profound point. We all knew that his conception of good economics was that it must be scientific in the sense of fundamentally mathematical in its analysis, consisting of testable propositions, and using up-to-date methods of empirical research. And this was the only acceptable method.

Why was Friedman so concerned about being scientific? He wanted to demonstrate that liberal ideas about the efficacy of free markets and the importance of general rules over government discretion could have a scientific basis. If there were to be a postwar revival of liberalism, it could not be on the terms of the pre-war liberals, especially the Austrians, who seemed so old-fashioned in their methods of analysis. They seemed to him to be dogmatic, ideological, and averse to the current trend of economic thinking. It is clear that he and others of the new Chicago school (yes, there was a Chicago school – everyone knew it – even though there was no Austrian school!) did not take seriously the anti-scientistic cautions of Frank Knight who had died in 1972.

At South Royalton Murray Rothbard was quite angry and he had every right to be. I think those who invited Friedman thought he would be pleased about an Austrian revival. After all, it could be yet another route to re-establishing liberalism. But they should have known better based on Friedman’s writings and participation in Mont Pèlerin discussions.

Friedman’s point exemplified the general attitude held by his Chicago School – as well as most of the economics profession. As the decades rolled on, economic theory became increasingly more abstract and mathematical. Empirical methods developed by leaps and bounds. Experimental methods were introduced. Fields became ever more specialized and isolated from each other. The narrowness of neoclassical rationality was questioned. Some of this was to be expected and some even welcomed. But there was a major problem: The thrust to specialize and to be as “scientific” as possible meant that economists had no time to consider the broader social implications of their work. And, because entry into the economics profession involves self-selection, many young economists had no interest in such issues. A perfect example was an economics faculty meeting at New York University during the 1990s in which William Baumol, who had himself made contributions to the history of economic thought in earlier days, argued that the history of economic thought requirement for Ph.D. students should be abolished because the opportunity cost of studying broader issues was now too high in view of increasing technical nature of the discipline. The requirement was abolished over the objections of Israel Kirzner and Wassily Leontief. A classic case of crowding-out.

Of course, Milton Friedman could have had no idea that things would develop in this way. He could have no idea that the view of economics – which he shared with the mainstream of economists – would evolve into an exaggerated form and obsession. In part, he did not know this because Chicago had always been far more moderate in its formalism than was economics at Harvard, Yale, or MIT. Chicago economics always kept a close relationship with the real world and employed intuitively-plausible theories. They were Marshallians – you could burn the mathematics and you still had something. Economics was an engine for the discovery of concrete truth.

Crowding-out meant that economists, at the highest level, were increasingly ill-educated beyond narrower and narrower technical concerns. Education for economists today has no room for the study of political theory, the history of economic thought, heterodox economic ideas, even economic history and economic institutions. The idea of discovering the scientific basis of liberalism makes no sense at the “elite” (aka fancy-school) level of the economics profession. Nevertheless, many economists still opine on political matters but without any of the background to do so.

Who continues to pursue the substantive relationship between economics, philosophy and the other social sciences? Clearly, the Austrians have been prominent in all this. Others, beyond the elite mainstream, are involved too – witness the surge in interest in Philosophy, Politics and Economics (PPE) programs.

Friedman’s error was to put down the distinctively Austrian perspective, thinking that his view of science was the only one acceptable and not recognizing the dangers of scientism. Ironically, and without his intent or responsibility, the mainstream profession of economics today has crowded-out the informed concern with broad political and social issues. The scientism in Friedman’s science has overwhelmed the liberal framework he hoped economics could contribute to building.

But not among the Austrians.