Liberty Matters

South Royalton: Before, During, and After


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.
Personal Pre-History
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.
South Royalton
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: