Joseph Salerno Archive
Rothbard Was Right -- and Friedman Was Wrong -- about the Great Depression
Rothbard and a handful of Misesian economists were virtually alone in maintaining that Hoover's interventionist policies, particularly as they impacted the industrial labor market, were mainly responsible for transforming what should have been a short and sharp recession into the economic catastrophe of epic proportions that we now know as the "Great Depression."
Now comes a National Bureau of Economic Research (NBER) working paper written by a prominent macroeconomist with impeccable academic credentials -- and accepted for publication by the influential Journal of Economic Theory -- which challenges the Friedman-Schwartz view and lends ample evidence to the Rothbardian position on the genesis of the Great Depression. In writing his article, "Who -- or What -- Started the Great Depression," UCLA economist Lee E. Ohanian spent four years poring over wage data and culling information from sources related to Hoover and his administration. FULL ARTICLE
Modern Austrian History: A Response to Pete (Part 1)
Over the past few years there has been an ongoing and productive dialogue over the viability of alternative strategies available to young scholars seeking to pursue a vocation in Austrian economics in academia. While there have been disagreements, most parties to the conversation have treated their opponents' positions with respect and scholarly restraint.
I and others have encouraged the view that Austrians need to think of their career choices in light of their fundamental vocation. Those choices may or may not involve managing one's professional choices precisely according to a preset program as required by academic conventions. As part of this, I have suggested a new strategy in which young scholars, depending on their aptitudes and preferences, study Austrian economics, including its technical details, on an independent basis, working with institutions such as the Mises Institute, while pursuing a Ph.D. degree in economics in mainstream programs in the U.S. or in the growing number of programs available in Europe. I have also suggested that young scholars might want to consider enrolling in Ph.D. programs in disciplines that are cognate to economics, including legal studies, management, entrepreneurship, business strategy, organization, public policy, etc.
Pete Boettke has a different view. He has defended the position that young Austrians should pursue a strictly conventional path. As part of this, they would do better by pursuing a Ph.D. at a graduate program with Austrian and Austrian-friendly professors and courses. These debates have been mostly civil. Lately, however, Pete has become increasingly aggressive, if not downright intolerant, of those who propose alternatives to his strategic plan. This has culminated in his vehement and misleading attack on me for a paper I just published that did not meet his approval.
Pete's response to my recent contribution to the Festschrift for Hans Hoppe, "The Sociology of the Development of Austrian Economics," is the worst case of logorrhea I have seen in many a year. He rehashes and repeats facts and arguments that he has made numerous times before, including a tedious laundry list of his accomplishments, which, incredibly, he himself has portrayed in a previous post a few weeks ago as reflective of an academic career he considers "to be a failure." In this verbal spew, however, he completely misses the point of my essay.
Continue reading "Modern Austrian History: A Response to Pete (Part 1)" »
How to Use Methodological Individualism: A Dissent
In a Mises Daily Article entitled "How to Use Methodological Individualism," Guido Huelsmann makes a provocative claim regarding this fundamental principle of social analysis. According to Huelsmann, "while methodological individualism is properly applied in history, it is not a method that we use in [economic] theory." His argument is that methodological individualism, although indispensable for explaining the contingent and complex events of history, e.g., the causes and consequences of the Iraq War or of the bailout of the U.S. financial system, is unable to aid us in demonstrating the time-invariant and necessary propositions that constitute economic theory.
To support his categorical claim that methodological individualism is not a method of economic theory, Huelsmann focuses on the following propositions, which in his words "are genuinely theoretical propositions in the Misesian sense."
1. More-roundabout production is more productive (in physical terms) than less-roundabout production.
2. When X persons divide labor among themselves, their work is more productive (in physical terms) than when it would have been if these same X persons had produced the same type of products in isolation from one another.
3. Under indirect exchange the market (and thus the division of labor) is greater than under direct exchange.
4. Any quantity of money can serve as an intermediary for any volume of trade, except for technological constraints (e.g., coin size).
But, contra Huelsmann, the first two propositions are not economic theorems at all. In fact they are statements about the ontological structure of the physical world. As such they have nothing to do with praxeology and can be stated with only incidental reference to human action. Thus it is a fact of the natural world learned from experience that there are (almost always) available some longer processes of production that are capable of yielding a greater quantity of a particular product for a given amount of original factors than the most productive of the currently available shorter processes. This fact is taken account of by the economist in formulating praxeological laws but is not itself such a law.
Continue reading "How to Use Methodological Individualism: A Dissent" »
Salamanca Live Blog