This Archival Insights into the Evolution of Economics series provides a systematic archival examination of the process by which economics is constructed and disseminated. All the major schools will be subject to critical scrutiny; a concluding volume will attempt to synthesize the insights into a unifying general theory of knowledge construction and influence. This volumeâa sequel to Part VII, Hayekâs Encounters with Fifty Knowledge Communitiesâaddresses Hayekâs (1899â1992) encounters with six influential individuals: George Orwell (1903â1950), Karl Popper (1902â1994), Wilhelm von Humboldt (1767â1835), Karl Polanyi (1886â1964), Walter Eucken (1891â1950), and (speculatively) Rudolf Steiner (1861â1925).
According to the second general editor of The Collected Works of F.A. Hayek, âHayek was very, very careless about his references. Sometimes he would remember something but not remember it exactly, and sometimes would not go back and check. Every one of his quotations had to be double checkedâ (Kresge 2013). But it was not scholarship that attracted disciples. As William Hutt explained: Ludwig âvonâ Mises âwas physically smaller than I had expected, but I was immediately struck by his really remarkable personalityâa magnetism and tenacity created by his deep emotional attachment [emphasis added] to a free economy and the institutions on which it had to relyâ (cited by Egger 1999, 201). And according to Peter Boettke, Grove Cityâs Hans Sennholzâa âMisean for lifeâ Luftwaffe bomber pilotââdoesnât reach you with the technical aspects, but with the ideological aspectsâ (cited by Doherty 2007, 423â424).
At the Koch-funded Austrian revival, âWe were all converts already. It was more a forming of a clanâ (Blundell 2014, 102). Hayek (1978) told James Buchananâthe âGeorge Mason Nobel Laureateââthat economic âscienceâ was driven by shallow emotions: âThereâs no emotional disappointment in the other fields when you recognize that you canât find out certain things; but so many hopes are tied up with the possible control and command over economic affairs that if a scientific study comes to the conclusion that it just canât be done, people wonât accept it [emphasis added] for emotional reasons.â 1 âVonâ Hayek advised Leo Rosten: âYou can tell the people that our present constitutional order forces politicians to do things which are very stupid and which they know are very stupid ⊠I want to make clear to the people [emphases added] that itâs what I call unlimited democracy which is the danger.â 2
In Fascism versus Capitalism, Llewellyn Rockwell Jr. (2013, 96â98), the co-founder of the Ludwig von Mises Institute, described the process by which Hayekâs co-leader of the fourth generation leader of the Austrian School constructed âfreeâ market Truth:
The scene was recalled to me the way miracles are described in the Gospels ⊠There is another respect in which we can all emulate Murray [Rothbard]. He was fearless in speaking the truth. He never let fear of colleagues, fear of the profession, fear of editors or political cultures, stand in the way of his desire to say what was true. This is why he turned to the Austrian tradition even though most economists at the time considered it a dead paradigm. This is why he embraced liberty, and worked to shore up its theoretical and practice rationale at a time when the rest of the academic world was going the other way ⊠This fearlessness, courage, and heroism applied even in his political analysis.
According to Mises (1993 [1964], 36), Edwin Cannan (1861â1935) was âthe last [emphasis added] in the long line of eminent British economists.â The British Fascisti was established in 1923. Six years later, Hayek (1995 [1929], 68â70), while praising Cannanâs âfanatical conceptual clarityâ and his âkinshipâ with Misesâ âcrusade,â noted that British-Austrians had failed to realize the necessary consequences of the whole system of Classical Liberal thought: âTo be sure, it must be added at once [emphasis added] that Cannan by no means develops economic liberalism to its ultimate consequences with the same ruthless consistency as Mises.â According to Bruce Caldwell (1995, 70, n67), Hayek was probably referring to Liberalism in the Classical Tradition in which Mises (1985 [1927], 19, 49) insisted that
The program of liberalism, therefore, if condensed into a single word, would have to read: property [Misesâ emphasis] ⊠All the other demands of liberalism result from this fundamental demand ⊠The victory of Fascism in a number of countries is only an episode in the long series of struggles over the problem of property.
Caldwellâs epigone-generation co-leader insists that Mises and Hayek had âintertwined research programsâ: both were
advocates of the private property market order and attempts to dehomogenize Mises and Hayek on the issue of private property and knowledge are mistaken. (Boettke 2004)
Mises (2006a [1958], 94) noted that âMan is not a being that, on the one hand, has an economic side and, on the other hand, a political side, with no connection between the two.â And as Boettke (2016) correctly pointed out: âMisesâs economics informed his political theory.â
The âFascistsâ that Mises (1985 [1927], 44, 49) praised included âGermans and Italians,â âLudendorff and Hitler.â Mises aspired to provide intellectual leadership:
The great danger threatening domestic policy from the side of Fascism lies in its complete faith in the decisive power of violence. In order to assure success, one must be imbued with the will to victory and always proceed violently. This is its highest principle ⊠The suppression of all opposition by sheer violence is a most unsuitable way to win adherents to oneâs cause. Resort to naked forceâthat is, without justification in terms of intellectual arguments accepted by public opinionâmerely gains new friends for those whom one is thereby trying to combat. In a battle between force and an idea, the latter always prevails. (emphases added) 3
Misesâ Second Estate insights about the power of âpublic opinionâ came almost a century after a similar discovery made by British aristocrats (see below); and somewhat belatedly, Mises discovered that Fascism was a conveyor belt along which Jews like himself had their property confiscated.
Four years after the demise of the Habsburgs, Mises (1922) denigrated the First Estate and their âevil seedâ of Christianity for having failed to protect the neo-feudal hierarchy. After the failure of his attempt to become the intellectual FĂŒhrer of a Nazi-Classical Liberal Pact (1985 [1927]), Mises sought a post-Hitler Pact with the American Religious Right, including public stoning theocrats (Leeson 2018a).
In May 1932, the prominent Nazi official, Gregor Strasser, declared that the ârise of National Socialism is the protest of a people against a State that denied the right to work and the revival of natural intercourseâ (cited by Bullock 1962, 215). The unemployment-inducing deflation that Mises and Hayek promoted facilitated Hitlerâs 1933 rise to power and the subsequent advance of Soviet communism into the heart of Europe. Between 1933 and 1936, it also helped propagate both Keynesian economics and a distinctive Chicago monetary tradition (Leeson 2003a, b).
Joan Robinson (1979, 186) described her first meeting with Michal Kalecki in Cambridge in 1936 as a Pirandello play: Kalecki was âperfectly familiar with our brand new ideas and he had invented for himself some of Keynesâs fanciful concepts ⊠I could not tell whether it was I who was speaking or he.â So it was on the right. Hitlerâa convert to Misesâ business cycle theoryâdeclared: âPower comes at last in Germany only to him who has anchored this power most deeply in the peopleâ (cited by Bullock 1962, 245). In Human Action, âvonâ Mises (1998 [1949], 188â189) again emphasized the importance of selling ideology to the âinferiorâ sovereign consumers:
Might is the faculty or power of directing actions. As a rule one says only of a man or of groups of men that they are mighty. Then the definition of might is: might is the power to direct other peopleâs actions. He who is mighty, owes his might to an ideology. Only ideologies can convey to a man the power to influence other peopleâs choices and conduct. One can become a leader only if one is supported by an ideology which makes other people tractable and accommodating. Might is thus not a physical and tangible thing, but a moral and spiritual phenomenon. A kingâs might rests upon the recognition of the monarchical ideology on the part of his subjects. He who uses his might to run the state, i.e., the social apparatus of coercion and compulsion, rules. Rule is the exercise of might in the political body. Rule is always based upon might, i.e., the power to direct other peopleâs actions. Of course, it is possible to establish a government upon the violent oppression of reluctant people. It is the characteristic mark of state and government that they apply violent coercion or the threat of it against those not prepared to yield voluntarily. Yet such violent oppression is no less founded upon ideological might. He who wants to apply violence needs the voluntary cooperation of some people. An individual entirely dependent on himself can never rule by means of physical ...