 Hello, my name is Jamie Lemke, I'm a senior research fellow and associate director of academic and student programs at the Mercatus Center at George Mason University. I'm here with my colleague, friend and former professor, Chris Coyne. Chris Coyne is a professor of economics and the director of graduate studies at George Mason University. He is also the associate director of the FA Hayek program for advanced study in philosophy, politics, and economics at the Mercatus Center. His most recent book is Doing Bad by Doing Good, Why Humanitarian Action Fails. Chris is here to talk with me a little bit about Austrian economics today, so thank you for coming in Chris. Thank you for having me. It's great to be here. Maybe you can just start by telling us a little bit about what Austrian economics is. Well, Austrian economics, as a school of thought, refers to the tradition that really began in the late 1870s, and it's traced back to Karl Manger, who published his book Principles of Economics in 1871. And Manger was one of three founders of what today we call the marginal revolution, which was a paradigm shift in economics, where economists moved from focusing on the labor theory of value to subjective value and the role that that played in individual decision making. And then from Manger, you have Eugen Bombavrik and Frederick von Wieser, who followed him and then up to Mises Hayek and more modern-day Austrians like Israel Kursner, Murray Rothbard, and Ludwig Lochman. Can you say a little bit more about that transition from a labor theory of value and more objective conception to the subjective? Well, prior to the marginal revolution, the standard kind of consensus around how economists or political economists viewed value was that the value of a good or service was dependent on the amount of effort or labor that went into either producing or securing that good or service. And what Manger emphasized, as well as the other two founders of the marginal revolution, but especially Manger, was that value was not some objective function or inherent in the good or service itself, but rather was dependent on the value attributed to it by other individuals. That is, it was in the mind of the actor. And so if you think about it, you or I or someone else might invest significant amounts of labor, resources, and effort in producing something. But less consumers, that is, other individuals value it highly, regardless of how much we invest, they will not purchase it or be willing to exchange a high amount of goods or resources to secure that good or service. And that's really what, in a fundamental sense, what it was all about. Subjectivism and what some people like Kersner call radical subjectivism or radical ignorance later on, which is related to that, is a hallmark of the Austrian school. One of the issues where the Austrian school really came to prominence was in the 1920s and the 1930s, the debate over the ability of people to be able to calculate and make economic decisions in the absence of a price system, a market system. Can you talk a little bit about the Austrian school's role in those debates? What today we call the economic calculation debate really started in the early 1900s. And the debate was a purely technical one. That is, a pure debate over economic theory. And on the one side is the name of the debate implies there was the socialist who wanted to nationalize the means of production. That is, in its original form, they wanted, the argument was that they wanted to completely eradicate private property and the unit of exchange, so money. And the argument was that in doing so, they could rationally plan economic activity such that you would either equal or outproduce what capitalism could produce. Capitalism, of course, being defined as the private ownership over the means of production. So the socialists argued that they could either equal production or outproduce, in terms of material wealth, what capitalism could do. But also at the same time overcome a variety of the ills of capitalism, so things like inequality, unemployment, business cycles, and so on and down the line. What Mises, and then Hayek came in and argued is that absent private property rights over the means of production, you would not be able to have exchange because you can't exchange things you don't own. Absent exchange ratios, which emerge out of exchange, by exchange ratios I mean prices, there is no way for economic actors to gauge the relative value of alternative resource uses. In other words, there is no way for economic actors to gauge the opportunity cost of using resources in one line of activity as compared to another line of activity, all of which are technologically feasible. So Mises, for instance, one of the things he said to paraphrase him is that planners wouldn't know if they should use platinum to make railroad tracks or to use it in jewelry, for instance. The reason we know how to use it is because producers of railroad tracks know it's too expensive to be used in that line of production, and the reason they know that is because of the price of it. Those prices are traced back to exchange, and so that's really the core of the debate. It ties directly back into that initial insight about subjectivism that Manker makes in the Marginal Revolution. So you have what might seem like a relatively abstract or theoretical exercise, this conversation about the origins of value, subjective or objective, that turns out to have these massive rural world stakes because you're talking about these grand social experiments in places like the Soviet Union. That's right, and so really what this all comes down to at its very core is really the wealth and poverty of nations. That is what allows a society or prevents members of a society from figuring out how to best use scarce resources to produce goods and services that they and other consumers value. That's really what, in some sense, what economics is about, but also what economic development in the broadest sense is about. And so this debate, which again many people simply kind of think of as a history of thought episode, which it was, and it's important on purely those grounds. But it also has a lot of relevance, real world relevance as you pointed out even today.