 This is Jeff Deist and you're listening to the Human Action Podcast. Ladies and gentlemen, welcome back once again to the Human Action Podcast, the show dedicated to books which we hope you are reading and ought to be reading. Now I want to thank everybody who participated in our giveaway last week of The Great Book When Money Dies by Adam Ferguson. We had Ryan McMacon on the show to discuss the book. It's really a fascinating historical account of what hyperinflation looked like in Weimar Germany. And unfortunately for those of you who are still listening to that episode and contacting me, we have given away all the copies of that book we had. I believe we had about 120 and I apologize for running out but nonetheless it was really fun to deviate a little bit from pure economics or libertarian theory on the show and read more of a historical book as a change of pace. And so this week's show continues in that same vein because I'm going to give a solo review of a book called The Marginal Revolutionaries, How Austrian Economists Fought the War of Ideas. Now this book was written a couple of years ago in 2019 by a professor named Janak Wasserman. He is at the University of Alabama which is actually just a couple of hours up the road for me. And he is a particular specialist in Central European history. Now again he's a historian, not an economist. So he's very knowledgeable about the Habsburg Empire, about Hungary, Poland, Germany, Austria, especially in sort of the late 20th century, 18, 19, 20th century. And this is his particular area of specialization. And I have to say at the outset that he writes as a left progressive. This is someone who is a critic of the Austrian school, who views the Austrian school as dogma. Of course nobody on the left ever applies this thinking to Marxism or to Keynesianism. Of course that's somehow science, but the Austrian school is dogma. But nonetheless, despite his own particular filters and biases, I think this book is worthwhile. I enjoyed it. I learned a lot from it. And I think it's an excellent sort of contribution to the history of the school. We have Mises, Mises' own historical setting of the Austrian school, which we'll make a link available to that, which you can read. And of course Guido Halsman wrote the great biography of Mises the last night of liberalism, wherein he goes into a lot of the sociology and history of the various figures involved, not just Mises. So the book is broader in that sense. So if you enjoy reading about the history of a movement, I think you will enjoy and benefit from this book. Now, David Gordon, our book reviewer, wrote a review of it a couple of years back, and he was a little harsher on it than I am, in particular David focused on some of the errors the author makes in his economics. And, you know, again, he's a historian, not an economist, and doesn't seem to fully grasp some of the contributions of Manger, or Bamberg, or Mises. He doesn't seem to fully understand what prexiology is. He doesn't seem to fully understand some of the distinctions of the marginal revolution and subjective value and the idea of how we develop a theory of value or a theory of interest. But the historical parts of this book are, I think, still worthwhile. Now, a little bit of background is in order in terms of the context in which this book came out. A couple of years earlier in 2017, a professor at Duke University named Nancy McClain came out with a now-infamous book called Democracy in Chains. And from my perspective, this book was nothing more than a hit job, a political polemic. Not much of a scholarly work at all. And it turns out it was riddled with errors, by the way. But this book took target at James Buchanan and the public choice theory School of Economics, which today finds its greatest home up at George Mason University, among some of the professors there, and also at the affiliated Mercatus Center. But generally speaking, in the Cato and Rees in orbit, James Buchanan and public choice theory are defended. And so she really did some nasty work in calling James Buchanan a racist, which is just absurd. But her book was also a broader attack on the overall broader orbit of Koch-funded university sinecures. And by her telling these radicals, the Kochs had kind of bought and paid for all these academics, particularly in the areas of economics. And as a result, there's this sort of libertarian takeover and all these bad ideas which got their start back in the Reagan and Thatcher era have really taken hold. And there's this nefarious group of sort of kept public intellectuals who are churning out all this libertarian stuff and that this is affecting our public discourse and especially our democracy. So, you know, that's the kind of thing you might expect. But nonetheless, from my perspective, the Koch-funded orbit responded badly to the book because instead of dismissing it as a political partisan hit job on par with something Rachel Maddow might write or whatever, they sort of gave her some sort of scholarly do and said, no, no, no, we have to correct her errors. We have to run off and check out footnote 31 on page 187 is all wrong, Buchanan actually said this. And so I think in a weird way they elevated her because they should have been, I think, more dismissive of the book rather than trying to refute it point by point. Because anything political, when you're explaining, you're losing. When you're saying, no, that's not what Buchanan meant. You know, in response, that's sort of a defensive posture. And I think because of all this, Nancy McClain, who really has a pretty thin resume and really wrote a pretty shoddy book, became a star of sorts for a year or two. She was vetted on the circuit of left progressive shows, things like NPR and Democracy Now and all that. So, you know, the Koch orbit felt that it had to respond. And so as all this was happening, there were rumors that a similar kind of hit job was coming out against the Austrian school in general and also against the Mises Institute, and this book is not that. But as an aside, I just want to say, you know, some of the same tactics which Nancy McClain used against the George Mason and the Mercatus folks, you know, bring to mind some of the tactics they've applied against the Mises Institute. This idea of just sort of doing cursory research of original sources and glossing over things and imputing motives and calling people racist and imagining that anything you don't agree with has to be right wing. I mean, they've done all this stuff to Lou Rockwell. They've done it to Murray Rothbard. They've done it to Hans Hoppe. So it's just interesting to me that they are complaining of some of the same treatment which they've given us. But again, I want to stress that Professor Wasserman's book is not a polemic. It is not the same thing as Nancy McClain's book. Now, it does have a chapter at the end which feels very unlike the rest of the book. It is partisan. It does sort of attempt to attack what Wasserman calls the American Austrians, which is the third generation, so to speak, of Austrian economists who were not geographically based in Austria but came to America. And so this is Mises in New York and what happened beyond that, which is particularly Rothbard, for example. So he goes into some of this stuff about Ron Paul and Rothbard and Hoppe and attacking this libertarian radicalization of the Austrian tradition, which in his view would render it unrecognizable to the old Viennese masters and this sort of thing. But the sense I got in reading this chapter is that it was a bolt-on. And there were rumors, I can't confirm them, that his publisher, Yale University Press, which is an academic house, wanted him to have this sort of modern chapter about these crazy libertarians and Austrians today to make the book a little sexier and to have, you know, maybe help it sell better by having something that was really up to date. Now, I don't know if that rumor is true and I'm not impugning Professor Wasserman. If he did do that, there's nothing wrong with trying to make a book more sales worthy. But the chapter is just full of absurdities and, you know, it really doesn't read like the rest of the book, which is a very capable and competent and fascinating history. So I wouldn't be surprised if that was thrown in there to kind of make his book more like Nancy McClain's book. But I don't think it worked if that was the goal because I don't think his book made anywhere near the splash and I don't think he's gotten the same publicity that she got. So all that said, you know, that he is in the tradition of people who are criticizing the Austrian school and particularly criticizing the modern Austrian school with its headquarters in, I guess, in Auburn, Alabama at the Mises Institute. And there are other left progressives doing this like John Gans at the Baffler, for example, has been a big critic of Rothbard. So this is out there and I think we ought to read our critics. And I think when they are reasonable and scholarly and not impugning motivations like for the most part, Professor Wasserman, I think we ought to treat them seriously. So when we get into this book, you know, it's really, really interesting. Again, I wrote a review of it for Chronicles Magazine a couple of years back, a year and a half ago, I suppose now. And we'll link to that and we'll also link to David Gordon's review. But he represents or he identifies early on in the book, in the introduction, sort of the three phases of the Austrian school. So the first phase we might go back to Manger, Monberba can say was the phase before the Great War, before the end of the Habsburg Empire, so the pre-World War I phase. And then he identifies the interwar phase, which is when Mises and Hayek begin to come to prominence between the two World Wars. And then the third phase is the post-war, the post-World War II era, where both Mises and Hayek end up coming to the United States, ultimately. And Mises is at NYU. And then out of that comes a whole host of what we call Austrian economists, both in the NYU orbit, in the Cato and Reason orbit, and also in the Mises Institute orbit here in Auburn. So those are sort of the three phases of the school. And what's so great about this book is you really learn a lot about some of the interpersonal motivations, some of the internecine squabbles, some of the personal foibles of some of the actors involved. And he really gets into some of the more minor names in the Austrian tradition. And of course, going back to when Austrian met geographically fixed in Austria as opposed to the broader school today. And I think this is what a good history does, because I certainly argue that you cannot separate a movement from its sociology. A lot of what Mises and Rothbard did, I think, resulted from their need to work around traditional academic channels and traditional academic sinecures, which were not made available to them. If Mises had been treated well and welcomed on US shores as the huge thinker and writer he was and was immediately given a good tenured position at a top school, he may never have written human action. I mean, we have to think, I think, in those terms. So while we shouldn't personalize ideas and concepts and theory, I think we have to understand ideas and concepts and theory as coming from the men and women who actually promulgated them. I think that's very, very important to read about the sociology of any school to understand it better. So this is an area where Professor Wasserman, I think, really helps us. And he starts out, of course, discussing Manger and his great principles book in 1871, which came out and put the Austrian school on the map, so to speak. And of course, you get some great history here about Manger was a little more retiring in his personal life. He never wrote some of the things he had hoped to write later in life. And, you know, he comes out about ten years later with a book on method. But between those years, he doesn't really find a lot of fellow travelers, and he's not really creating what we might call an embryonic school at that point. So one of David Gordon's criticisms, and where I think Wasserman goes astray, is he never really quite gets the marginal revolution. He never really quite understands what Manger did to develop a theory of value. In other words, that humans value things subjectively on the margins. And the margins are constantly changing. Our subjective views are constantly changing. And this explains, for example, the diamond water paradox. And this explains, of course, why a billionaire like Mark Cuban cares less about an additional $10,000 in his bank account than you and I do, because he has billions of dollars. And so $10,000 more matter less to him than they do to us. And of course, all of this seems almost self-evident to us today. But it was radical at the time, because neither the Marxists nor the classical economists had figured this out. And that's why we applied the term marginal revolution to that period, because it really was a revolutionary manner of thinking in economics. And so nobody really understood value. Nobody could competently explain it until Manger and a few other thinkers involved in the marginal revolution came along. So one of the blind spots here for Wasserman is that he just sort of glosses over and misses. Manger's other huge contribution was which was explaining how money arises as the most saleable commodity. In other words, that money arises in the marketplace, that it rises as a result of a trade. It arises to solve the problem of double coincidence of wants in barter. And of course, barter is not a system which makes us specialized and rich. And so Manger was very groundbreaking in all this, and Wasserman doesn't really see this. And I think a lot of people across the economic spectrum think that money arises from sovereigns. It arises from kings. It arises from nascent governments. And that money didn't really exist prior to that. We kind of went from barter to kings and states, and there was no in between, and there really was. And that's one of Manger's huge contributions, which Wasserman misses. But again, an excellent treatment of Manger, sort of a character who was perhaps depressive in his personality and never quite wrote everything he hoped to write because of just the conditions of his life and what was going on. Now by contrast, his treatment of Bamberg shows us that Bam was someone who really wanted to create a school. And this is someone who really worked politically, who worked at the University of Vienna, and really sort of tried to network, I guess would be the term today, and really considered things like law and philosophy and politics within the rubric of economics and trying to create connections. So Bamberg was more entrepreneurial and more driven than Manger. And so he really has a great account of how Bamberg tried to build a school. And one of the great contributions of Bamberg, of course, is helping us to explain interest. Why do we pay interest on capital? How did interest arise? Well, the neoclassical, excuse me, the classicals at the time, we now have a neoclassical tradition. But at the time, classical economists tried to say, well, it's sort of a return on capital. So it's money you're paid for using other people's capital. And that was always an unsatisfactory explanation of interest. And the Marxists said, well, you know, this is just sheer exploitation, not only is capitalists steal from workers by paying them only part of the profits in the form of wages, but then they amass all this capital. And then once they've amassed it, they turn around and they lend it to the workers and charge them interest for it. So this is just sheer exploitation. And I'd like to say as an aside, I wonder how Marxists explain negative interest rates. Not real negative interest rates, but nominal negative interest rates, for example, on a lot of Euro bonds today. If the rich guys who own bonds are actually getting negative interest applied to their bond holdings, is that the opposite of exploitation? I don't know. But nonetheless, the Marxists didn't have a good explanation for interest payments. When Berver comes along and shakes up the world by saying, you know, there's something called time preference. And there are people who want to consume now. And there are people who are willing to forgo present consumption and accumulate capital and create roundaboutness, several levels in the structure of production. And because all individuals have different time preference, which is constantly shifting and subjective, we develop this concept of interest, which we pay to borrow money because axiomatically, we always prefer present goods to future goods, all things being equal, because life is uncertain and we might die. And so this was groundbreaking stuff. And you get the sense reading this book that Wasserman doesn't really completely buy this explanation of interest. But look, there are lots of people, even within libertarian and Austrian circles, who attack the pure time preference theory of interest. So this is not necessarily a deviation on Wasserman's part. But nonetheless, at least in the more hardcore Austrian circles, people like Jeff Herbner and Guido Holtzmann today defend time preference as the best explanation for interest payments. So, you know, that aside, during the same period of Bomberwerk, you really do get a sense of how from Wasserman how bomb is shifting influence and intellectual prowess a little away from Germany. And the historicist school based there towards Austria as the late 1800s unfold, Austria is becoming more of a powerhouse of thought. Austria is becoming more of an intellectual center. And Wasserman gives Bomberwerk his due in being part of creating this. And of course, there are some interpersonal nuggets here about Gustav Schmaler and why the Austrians or the budding Austrians disliked the German historicist and vice versa. So this is all, for me anyway, really fascinating stuff and worthwhile stuff. So fast forward into the interwar years and you get into his treatment of Mises and Hayek. Now, I don't want to go too much into this simply because there are lots of other places where you can read about the intellectual history of both of these men, including the aforementioned Gito Halsman biography. And also because a lot of you are listeners probably already know quite a bit more about Mises and Hayek than you do about Manger and Bomberwerk. But, you know, I will point out that to his credit, Wasserman really goes into a lot of other less famous figures of this era. He goes into Fritz Machlup, he goes into Joseph Schumpeter and some of the interrelationships between these men and how different theories were evolving, how they were challenging each other, how they were sometimes having interpersonal fallings out, how people were climbing for status, perhaps a university, much like they do today, I would say, trying to get sinecures and, you know, how people were trying to pay their own bills and have employment, you know, so this is all very fascinating to me. You know, but some readers might want to skim over this or gloss over this, this is inside baseball, which doesn't really affect them today. I found it interesting. But where he really goes wrong in his treatment of Mises and Hayek is, you know, he's like all people on the left, he seems to be obsessed with this idea of neoliberalism and that Mises and Hayek are avatars of neoliberalism and that basically we're all living today. We wish it were, but, you know, in his view, we're all living today under this sort of neoliberalism in the West, which finds its roots and origins, not entirely, but largely in thinkers like Hayek and Mises. So by neoliberalism, that means anything a left progressive doesn't like about capitalism, I suppose. But, you know, from our perspective, neoliberalism is kind of a muddled mixture of, you know, some amount of grudging respect for property and markets but also a robust role for government to interfere in areas like public goods, in areas like monopoly, in areas like environmental protection, in areas like civil rights and also to, you know, provide a robust social safety net for the people who are left behind by technological upheavals in the job market and basically social democracy as practiced in Europe in the 21st century and also increasingly I think practiced in the United States in the 21st century. So this is, you know, this sort of ill-defined term neoliberalism which everybody has a different definition for. I would argue that Mises and Hayek were not the avatars of neoliberalism but nonetheless, that's sort of a discussion for a different day and if you're going to read left progressives, you're going to have to tolerate some of this speaking because they're always sort of shaking their heads and tut-tutting behind the scenes saying like, you know, gosh, we ought to have full socialism by now and we just don't because the left sold out to these market radicals and I think that's absurd but, you know, it doesn't ruin the book. The fact that his own perspectives and viewpoints bleed through, which is perfectly natural for me anyway doesn't ruin the book in the way perhaps it did for David Gordon. But as we get a little deeper into the book, I can't help but scratch and itch and bring up what I'm going to call concern trolling on the part of the author and this is particularly evident in that final chapter I mentioned about the American Austrians and this is where he says, well, you know, this radical libertarianism has infected the American Austrians and as a result of this, they really changed the Austrian tradition which ought to be just about thinkers that came out of Austria and their various progeny. It shouldn't be this crazy political movement and it shouldn't be this crazy anarchism and libertarianism of Murray Rothbard and it shouldn't be this dogmatic attachment to praxeology which of course Wasserman misunderstands a bit. He basically says, well, in Mises's thought, everything you could say about economics you can derive deductively and axiomatically and there's never any need for empiricism and as David Gordon points out in his review, no, this is a muddle headed and a gross overstatement of what praxeology is. Praxeology is the study of purposeful human actions to help us understand what's going on in the world. It doesn't negate the desire or need for empirical research at all but empirical research can be performed with theory as a guide and it can help us understand when the empirics are wrong and it can help us think about theory and challenge theory as well. So he really has that sort of typical critique of praxeology which is very thin and superficial but nonetheless, when I say he's concerned trolling what I mean is there's no type of free market economics that this guy is ever going to like whether it's Chicago, whether it's supply side, whether it's Neoclassical, whether it's Adam Smith or whether it's Austrian. This guy is never going to appreciate any sort of free market school so when he sort of says, well, I'm worried about that these American Austrians are really damaging the tradition with their crazed libertarianism is like, okay, that's concern trolling. He's not really concerned about this at all. And so I guess I get, I smile a bit at that and enjoy reading that because how could we ever satisfy him? Could we go back and reassess Rothbard and Mises and Hayek in ways that would satisfy him? I think not. So in one of his final critiques, he goes after Rothbard as saying, well, these American Austrians sort of melded together their crazy libertarianism with their Austro-Misesian economics and created this blend. And Rothbard never really did that. Yes, he wrote in political theory and in political economy from a normative or ethical perspective, and of course he did this most fully in the ethics of liberty, but he never said or implied that economics was a value-laden science. He never abandoned vert-free, the value-free notion of any social science. Rothbard, as David Gordon points out, was true to that to the end, that economics is obviously very separate from political thought or political philosophy. That doesn't mean it can't inform it. And yes, it is natural and it is true that a lot of economists in the Austrian tradition or closely related to the Austrian tradition happen to be libertarian in their personal politics or in their worldview. That's absolutely true. It's also true that people working in the Marxian tradition of economics tend to be deeply left-wing in their views, but it doesn't follow that they have to be. Those are two separate things, and I think it's important to point that out. So all that said, you know, this is a great book. This is an interesting book. And it will really shock you if you haven't studied Vienna at the end of the 19th century to understand just how influential it was. I mean, there was a period of time when Vienna, at least culturally, was on par with any city in the world. It was on par with London and Paris and New York as a cultural center of influence with music and art and also intellectualism. Now, I would say it was never the financial powerhouse perhaps of some of those other cities, but nonetheless, when we think of Vienna today as a pretty small city and not really, although it's delightful, of course, in every way, it's not really what we think of as one of the top, top European capitals or world capitals anymore. You know, that was not the case even 100 years ago. And it's astonishing to think about some of the intellectual firepower which has come out of Vienna and how that firepower still shapes our lives today perhaps in ways we don't think about. So as I wrap this up, I just want to read you a quote from Wasserman. It's a little overstated, but I want you to think about this. And I want you to put yourself in the mind of a left progressive because these people really and truly believe that free market orthodoxy has taken over the political landscape in the West and even the academic landscape in the West. And of course, that's absurd. The opposite is true. But nonetheless, sometimes when we think of ourselves, we meaning Austrians or Austro-Liberarians, we think of ourselves as this kind of minority position which is struggling for a foothold and isn't heard in the mainstream. The left views it very differently. And I think we should be more aware of that to understand that from the perspective of left progressives, the Austrians and the free market types have had really far-reaching and far-ranging impact. So let me read this quoting from Professor Wasserman. Whether in university halls or libertarian think tank offices, WTO boardrooms, or Silicon Valley confabs, the Austrian school has not only transformed economics and social theory, but changed our world. The school's effects are profound and pervasive, and its history permits us to think the present age. So that's pretty remarkable. And I would credit Wasserman for his willingness to say something like that. It's not dismissive. I certainly challenge him to whether Austrian thinking is predominant at the WTO of all places, but nonetheless, people like him believe that even the IMF and WTO and the European Union and the ECB and certainly all Western governments, including the one of ours in DC, are neoliberal and that neoliberalism again comes out of this market tradition. So that's something to think about when you are sort of lamenting our underdog status or what we think of as our underdog status as Austrians or libertarians. So I'm going to wrap this up by saying that I'm going to put a link to this book in the show notes. You can get it at Amazon if you care to, but perhaps you can even rent it from your local library and not pay Yale University Press, which is perhaps not a friend. I'm going to put a link to my review at Chronicles of the Book. I'm going to put a link to David Gordon's review at Mises.org. And we'll also put up links to the aforementioned historical setting of the Austrian School of Economics by Mises and to Gito Halsman's great biography of Mises. So in the next coming weeks here as we get closer to year end, in fact, we just have two weeks left this year, I'm going to try to get Professor Halsman to come on the show and sort of revisit that biography and everything that went into it and everything we've learned about Mises even since he wrote it because it really is, I think, a book where if you're interested in the Austrian School but you're not an economist and you don't want to do all the heavy lifting of a book like Man, Economy and State, which for me is a difficult book, and also Human Action, you know, you can learn almost by osmosis a lot of Austrian theory by reading Dr. Halsman's lively biography, and that's more fun. It's a great Christmas book, for example. It's a great New Year's book, and I think we'll do another giveaway. So if you listen to this podcast, you might want to stay tuned because we are going to do a giveaway of Halsman's biography, The Last Night of Liberalism, which is just such a great book. And if you ever get a chance to meet Dr. Halsman and have him autograph it, that will be an absolute thrill because he is just, you know, a huge, huge, huge brain and mind and an important figure in our movement today. So, all that said, ladies and gentlemen, I hope you will consider checking out the marginal revolutionaries, how Austrian economists fought the war of ideas by Professor Yannick Bosserman. And I hope you will consider the ideas of him and others in his orbit with perhaps a bit more kindness than they treat ours. And I'm going to ask all of you to have a very, very, very Merry Christmas this upcoming week and have a great weekend. The Human Action Podcast is available on iTunes, SoundCloud, Stitcher, Spotify, Google Play, and on Mises.org. 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