The Mercatus Center at George Mason University organized an event yesterday at the 40th anniversary of FA Hayek winning the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (the economics “Nobel Prize”). This great event included a keynote address by Professor Israel Kirzner with the title “Hayek, the Nobel Prize, and the Modern Austrian School of Economics” and a roundtable discussion on Hayek’s influence with Nobel laureates Eric Maskin, and Vernon Smith.
Professor Kirzner’s talk provided a revised history of the Austrian school, arguing that the common perception of a school that more or less “died” after the Socialist Calculation Debate and was then resurrected some three decades later is wrong. On the contrary, Kirzner argued that the “decade 1937-1948″ was one of great scholarly activity by Austrians, and especially Mises and Hayek. This scholarship was primarily aimed at providing better explanations for the Misesian argument that a centrally planned, socialist economy is impossible. Neither Mises nor Hayek changed or adjusted the original argument, but took different paths to elaborate on and explain the argument that the “market socialists” had so fundamentally failed to understand.
Mises focused on developing and extending the subjectivist framework for studying economics, while Hayek attempted to show the impossibility of coordinating outside of the market due to the lack of knowledge available for the central planner. Kirzner argued that the main lesson Hayek learned from Mises was the open-endedness of the economy that is evident from the subjectivism approach. Hence, Hayek’s statement in The Counter-Revolution of Science (1952) that major advances in economics over the preceding one hundred years represent the progress of subjectivism. This explains, indicated Kirzner, Hayek’s later and well-known interest in “spontaneous orders.”
This scholarly activity fed an Austrian movement that included Mises’s Human Action (1949) as well as Rothbard’s Man, Economy, and State (1962) and Kirzner’s own An Essay on Capital (1966) and Competition and Entrepreneurship (1973) before the Austrian revival in 1974. While a lot seems to support Kirzner’s thesis, the general story line of one Austrian school has been criticized by Joseph Salerno. Also, Hayek’s treatise on capital, The Pure Theory of Capital (1941), raises questions about the Kirznerian revisionist history. It was published during the “decade” stressed by Kirzner, but is hardly a subjectivist approach to capital (in contrast to, for example, Kirzner’s 1966 book).
Kirzner’s interesting talk was followed by a highly entertaining and enlightening Q&A, and thereafter the roundtable discussion with Nobel laureates Eric Maskin and Vernon Smith. Edmund Phelps was also scheduled, but was unfortunately ill and could not attend. Professor Peter Boettke chaired the discussion and read a brief statement by Phelps indicating the importance of Hayek’s thinking in his research on inter-temporal tradeoffs in macroeconomic policy. Maskin discussed two important Hayekian lessons that gave rise to and are still core to what is now referred to as mechanism design theory. Smith discussed how Hayekian spontaneous order lies at the core of the economic experiments he uses in his research.
Overall a very interesting and well organized event. Many thanks to the staff of Mercatus, the economics faculty at GMU, and the several hundred participants and attendants for making it a great Hayekian afternoon.
