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CIAO DATE: 03/02
Critical Review
Winter–Spring 1998 (Vol.12 Nos.1–2)
Formalism and Contemporary Economics: A Reply To Hausman, Heilbroner, and Mayer
By Peter J. Boettke *
Abstract
Economic formalism crowds out the analysis of change and adjustments to change under capitalism. The style of analytical narrative that was practiced by the first generation of neoclassical economists, in contrast, is more productive of genuine economic understanding. Despite Daniel Hausman’s challenging argument to the contrary, I maintain that Joseph Stiglitz’s work is formalist at its core. While I agree with Robert Heilbroner’s critique of contemporary economics, there is a limited sense in which nonformalist economics can rely on universalistic assumptions. And Thomas Mayer has provided useful guidelines for focusing nonformalist analysis on real-world economic problems.
My purpose in writing “Where Did Economics Go Wrong?” was rather straightforward. In the wake of the rejection of the real-existing socialist political economies of East and Central Europe in 1989 and the subsequent collapse of the Soviet government in 1991, F. A. Hayek was often paid lip-service for his prescient skepticism about central planning. Unfortunately, in my opinion, Hayek’s analytical contribution was generally misunderstood. In an article written before Hayek’s death in March 1992, I had already taken up the task of attempting to demonstrate that Hayek and his teacher Mises were not simply broken clocks that fortuitously could tell the time correctly twice a day (see Boettke 1992). There are analytical features of Hayek’s political economy that provide the foundation for his deep commitment to classical liberalism, and thus his opposition to various forms of socialism and Keynesian demand management.
Explaining why Hayek’s argument was misunderstood—let alone not appreciated—was what motivated me to write “Where Did Economics Go Wrong?” The argumentative strategy was to use Hayek as a fulcrum for comparing the economics of the 1930s and 1940s to that of the 1980s and 1990s. The idea was to contrast Hayek first with old Keynesianism and old market socialism, and then again with new Keynesianism and new market socialism, and to demonstrate that the essential analytical points that Hayek raised in the older debates are being overlooked in the contemporary debates, despite the grudging respect paid to Hayek as an ideological warrior for the competitive market economy. Since Hayek failed to persuade his fellow economists in the 1930s and 1940s, the development of economic theory in the 1950s and 1960s proceeded along lines that ignored his contributions. With the failure of the Keynesian system in the 1970s and real existing socialism in the 1980s, many of Hayek’s criticisms were reconsidered and supposedly incorporated. However, a close reading demonstrates that Hayek’s main analytical contributions have failed to penetrate the core of contemporary economic theory. In other words, the implications of Hayekian economics are more radical for the way we conceive of political economy than has been appreciated, and if absorbed would demand a recasting of this enterprise.
The nature of my self-imposed task was, therefore, necessarily broad and not the focused critique to which one is accustomed in economic writings. Nevertheless, I stand by my basic contention that modern economics developed in a manner that ignored many essential characteristics of real-world economic and political life because of the systemic biases of formalism, and that this has had a detrimental effect on the progress of economic thought. It is not my contention, however, that either Hayek or Austrian economics has an exclusive claim to sound economic reasoning. I am persuaded that the Austrian economists have identified certain fundamental issues that need to be incorporated into the body of economic thought if we are to improve our understanding of the human condition. In the end, however, like Milton Friedman, I believe there is only good economics and bad economics. Good economics means paying attention to human choice in complex problem situations, recognizing the institutional sensitivity of economic propositions, and respecting the multiple forms of evidence that bear on those propositions. Much of the most important data in economics is of a qualitative nature and thus is not amenable to modern techniques of statistical analysis. Rather than either attempting to quantify data that cannot be easily quantified or ignoring them, we should embrace narrative history—and the discipline of the archive—as legitimate parts of empirical economics. In fact, the “revolution” I advocate for economics amounts to little more than returning aspiring economists first to library shelves, to read the classics in the “worldly philosophy” that can teach them to situate modern contributions within a broader disciplinary perspective, and then to library basements to uncover memoirs, letters, policy debates, contracts and other business documents, and political history that can teach them about the evolution and development of the institutions that shape economic life. Hence the critique of formalism in my paper—for it is the formalist bias within contemporary economics (and the social sciences in general) that has led to a disregard of the unquantifiable elements in economic life.
Hausman and the Misplaced Centrality of Perfect Competition
Daniel Hausman is undoubtedly one of the most profound contemporary philosophers of economic science. It is with great hesitation that I attempt to defend myself against his rather harsh criticisms of aspects of my argument. The most troublesome of his criticisms is the claim that my reading of Stiglitz is mistaken, and that my article is mainly a plea for economists to become uncompromising defenders of laissez faire. I will attempt to defend my reading of Stiglitz, though I do plead guilty to being persuaded that certain basic teachings of economics support the superiority of the market mechanism over alternative systems of exchange and production. But I want it to be clear that I do not believe that economics alone can produce a case for laissez faire. The discipline of economics provides us mainly with negative knowledge, knowledge that puts parameters on our utopias. Through the process of immanent criticism, the economic analyst can establish the consequences of a proposed policy; and in the wake of repeated discoveries of unintended negative consequences, economics does lead us to doubt that, some day, somebody will hit on a way to outperform the market. Both the critique of unintended negative consequences and the critique of intervention in markets as a tool of special interests follow from a consistent application of economic principles. But neither produces an air-tight case for unfettered capitalism. To make that case requires something more than pure economics. One reason for this is that markets are always embedded within a broader political-legal infrastructure, so the idea of a complete absence of government is conceptually questionable. Some form of governance structure must be in operation, and it is not at all self-evident that the most effective governance structure will always emerge endogenously from the market process itself. Second, there are competing values within any political economy that may need to be traded off against each other. Perhaps we can summarize these values under the broad headings of efficiency, equity, and fair play (see Boettke 1998). Economics as a science cannot serve as the final arbiter in this negotiation process; as a discipline it provides vital knowledge that must be incorporated in assessing the tradeoffs, but it cannot tell us which values should prevail. As Hausman himself has argued elsewhere, economists should pay attention to developments in moral philosophy, just as moral philosophers have to pay attention to developments in economics. “Economic outcomes may be better or worse along several dimensions,” write Hausman and Michael McPherson (1996, 69). “Some outcomes may make people better off. Others may show more respect for human dignity. Others may permit greater freedom. To decide which dimensions are more important requires moral judgement.”
So I do not think that economics produces a case for uncompromising laissez faire. My criticism of contemporary economics is that positivism and formalism dismiss out of hand certain arguments and evidence bearing on the desirability of laissez faire because of the form they take rather than their substantive content.
With regard to the centrality of the perfect competition model in contemporary economics and in the work of Stiglitz in particular, however, I am not yet persuaded that rhetorical excess on my part misled my readers. The fact that my critique focused on Stiglitz had to do with my judgment that Stiglitz is the most significant mainstream economic theorist since Paul Samuelson. No doubt Stiglitz is a critic of the model of competitive equilibrium, and in fact his major contributions have brought out some of the problems with this model. But he cannot abandon this model, because he can make reference to market failures only by point of comparison with perfect markets. If the model of competitive equilibrium is completely jettisoned, then the point of reference for judgments of “failure” would be jettisoned as well. Perhaps some alternative standard would emerge, but Stiglitz has not provided it. In Stiglitz’s own elementary treatment of this issue in Economics (1993, 386–89), he divides the economics profession into two camps: free-market economists who believe that the model of general competitive equilibrium provides a good description of most markets most of the time, and imperfect-market economists (such as himself) who see significant departures from the competitive model in the real world they observe.
For Stiglitz, among the key imperfections of markets is the costliness of information, but he also highlights problems with the structure of markets (e.g., small rather than large numbers of buyers or sellers). The Greenwald-Stiglitz theorem aims to demonstrate that under conditions of imperfect information, limited markets, and other market imperfections, (1) well-identified forms of government intervention can indeed be welfare enhancing; (2) efficient decentralization may be impossible; and (3) the market mechanism might not be the most efficient way of allocating scarce resources (Stiglitz 1994, 32–33). But unless Stiglitz has some benchmark notion of perfection, the terminology of “imperfect” markets would be meaningless. Stiglitz admits this, writing that “imperfect-market economists would not, however, discard the model: for them, it is still an important baseline for investigation” (1993, 388).
Now here things get a bit complicated. Stiglitz wants to argue against Hayek’s depiction of the informational advantages of market decentralization, yet he knows that Hayek is not guilty of deploying the model of perfect competition to make his case for the market. In fact, in the socialist calculation debate, Hayek explicitly blamed the model of competitive equilibrium for clouding the judgment of leading economists, such as Joseph Schumpeter. Thus, Stiglitz devotes an important section of his Whither Socialism? to dealing with the question of “Hayek versus Stiglitz.” But the debate is never engaged on the appropriate grounds because Stiglitz insists, first, that “because Hayek (and his followers) failed to develop formal models of the market process, it is not possible to assess claims concerning the efficiency of that process,” and because, “second (and relatedly), in the absence of such modeling, it is not possible to address the central issues of concern here, the mix and design of public and private activities, including alternative forms of regulations (alternative ‘rules of the game’ that the government might establish) and the advantages of alternative policies toward decentralization-centralization” (Stiglitz 1994, 24–25). 1
It is statements like this one that led me to write my paper in the first place. Hayek offered an alternative framework for analyzing market processes, one that transcends the perfect/imperfect-market dichotomy. Hayek’s argument about why decentralized markets work is not limited to the informational content of equilibrium prices, but instead refers to the error-detection capacity afforded by non-equilibrium prices and thus the adaptive properties of the price system. It is precisely market disequilibrium that initiates the process of knowledge discovery that characterizes real-world competition. What imperfect-market theorists such as Stiglitz take as evidence of market imperfection (and thus failure) is to Hayek the very essence of the competitive market process. I tried to spell out those properties in my paper so that perhaps we could go back and reassess Stiglitz’s dismissal of Hayek (and his followers). Such a reassessment is not an “act of faith,” but the outcome of a chain of reasoning that must be analyzed on its own terms. Just because an argument about disequilibrium adjustment—as opposed to a suboptimal equilibrium—defies neat formalization should not be grounds for ignoring it or dismissing it. Reason and evidence need not be presented only in one “language,” the language of mathematics, to be accorded respect, especially if in hindsight we are willing to grant prescience to Hayek in predicting the collapse of socialism. Mathematical modeling need not be the only language for expressing economic propositions, and tests of statistical significance need not be the only manner in which to evaluate evidence.
Heilbroner and the Critique of Economics
I share so much with Heilbroner’s perspective that, on the failings of contemporary economics, I will only recommend that the interested reader examine Heilbroner and Milberg’s The Crisis of Vision in Modern Economics (1994). 2 My sole objection to Heilbroner’s comment on my paper relates to the limited but vital role of analytical propositions that are not restricted to the institutional configuration we call capitalism. These propositions are derived from conditions common to all human situations—the logic of scarcity and what that implies for human choice making. The concept of opportunity cost was as relevant to a Soviet planner as it is for a Western businessman deciding on whether to pursue investment project A or B. Soviet planning authorities might have seemed to have controlled all decision-making processes, but the de facto reality of the system stood in direct contrast to this de jure illusion. Analysts of the Soviet system were often misled in their examination of the Soviet economy precisely because they failed to take into account the de facto, scarcity-driven organizing principles and why these diverged from the official picture embodied in plans. 3
What is true for the Soviet system is also true for the Kalahari bushman and the Sumerian, Akadian, Egyptian, Incan, and other systems of production and distribution. There are certain fundamental propositions in economics that are universally valid because the initial conditions required for their applicability are so general that they hold across times and cultures. These propositions are very limited, and for the most part fairly uninteresting in themselves, but they provide the building blocks for very interesting claims that are of a more institutionally contingent nature. Economics has a lot to say about all social systems of production—not the same thing, granted, but something—even when the dominant influence on decision making is seemingly but the “will of one.” It is certainly true, as Heilbroner argues, that Tradition, Market, and Command have served as divergent organizing principles in various societies throughout history. But that does not mean that an economic analysis of traditional societies or command societies is void of meaningful content because the market economy did not play the main role in coordinating human affairs. Basic economics is not limited to market interaction, but examines human choice whenever scarcity is a consideration.
I don’t want to make too much of this difference with Heilbroner. The disagreement ultimately traces back to my claim that Austrian economists are firmly rooted in the marginalist/neoclassical project, though they situate the individual within the problem situation articulated by heterodox economists (see Boettke 1996b). The manner in which the marginalist/neoclassical project has proceeded has been one that trivialized the problem situation, so that equilibrium followed inexorably from the logic of choice. On the other hand, the problem with the heterodox project is that once the problem situation is laid out—namely that time’s arrow runs only in one direction, and that individuals possess imperfect knowledge of existing conditions and imperfect foresight into future conditions—it is simply assumed that the individual logic of choice cannot result in the systematic coordination of individual economic activities. I do believe that Hayek’s economics, or Austrian economics more broadly understood, offers us a way to combine the argumentative structure of economic science with the sensitivity to initial conditions and historical setting that animate the heterodox critique. This is what Hans Mayer meant when he argued that the path to scientific enlightenment in economics is along “the road on which the great system-builders of the ‘older’ German historical school meet up with the founders of the ‘Austrian School’” (Mayer 1932, 149). This, I believe, was a path Max Weber tried to carve out.
Along this road, sociopolitical matters that, as Heilbroner points out, are today ignored will once again come to the forefront of analysis. As Heilbroner predicts, this will most likely lead to less clearly modeled depictions of the economic system. But the promise of richer explanations is worth the loss of crystalline precision, since the precision that has been achieved falsifies reality. 4 If we continue to insist that precision is always more valuable than relevance, then I conclude with Heilbroner that “the worldly philosophy, which began with such rich promise, seems unlikely to become the source of illumination that was once its singular gift.”
Big Think, Little Think, and Mayer’s Pragmatic Criticisms
Mayer’s criticisms of my paper are those that have been the most challenging for me to think about. The reason is that I find myself in almost complete agreement with Mayer’s observation that good economic analysis is practiced every day by non-Austrians, and that many Austrians engage in rather poor economic analysis. The burden of proof must be shouldered by the critic, not those following the conventional wisdom. Perhaps the worst form of work in economics is bad big think; at least bad little think is usually short in length, whereas bad big think tends to go on and on.
But the discipline of economics has lost track of problems and it has forgotten questions that have to be resurrected if progress is going to be made. 5 Certainly mid-century economics sought to develop an institutionally antiseptic theory, despite Abba Lerner’s sudden appreciation for market institutions when confronted with the unpredictable Israeli specialization in false teeth. Sometimes our “appreciative theory” outdistances available “formal theory,” and in some instances that will always be the case. 6 The problem with formalism is that its tenets compel scholars to treat appreciative theory always as the immature sibling of the more developed formal theory.
Mayer agrees with me that mainstream economics has failed to solve some of its key problems. But he turns the criticism back on the critic. How much progress have the Austrians made in solving problems that interest practicing economists? I have to admit that in terms of real progress in scientific understanding, apart from Israel Kirzner’s contributions to the theory of the entrepreneurial market process and recent work on “free banking,” the golden years for the Austrians were in the last three decades of the nineteenth century, and then again in the 1930s and 1940s. The Austrian tradition lay practically dormant from the 1940s to the 1970s, except for occasional contributions from Mises, Hayek, Ludwig Lachmann, Murray Rothbard, and Kirzner. Since the mid-1970s there has been a growing resurgence of the Austrian school, and there has been within the school a strong current of self-criticism aimed at killing off the dogmatism that may have served a positive sociological function during the years when the tradition was largely dormant. But Austrians as a school still devote considerable time to methodology, history of thought, and “big think” ideological questions, and this does not conform with the interests of most practicing economists. 7 While I admit that this is a problem within the Austrian camp, I am also willing to “defend” it, or at least understand it. When a set of ideas is ignored in the standard curriculum of undergraduate and graduate training in economics, only extraordinary circumstances will lead young economists to devote time and effort, beyond their standard training, to the study of this heterodoxy.
Those extraordinary circumstances—shared by most heterodox schools—usually combine a set of methodological criticisms of standard practice, a historical narrative about how important insights have come to be overlooked, and a belief that what is at stake is something of major importance to human well-being. Those who reject the standard practice in “the discipline” of economics must be led to that rejection because they find the discipline to possess great potential for solving human problems and they want to know why that potential is unfulfilled in current practice. If they just viewed the discipline as a problem, then they could pursue alternative professional training. To pursue professional training in a discipline that one believes is fundamentally flawed requires some deep commitment outside of the internal reward mechanisms of the profession. This may cause problems in communicating with other economists, but without it there would be nothing to communicate. 8
That much said, it is true that despite the sociological function this emphasis on methodology, history of thought, and “big think” serves, scientific progress must be measured by solving an increasing number of “little-think” problems. By focusing on smaller, more manageable problems, economists can demonstrate the effective comparative power of their theoretical insights. What Austrian economists need now is more historical and applied work and fewer methodological exposés and theoretical treatises. This is not to say that methodological and theoretical developments are not needed; they certainly are, because the basic approach of economists will sometimes have to be changed if we are to tackle the lost problems and the forgotten questions. But for the majority of practicing economists attracted to the Austrian school, the greatest opportunity for marginal gains in understanding the real world will lie in the application of existing Austrian propositions. Solid empirical work needs to be done. In my own field of comparative political economy and economic development, there are indeed important theoretical disputes, but there are also fundamental disputes of an empirical nature—e.g., the question of monopolies in the Gilded Age and the present; the causes of the Great Depression; the nature of Soviet industrialization; the effectiveness of the Marshall Plan for postwar reconstruction; the sources of the Asian miracle and of its weaknesses; the cause of the collapse of real existing socialism in the late 1980s; and the sources of Third World poverty. If Austrian economists can explain these phenomena better than alternative schools of thought, then the theorizing and methodologizing will have been well worth it.
However, contemporary economists often put unnecessary constraints on the form of legitimate argument and the type of evidence that can be marshaled in its support. Many Austrian insights must be presented in the form of natural language as opposed to a set of equations, and they demand evidence other than measures of statistical significance. One of the most promising developments in contemporary economics is the increasing acceptance of economic history, including history that comes closer to the standards of traditional archival history (see Greif 1997, 400–403). But since the whole raison d’être of Austrian economics is to produce a more realistic picture of the political-economic world, if this proves impossible within the discipline of economics — indeed, even if it does not — it is a project that should be pursued by political scientists, sociologists, and historians proper, as Weber anticipated.
The problem with contemporary economics, then, is that it artificially restricts the questions we can legitimately ask about the real world. The “older economists” were not so constrained. My article sought to place the blame for these relatively recent constraints on a formalistic bias that took hold of economics in the 1940s. I stand by that basic historical narrative, which suggests that the likes of Frank Knight, Ludwig von Mises, Ronald Coase, F. A. Hayek, James Buchanan, and Mancur Olson (despite whatever ideological blinders may have handicapped some of them) have done more to increase our understanding of political-economic life than the work of such brilliant formalists as Jan Tinbergen, Kenneth Arrow, Robert Lucas, Paul Samuelson, and Joseph Stiglitz. This judgment is not shared by many economists. Why?
The question still puzzles me. The discipline of economics was born of the attempt to explain how various institutions affect the wealth and poverty of nations. This question still remains with us (see Landes 1998). Adam Smith’s heirs, in my opinion, are to be found in the first group of economists just listed, not in the second. Perhaps I have blind spots induced by overzealous advocacy of the Austrian corrective to contemporary economics. But in the end, all I am really advocating is “good” political economy that results in “better” narrative history. The purpose of theory is to aid the task of writing history (including the diagnosis of contemporary problems). Traditionally, the worldly philosophy attempted to illuminate the human condition. Developments within twentieth-century economics moved us away from the task of understanding and illumination in a vain quest for scientific precision. If we fail to resist those developments so as to re-engage the worldly philosophy, then the humanistic desire to understand ourselves, the scientific impulse to know the underlying forces at work, and the political belief that understanding and knowledge can be employed to improve the human condition will be eliminated from political economy. A sadder fate for a discipline that has included some of the greatest minds in the Western tradition could hardly be imagined.
References
Boettke, Peter. 1990. The Political Economy of Soviet Socialism: The Formative Years, 1918–1928. Boston: Kluwer Academic Publishers.
Boettke, Peter. 1992. “Analysis and Vision in Economic Discourse.” Journal of the History of Economic Thought 14(1): 84–95.
Boettke, Peter. 1993. Why Perestroika Failed: The Politics and Economics of Socialist Transformation. New York: Routledge.
Boettke, Peter. 1996a. Review of Joseph Stiglitz, Whither Socialism? Journal of Economic Literature 34 (March): 189–91.
Boettke, Peter. 1996b. “What is Wrong with Neoclassical Economics (And What Is Still Wrong with Austrian Economics?).” In Beyond Neoclassical Economics, ed. Fred Foldvary. Aldershot, England: Edward Elgar Publishing.
Boettke, Peter J. 1997. “Where Did Economics Go Wrong?” Critical Review 11(1): 11–64.
Boettke, Peter. 1998. “Rethinking Ourselves: Negotiating Values in the Political Economy of Post-Communism.” Rethinking Marxism 10(2): 85–95.
Boettke, Peter, and Steven Horwitz, eds. 1997. “The Crisis of Vision in Modern Economic Thought: A Symposium.” Advances in Austrian Economics 4.
Greif, Avner. 1997. “Cliometrics after 40 Years.” American Economic Review 87(2): 400–403.
Hausman, Daniel. 1998. “The Faults of Formalism and the Magic of Markets.” Critical Review 12(1–2).
Hausman, Daniel and McPherson, Michael. 1996. Economic Analysis and Moral Philosophy. New York: Cambridge University Press.
Heilbroner, Robert. 1998. “The Self-Deception of Economics.” Critical Review 12(1–2).
Heilbroner, Robert, and William Milberg. 1994. The Crisis of Vision in Modern Economic Thought. New York: Cambridge University Press.
Landes, David. 1998. The Wealth and Poverty of Nations. New York: Norton.
Mayer, Hans. 1932. “The Cognitive Value of Functional Theories of Price.” Translated and reprinted in Classics in Austrian Economics, vol. 2, ed. Israel M. Kirzner. London: William Pickering, 1994.
Mayer, Thomas. 1998. “Boettke’s Austrian Critique of Mainstream Economics: An Empiricist’s Response.” Critical Review 12(1–2).
Morgenstern, Oskar. 1964. “Pareto Optimum and Economic Organization.” Reprinted in Selected Writings of Oskar Morgenstern, ed. Andrew Schotter. New York: New York University Press, 1976.
Morgenstern, Oskar. 1972. “Thirteen Critical Points in Contemporary Economic Theory: An Interpretation.” Journal of Economic Literature 10(4): 1163–89.
Nelson, Richard, and Sidney Winter. 1982. An Evolutionary Theory of Economic Change. Cambridge, Mass.: Harvard University Press.
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Endotes
*: Peter J. Boettke, Department of Economics, George Mason University, Fairfax, VA 22030, is the author of The Political Economy of Soviet Socialism (Kluwer, 1990) and Why Perestroika Failed (Routledge, 1993). The comments and criticisms of Andrew Farrant, Roger Garrison, Mario Rizzo, Lawrence White, and the editor are gratefully acknowledged. The usual caveat applies. Back.
Note 1: In my review of Stiglitz’s Whither Socialism?, I also point out that his disregard of public-choice arguments and of Coase’s comparative institutional analysis undermine his ability to achieve a realistic examination of the mix of public and private. See Boettke 1996a. Back.
Note 2: See also the symposium on Heilbroner and Milberg 1994 in Boettke and Horwitz 1997. Back.
Note 3: This has been something I have repeatedly stressed in my own work on the Soviet system. See Boettke 1990 and 1993. Back.
Note 4: This is not a generalized critique of abstraction, but an attempt to question the right amount of abstraction. Simplifying the problem situation for the sake of formal tractability is an abuse of the principle of parsimony. As Oskar Morgenstern (1964, 255) put it: “The abstraction would be faulty if it bypasses a fundamental feature of economic reality and if the analysis of the radically simplified situation will never point towards its own modification in such a manner that eventually the true problem can be tackled. . . . Radical simplifications are allowable in science so long as they do not go against the essence of the given problem.” Back.
Note 5: See, for example, the survey articles from the 1970s by Oskar Morgenstern (1972) and Joan Robinson (1977), which identify the main unsolved theoretical points and unanswered questions in economics and assess the progress made in addressing them. If, indeed, Morgenstern and Robinson identified important problems and questions, and little progress has been made, then economists who work with those problems or ask those questions do indeed have a market niche within the economics profession. Back.
Note 6: The terminology of “appreciative” and “formal” theory was introduced in economics by Nelson and Winter 1982, 45–48. Back.
Note 7: In comments on an earlier version of this paper, Mario Rizzo pointed out to me that this communication problem can also be viewed as a natural outcome of the present status of the discipline. If there is an evolutionary selection (or self-selection) bias in the discipline, then we must ask who will stay in a discipline when things are degenerating. Only those who accept the degeneration as appropriate—and a few revolutionaries—will remain. Nevertheless, if the latter hope to engage the former, then the communcation gap must be closed—by the latter. Back.
Note 8: The argument of the last paragraph is true not only for Austrian economists, but also Post Keynesians, Institutionalists, Marxists, etc. Methodology, history of thought, and idealism are present in all deviant strands within economics. New Institutional economists, for example, tell a different history of the development of economics than more traditional economists. Some dissenters play up the methodological differences, others play up the historical story, and others, still, play up the political consequences. Back.