A lot of Austrian Economists are Libertarians, but the truth value of Libertarianism as a social ethics theory is completely independent of the value of “Austrian” Economics. The term “Austrian” refers to Carl Menger and other economic thinkers who first articulated (or re-articulated from some medieval scholastics) a theory of economics that demonstrated why markets work and why socialism is impossible. Two of the best known “Austrian Economists” were F. A. Hayek and Ludwig Von Mises.
Their influence has become important enough to get E. J. Dionne to write against them:
Hayek and Mises perceived little difference between democratic governments that used their power to plan against recessions and dictatorships that did the same thing. In this view, the policies of Franklin Roosevelt led down what Hayek called the “Road to Serfdom” and were thus objectively comparable to those of Hitler or Stalin.
But Keynes agreed with the Austrians. Or at least that is what he wrote in the introduction to his General Theory when it was published in Germany in 1936.
The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.
In other words, it is much easier to apply Keynes’ work to Nazi Germany. In order to get the book to work in a democratic country it must become more totalitarian.
Dionne writes as if Hayek and Mises simply made assertions. The Road To Serfdom is an extended argument. The basic thesis has even been translated into a series of captioned illustrations. The reason he is gaining in popularity is precisely because Bush, then Obama, have made Hayek sound prophetic.
According to Dionne,
To a remarkable degree, our politics are haunted by the principles of Austrian economics and their sweeping hostility to any actions by government to keep downturns from becoming catastrophes or to promote greater economic fairness.
Right, because making Warren Buffet tens of millions of dollars richer ever day in 2013 (on average) promoted greater economic fairness. Giving millions to the one tenth of the one percent was all done to keep a downturn from becoming a catastrophe. All we are getting here is Dionne’s delusional fantasy treated as the standard for measuring the value of Austrian economics. His description of what Austrians think is mostly based on his own anti-Austrian view. Downturns are not the problem, they are the result of what happens when the government shoves down interest rates and causes an unnatural boom. Everyone claims the boom is “economic growth” when it is really just euphoric malinvestment that can only lead to a correction. Under Clinton, the Fed gave us the internet bubble, which led to a downturn early in Bush’s first term. Bush got the Fed to “keep downturns from becoming catastrophes” by shoving interest rates down further and jump-starting the housing bubble. Naturally, Bush also claimed to be promoting housing “fairness.”
I can see why Dionne does not want people to gain popular respect who expose everything he believes in to be a corrupt lie that serves the interest of kleptocratic billionaires. His pretense that Hayek was disproven by post-war history is preposterous on its face. He takes a simplistic second-hand caricature and claims that it doesn’t match history. He has no idea what he is talking about.
But blaming gridlock on the Austrians misses a step. The Austrians do not have money. The Koch brothers hate them. The only reason Congress is following the Austrians is because the Austrians, to some extent, are reflected in American values and perceptions. American voters in many places know that we are too deeply in debt and spending suicidal amounts of money. Those people elect Representatives. The Representatives vote and try to make their constituents happy so that they can get re-elected.
Gridlock is the will of the people right now, Dionne. Making up stuff about Mises and Hayek is not going to get Congress to let you have your way.
Dionne claims free markets, sound money, low taxes, and debt-free governance have been “discredited.” As if his own thirst for more debt, spending, and regulation have been vindicated. But so what? If the political class mattered intellectually anymore, Dionne wouldn’t have to write about the Austrians. All they have left is power. Since TARP, and since Afghanistan/ Iraq/ Libya/ Syria/ Iran/ drones/ NDAA/ NSA, everyone knows they are just a pack of self-deluded, self-adoring thieves and killers.