The business section of today’s Wall Street Journal features a lengthy profile of GMU economics professor Peter Boettke. It also describes the resurgent interest in Austrian economics. Entitled Spreading Hayek, Spurning Keynes–Professor Leads an Austrian Revival, it begins this way:
Peter J. Boettke, shuffling around in a maroon velour track suit or faux-leather rubber shoes he calls “dress Crocs,” hardly seems like the type to lead a revolution. But the 50-year-old professor of economics at George Mason University in Virginia is emerging as the intellectual standard-bearer for the Austrian school of economics that opposes government intervention in markets and decries federal spending to prop up demand during times of crisis. Mr. Boettke, whose latest research explores people’s ability to self-regulate, also is minting a new generation of disciples who are spreading the Austrian approach throughout academia, where it had long been left for dead.
To these free-market economists, government intrusion ultimately sows the seeds of the next crisis. It hampers what one famous Austrian, Joseph Schumpeter, called the process of “creative destruction.”
Governments that spend money they don’t have to cushion downturns, they say, lead nations down the path of large debts and runaway inflation.
Eight decades ago, in the midst of the Great Depression, the Austrian school and its leading scholar, Friedrich A. von Hayek, fell out of favor relative to the more activist theories of John Maynard Keynes. The British economist’s ideas, which called for aggressive government spending during recessions, triumphed then and in the decades since, reflected most recently in measures like the $814 billion stimulus package. Austrian adherents were marginalized, losing influence in prominent journals and among policy makers.
But as the economy flounders, debt mounts and growth—revised downward Friday—flags, Mr. Hayek and his Austrian-school adherents like Mr. Boettke are resurgent as their views resonate with more people.
“What I’m really worried about is an endless cycle of deficits, debt, and debasement of currency,” Mr. Boettke says. “What we’ve done is engage in a set of policies that’s turned a market correction into an economy-wide crisis.” Others seem to agree. Mr. Hayek’s 1944 classic, “The Road to Serfdom,” became the top-selling book in June on Amazon.com. The Austrian think tank Foundation for Economic Education had to turn students away this summer from its overflowing seminars.
Of course, economic theory ebbs and flows. The Austrian school surged along with inflation and unemployment in the 1970s. By the 1980s, free-market ideas ushered in the Reagan Revolution. But the success faded as inflation was successfully controlled by central bankers and government spending actually rose during the Reagan years. Besides, no one figure emerged as the leader of a fractious group of economists averse to central planning.
Mr. Boettke has come as close as anyone in recent years. In the last decade at George Mason, he has helped recruit the Austrian school’s leading scholars and drawn students from around the world. Roughly 75% of his students have gone on to teach economics at the college or graduate level.
Mr. Boettke “has done more for Austrian economics, I’d say, than any individual in the last decade,” says Bruce Caldwell, an editor of Mr. Hayek’s collected works.
There is much more. Way to go Pete!
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