Where is Austro Libertarian?

Economics

Conservatism and the Viennese Students of Civilization

By
CJay Engel
|
January 31, 2020
In the coming repudiation of the Western postwar progressive economic and political order, the Austrians have an enduring relevance.
Economics

Conservatism and the Viennese Students of Civilization

By

CJay Engel

|
January 31, 2020

In the coming repudiation of the Western postwar progressive economic and political order, the Austrians have an enduring relevance.

In our time, there is a global stirring of dissatisfaction against the present world order. This dissatisfaction is focused not merely on the political and economic structures that constitute a global framework, but also on its most cherished and deeply rooted narratives; namely, those related to the alleged goodness of multiculturalism, unconstrained migration, individualism and state-protected liberalism, democracy, and, especially, the modernist commitment to material prosperity and economic efficiency. Wilhelm Ropke called this latter commitment the “standard of living cult.”

This stirring has led many, including myself, to a profound turn back toward at least one form of conservatism or Old Rightism. This adjustment brings with it numerous rhetorical problems related to three areas: one, the corruption and decadent nature of the postwar conservative movement in America; two, the need to deal with the semantics and lines of argument from our years as doctrinaire libertarians; three, the relation of our reflections to the diverse and difficult meanings for “conservatism” that have existed in the past, especially in Europe from the mid-nineteenth century to the mid-twentieth.

Even F.A. Hayek, not a libertarian, refused to call himself a conservative for this latter reason, even though he stood strongly in the Whig tradition of modern conservatism’s founder Edmund Burke, as can be seen in his Law, Legislation, and Liberty. He also refused the liberal label. Yet Russell Kirk later described him as essentially a conservative in the Anglo tradition. For an interesting response to Hayek’s own self-labelling, see this essay by Dr. Madsen Pirie. Semantics can be aggravating and painstakingly stubborn.

Nevertheless, there exists in the present spirit of the age a repudiation of left-progressivism. A fundamental aspect of this repudiation is a rising reactionary irritation regarding the narratives of enforced racial and sexual diversity, as well as the obvious attempts by the lords of what passes for American culture to antagonize white Christians and their sociological norms. This reactionary spirit is coupled with a strong urge to rediscover classical European heritage and to question where, exactly, the Western world went wrong.

Whereas the libertarian so often singularly focuses directly on the state itself, and it cannot be reasonably denied that the modern managerial state played a role in our troubled path, the modern state exists in an interesting historical context. This context does not have mere and simplistic ethical reference, but it also has an equally important, though tragically less discussed, sociological component. What are the structural, social, and cultural conditions of a strong, stable, and healthy social order? This is a discussion that cannot be reasonably limited to the theory of the state, economic theory, or personal standards of morality.

The rediscovery of a conservative sociology inevitably leads one back to folks like Robert Nisbet and Richard Weaver who focused much of their work (perhaps the former more than the latter), on the institutions and structural frameworks of the social orders of ages past. These pre-modern social orders were characterized by the relations and associations of groups of people which dealt which each other in terms other than monetary reference. While the market played then, and has played for centuries, an important role in the development of society, we find in the past both a smaller influence from the state on the whole of society and, concomitantly, a smaller influence of the role of commercial institutions. We withhold, for the moment, a value judgement. The point is—and this is shown quite convincingly in Nisbet’s Quest for Community—that it was first the “emancipation” of the individual from the bounds and bonds of community and other associative institutions, and then the rise of the omnipotent state that began to fill the gaps where the former associations once sat.

This gap into which the state wedged its hegemonic power widened over the course of the post-enlightenment era and one can see in the twentieth century a great battle waged between the central states and all decentralized governments, “lesser magistrates,” churches, guilds, associations, communities, small businesses, business associations, and, more recently, families themselves.

Once the dispersed and fabric-like nexus of the old institutions (the true balance of powers in pre-modern Europe) was broken down, it was only then that there arose the modern theories of economic science to put forth a non-state arrangement for human cooperation. Economics, Mises noted in Human Action, was the youngest of the social sciences. There were of course economically-related writings going back as far as Aristotle, but modern economics developed to confront the new urge for the modern state to plan for the wealth of nations. As the old institutions fell to the march of history, so the theory of the market arose to offer an alternative interpretation of man’s cooperation outside the machinations of the political state.

If the old institutions and Nisbet-described bonds of community were broken down as the vestiges of alternatives to the modern nation state, only two options were to remain: the market and the state. Economics was needed primarily because the nation states promised to give what it could not provide: material prosperity for all who would turn to it.

In this context, we turn to the glorious and unique nature of the Austrian School, so often the blame for all our modern woes despite their being explicitly denied a seat at the table of economic orthodoxy and academic legitimacy over the past century and a half. It was the Austrians above all other schools of economic thought that considered its role to be in repudiating the economic promises of the statist revolution, rather than using the state to institute a market framework. This latter tendency is more common in the Western Court Economists, the "regime free-marketers" and "free market technocrats."

There are many budding traditionalists who find in their own sentiments a longing to return to the medieval past. The arguments made by the Austrians was not to prevent this alluring desire for older arrangements (for economics itself is not equipped to make a judgement here); it is rather to put forth dispassionately why, in light of where we find ourselves, that the state cannot bring forth a prosperous state of affairs. We cannot wish our way backward, we must deal with the challenges of our times, the threats of our age. The role of economic science, as singularly offered forth by the Austrian tradition, was to demonstrate the failure that the state would produce by attempting to plan the way forward.

Several years ago, there was an interesting book written by Erwin Dekker entitled The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered. In this book, the author observes something often overlooked by conservatives (of which, by way of reminder, I am one) wary (for great reason!) of economics as a profession: the Austrians are, unlike the economic planners for modern liberalism (including libertarians like Milton Friedman of the Chicago School), students of civilization, not architects. Civilization is not something that can be rationally planned and put into place. Dekker writes:

the Viennese students of civilization argue that we cannot fully know or understand our civilization, and hence we should be very careful in trying to reconstruct it rationally. The organically grown institutions often contain a lot of knowledge, which is not always easily accessible to the student of civilization… Hayek argues that culture makes individual autonomy possible; cultural institutions such as language and markets ‘make us intelligent’. Intelligence for him is a cultural product, and that implies limitations to what we can know about that culture… we cannot step outside our own civilization to observe it… as is the ideal in natural science.

The idea that culture guides the individual and that the individual depends upon the institutions into which he was born is a very conservative point. It is a great danger to assume that one can emancipate the individual from his sociological context and not see him revert backward to his primitive past. In our time of concomitant attempted individual self-actualization and loneliness and despair, this sociological observation is of supreme importance. This means that while individual freedom is immensely important (a point defended at length in Nisbet’s Quest for Community), there are actual social dangers of the predominance of individual liberty as a chief motivating impulse without constraints. Dekker points out:

… there is, contrary to my expectation, a surprising consensus on what the central element is of any type of civilization: restraint. Hayek… argues that civilization has become possible through restraint: the restraint of our natural inclinations, our instincts. But also, and that is especially important for Hayek, the restraint on our rationalism, the recognition of the limits of our rational faculties: our ability to know and design.
… freedom, for all these thinkers, is only possible through restraints: freedom is made possible by civilization. Civilization, the norms and institutions which regulate human interaction, enable us to be free.

Since these “norms and institutions which regulate human interaction,” are organic and have developed over a thousand years of Western history, we cannot be surprised that, when these institutions are rebelled against, individual man is cast adrift. Moreover, often in the misguided attempt to save the individual man from his tragedy, we cannot be surprised when the central state, in all its power-hungry delusions of grandeur, interprets its own role in the world as basically messianic.

In this way, the historical nature of civilization’s institutions into which men are born and come to age strikes one as quite Burkean flavored. And indeed, in the Austrian School founder Carl Menger’s book Investigations into the Method of the Social Sciences, we find high praise for the important Irish-English statesman:

Burke was probably the first, who, trained for it by the spirit of English jurisprudence, emphasized with full awareness the significance of the organic structures of social life and the partly unintended origin of these. He taught most convincingly that numerous institutions of his country, which were to a high degree of common benefit and filled every Briton with pride, were not the result of positive legislation or of the conscious common will of society directed toward establishing this, but the unintended result of historical development. He first taught that what existed and had stood the test, what had developed historically, was again to be respected, in contrast to the projects of immature desire for innovation. Herewith he made the first breach in the one-sided rationalism and pragmatism of the Anglo-French Age of Enlightenment.

Indeed, Menger even contrasts Burke's stress of the importance of the organic nature of society over against the enlightenment-pragmatists:

[Pragmatism] therefore, did not know how to value the significance of "organic" social structures for society in general and economy in particular and therefore was nowhere concerned to preserve them. What characterizes the theories of A. Smith and his followers is the one-sided rationalistic liberalism, the not infrequently impetuous effort to do away with what exists, with what is not always sufficiently understood, the just as impetuous urge to create something new in the realm of political institutions-often enough without sufficient knowledge and experience.
The organically developed institutions of economy had usually cared so wisely for the living, for things already existing, for what was close and immediate. Pragmatism in economy was concerned about the welfare of man in the abstract, about remote things, about things which did not yet exist, about future things. In this effort it only all too often overlooked the living, justified interests of the present.
Against these efforts of the Smithian school there was revealed to our science a vast realm of fruitful activity in the sense of the orientation of Burke-Savigny-not in the sense of simply maintaining what had organically developed as unassailable, as if it were the higher wisdom in human affairs as opposed to the intended ordering of social conditions.
The aim of the efforts under discussion here had to be, on the contrary, the full understanding of existing social institutions in general and of organically created institutions in particular, the retention of what had proved its worth against the one-sidedly rationalistic mania for innovation in the field of economy. The object was to prevent the dissolution of the organically developed economy by means of a partially superficial pragmatism, a pragmatism that contrary to the intention of its representatives inexorably leads to socialism.

Imagine that! Menger, more Burkean than Burke's friend Adam Smith.

It is this Burkean understanding of society as adopted by the Mengerian tradition that causes it to stand distinct, sociologically, from other “pro-market” economists in the twentieth century. While the American empire and its crony-corporatist managerialist economic project brought on board a plethora of economic advisors who pretended they could manage Western society into a blissfully prosperous future, the Austrians stood resolutely against the tide of state-planning for capitalism’s mandated expansion.

Related to the state’s extension of capitalism to the world, we find an immediate example in libertarian economist Tyler Cowen. Whether or not the conservative reader agrees with Salerno’s understanding of the essentially criminal nature of the state, he should at least appreciate one important aspect of a recent response to Tyler Cowen’s “State Capacity Libertarianism.” Criticizing Cowen’s advocacy of using American diplomacy to “extend capitalism and markets,” Salerno makes the important and often ignored point that the state-driven expansion of capitalism is precisely the opposite of the natural development of social orders. It stems, Salerno explains later, from an obsession with the material benefits of capitalism; an obsession that can be referred to as “economism:” the assumption that that which is most economically, efficiently, and materially beneficial is also necessarily socially beneficial.

Salerno states as much in an aside to the Hoover Institute’s David Henderson:

But, in the end, Henderson’s version of libertarianism amounts to little more than economism, the narrow and hollow doctrine of enlisting market forces to improve social efficiency under the existing political regime. Henderson’s economistic approach to libertarianism is epitomized in Milton Friedman’s classic work Capitalism and Freedom.

The Viennese students of civilization would never have talked in the way Cowen does. Contrary to the “free market” economic establishment, the Austrians, and especially Misesians, completely deny the neo-classical construct of homo economicus. As conservatives such as Russell Kirk rightly point out the actual unrealistic nature of this construct, the Austrians are forever exempt from the criticisms related to the “economism” of man. It is true that man does not live by bread alone, as Wilhelm Ropke echoed the Biblical phrasing; his sociological needs, fulfilled by his community setting and connection to place and kin, are often more important than a singular emphasis on his material opportunities. The Austrians recognized this more than the typical policy-advising economists of the twentieth century.

Thusly, Arnold King says of Dekker’s book:

In The Viennese Students of Civilization, Erwin Dekker provides a new interpretation of the work of Ludwig von Mises, Friedrich Hayek, Joseph Schumpeter, and other economists of the Austrian school. In the process, he identifies a number of tensions in their thought: the economist as detached observer versus the economist as political participant; progress versus decline; liberty versus restraint; individualism versus culture; modernity versus tradition; and what Jacob T. Levy would call rationalist versus pluralist.
Austrian economists respect civilization as an emergent order and are skeptical of attempts to design society using rational expertise. This makes them much less inclined than other economists to be policy activists.

It makes complete sense that the Austrian economists, sociologists, and political scientists during the turn of the century would be despised by the more policy-oriented market technicians, including the advisors that came from the Chicago School. The Viennese, after all, were more interested in describing civilization and the economic process than they were in creating material blessings. In this way, emphasizing the spontaneity of society and culture, they warned against planning, against monetary shenanigans, against the forced expansion of crony “capitalism,” against centralized socialism. They stood wholly unconvicted by Burke's complaint of the turn to the age of "sophisters, economists, and calculators." And it is precisely because they sought to understand the organic and natural process of the market order, that they also stood firm against attempts by central states to create prosperity from the top. The Austrians were, and remain, the anti-planners, the anti-calculators, the anti-court economists.

In the coming turn toward a rediscovery of conservative sociology and the revival of Old Rightism, no school of economic thought is as enduringly relevant as the Austrian School. Only they, with their subjective theory of value, can account for the displeasure of those Westerners who are not experiencing the mythical wonders of booming GDP. It was they who derided the absurdity of using formulas of aggregation to pronounce the successes of central economic decision making. It was the Austrians who alone among economists could account for the fact that mankind's wants were so much more complicated and complex than just a cold material prosperity could fulfill.

This tradition does not say that man will be happier with market mechanisms alone, it merely points out in advance the failures of the promises of planning. It offers the content of the potential sociological-economic trade-offs, but it does not decide on behalf of the localities and regions what, exactly, should be preferred. In our age of secession and political decentralization, the Austrians must stay relevant. If we, as we should, are going to return to community and region and nation over internationalism, if we are going to learn from the social models of ages past, we cannot simply ignore economic logic. Nor can we wish it away. The logic of economics will be vital in the transformation toward the age to come.

About the author

C.Jay Engel is the founder and publisher of Bastion Magazine. He has written for Mises.org, LRC, David Stockman, and related. He owns several consulting business, actively works on the magazine, and lives in Northern CA.

from the editor's blog