The weakest part of the book comes in the final two chapters where he addresses the revival of Austrian economics since the mid-1970s. In particular, he dramatically underplays the importance of Israel Kirzner for the Austrian economics of the 21st century, both in the substance of his thought and as a role model for scholarly activity. One reason for this neglect is that Kirzner, and the later “Kirznerians,” create a complication for his narrative. Wasserman wants to argue that Austrian economics was always in service of the powerful and that therefore ideology eventually would triumph over serious scholarship, making it unsurprising that the Rothbardians would play footsie with the alt-right. Kirzner doesn’t fit that story. Not only did he, and most of those who followed up on his work, remain committed liberals, Kirzner was the very model of scholarly engagement and that branch of the modern Austrian school has continued to follow that path.
I write about these issues with some trepidation as I have not only lived through the events Wasserman describes, I have committed my career to the Kirzner side of this divide and am cited for that view in the book. So readers should take my own biases into account in what follows.
Wasserman is correct to identify the two wings of modern Austrian economics as being between a broadly Kirznerian wing associated with George Mason University and a Rothbardian wing associated with the Ludwig von Mises Institute. The problem with his presentation is that he fails to distinguish the important differences between how Kirzner and Rothbard, and their followers, approached the relationship between scholarship and ideology, and how they interacted with the scientific community of economists. The differences between these two wings is largely portrayed as a clash between what one might call “liberal libertarians” and “paleo-libertarians.” Much of the chapter on these differences relies on debates that took place in the blogs and other informal sources.
What Wasserman does not do is to discuss the ways in which the two wings have interacted with the larger economics discipline. Wasserman held up early 20th century Vienna as a model to be emulated in the ways that Austrians were in the middle of important conversations in the social sciences. Through his career, and especially starting with Competition and Entrepreneurship, Kirzner attempted to engage the questions that the mainstream of the discipline thought were important. Although his contributions to professional journals were limited, his students and their students in the GMU wing have published widely in professional journals. They have incorporated ideas from related areas in economics, such as public choice, and the Bloomington school of political science associated with Elinor and Vincent Ostrom, to create an interdisciplinary approach to political economy. Members of that wing have also published books with major university presses and have taken on leadership roles in professional organizations beyond the ones directly associated with Austrian economics. The dozen or so panels of the Society for the Development of Austrian Economics (also never mentioned in his account) continue to be the most well-attended at the Southern Economic Association meetings.
The emphasis on scholarly contributions on the part of the Kirznerian wing is substantially due to Kirzner’s influence not necessarily as a direct mentor, but as a role model of scholarly engagement. , Their focus steers clear of narrow policy advocacy or equating Austrian economics with libertarian ideology; it is not the Kirznerians who refer to themselves as “Austro-libertarians.” In a more complete account of where Austrian economics is today, Kirzner would have been featured much more prominently. In addition to serving as a role model, the substance of his contributions has been fundamental for the path that the GMU-related wing has taken, even where there have been plenty of disagreements with the details. Giving Kirzner his due in this way would also have enabled Wasserman to more accurately frame the current divisions among Austrians as being less about libertarianism or even the specifics of Austrian economics, but instead about the relative roles of scholarship and politics and the resulting relationship between Austrians and the rest of the economics profession. The Kirznerians have done more to recapture the intellectual spirit of Vienna than Wasserman gives them credit for, and he thereby overlooks the ways in which that spirit has been productive in giving Austrian economics a seat at the table in economics in ways that they haven’t had since the interwar years.
Unfortunately for Wasserman, acknowledging that reality poses a major problem for his overarching narrative. If the majority of 21st century Austrian school economists are engaging with the profession, contributing to its top presses and journals, and being elected to leadership roles, all while sustaining a commitment to scholarship over ideology, it undermines his claim that there is something about the Austrian school that inherently led it to give up its scholarly roots and find alliances with the worst sort of defenders of privilege and power. As a claim about modern Austrian economics it’s just not true. There was a far more interesting concluding chapter that Wasserman could have written that explored what I think are the real differences between the Kirznerians and Rothbardians, but he chose the one that looks more like a prizefight.
Despite its flaws, Wasserman’s book is well worth reading for those interested in the Austrian school or the history of economics more generally. Future work on the history of Austrian economics will not only have to tangle with Wasserman’s book, it will be better for having done so.