Monday, January 30, 2006

The Left hand not knowing what the right hand does?

Last week Murray Rothbard, a leading Austrian economist a few years back, was quoted in the von Mises Institute Blog fully endorsing Joseph Schumpeter’s robustly critical views in his History of Economic Analysis on Adam Smith (See my pieces on “Murray Rothbard’s Myths”, 1- 6).

This week another Austrian Economist, Henry Hazlitt from the same school, is also quoted in the von Mises Institute Blog, less than politely attacking the same Joseph Schumpeter’s views in the same book, in his History of Economic Analysis, this time on Frédéric Bastiat. From praise to severe criticism in the space of a week. What is going on? Does the left hand not know what the right hand is doing?

Here is what Henry Hazlitt says about Joseph Schumpeter’s assessment of Bastiat:
It has even become a fashion for some economists to write about Bastiat patronizingly or derisively. This fashion reaches a high point in an almost contemptuous one-page notice of Bastiat in the late Joseph A. Schumpeter's History of Economic Analysis. "It is simply the case," writes the latter, "of the bather who enjoys himself in the shallows and then goes beyond his depth and drowns…. I do not hold that Bastiat was a bad theorist. I hold that he was no theorist."

“Schumpeter's judgment of Bastiat is not only ungenerous but unintelligent, and for the same reason that it is unintelligent to deride an apple tree for not bearing bananas. Bastiat was not primarily an original economic theorist. What he was, beyond all other men, was an economic pamphleteer, the greatest exposer of economic fallacies, the most powerful champion of free trade on the European Continent. Even Schumpeter (almost in a slip of the pen) concedes that if Bastiat had not written the Economic Harmonies, "his name might have gone down to posterity as the most brilliant economic journalist who ever lived."

What the "might have" is doing here I do not know. It has so gone down.”
The only common thread between these views of this two luminaries of the von Mises Institute appears to be that both were published to promote two new sets of books from the von Mises Institute, one by Murray Rothbard and the other by Frederic Bastiat.

Of course, that Schumpeter is wrong in his interpretation of Adam Smith because he is wrong on Bastiat, would not be a logical conclusion (or vice versa), but as I have shown, Rothbard’s reading of Smith’s “Wealth of Nations” in the misinterpretations of what Smith actually wrote (I cannot believe a person of his intellectual stature actually read the passages he criticises, given his elementary errors about them) suggests to me that Schumpeter is a weak source of authoritative opinions on either Smith or Bastiat, and that Rothbard is also unreliable.


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