AUSTRIAN JOURNALS: A C RITIQUE OF ROSEN, YEAGER, LABAND AND TOLLISON,…

AUSTRIAN JOURNALS: A C RITIQUE OF ROSEN,
YEAGER, LABAND AND TOLLISON, AND
VEDDER AND GALLAWAY

WALTER BLOCK




T         here is no secret concerning the reasons Murray N. Rothbard inaugu-
          rated the Review of Austrian Economics (RAE). It was to promote the
          Austrian research agenda, and to enhance two-way communication
between economists guided by praxeological considerations and their counter-
parts in the positivist mainstream tradition. Crucial for communication, of course,
is publication. But praxeologists were all but frozen out of neoclassical publica-
tions. Stated in the introduction to the inaugural issue of the RAE (Rothbard
and Block 1987, p. xi):

        Articles that simply assume a familiarity on the part of the profession
        with methodological norms and theoretical developments within the
        Austrian tradition are unlikely to be published; the profession, by and
        large, has no such familiarity. Articles that devote substantial space to
        stating and defending the methodological norms and retracing the
        theoretical development are also unlikely to be published; they are
        seen, and correctly so, as unoriginal. Articles whose backgrounds are
        extensive in absolute terms but brief in relation to the remainder of the
        article do not constitute a workable compromise; they are rejected on
        the basis of length. The constraints do not totally preclude the publica-
        tion of Austrian-oriented articles in mainline journals, but they make
        such events much more difficult.

   A similar vision was adopted by the editors of the Quarterly Journal of Austrian
Economics (QJAE) (Block, Hoppe, and Salerno 1998, p. iii): "to promote the devel-
opment and extension of Austrian economics and to promote the analysis of

WALTER BLOCK is professor of economics and department chairman of economics
and finance at the University of Central Arkansas.
    1
     I speak of the Review of Austrian Economics only during the time I was associated
with it, 1987­1997.

THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000): 45­61

                                           45
46   THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)



contemporary issues in the mainstream of economics from an Austrian per-
spective." Both the QJAE and the RAE 1 are now publishing regularly and have
been doing so ever since their respective inceptions. These periodicals have
featured pathbreaking research from dozens of Austrians, and have managed
to attract the contributions of several notable mainline economists such as
Leland Yeager, Richard Timberlake, Harold Demsetz, Gordon Tullock, and
Bruce Caldwell. To be sure, the goal "to completely displace the crisis-ridden
but entrenched positivism (of the mainstream) by a vital and full-blown
praxeological paradigm" (p. iii) has not yet been attained, but it is undeniable
that the neoclassicals have been put on notice that their previous unchallenged
preeminence is no more.
                                       ROSEN
Judging from several published reactions to this state of affairs, the positivists
are not at all pleased with the new Austrian kid on the block. First out of the
starting blocks in dismay at this Austrian renaissance was Rosen (1997). Osten-
sibly an inquiry as to whether there are any gains to be made from intellectual
trade between Austrian and neoclassical economics, this is instead a frontal
attack on the former school of thought, accusing it of academic superficiality
on the ground it has failed the "market test."
     Seemingly, there are several areas in which Rosen thinks mainstream
practitioners of the dismal science can benefit from praxeological insights; e.g.,
competition and entrepreneurship (Rosen 1997, p. 149) and information and
economic change (p. 150). However, no sooner does he make these overtures
but that he takes it all back: "Yet, it is hard to assess exactly what is lost without
it [e.g., these supposed Austrian contributions]. The neoclassical approach
does not ignore change. Rather, it analyzes change in a more empirically
manageable way" (p. 150). The essence of his article can be found in its last
section, where he applies "natural section" and "competition . . . to the market
for ideas" (p. 150) and asks: "What is the fact that neoclassical economics has
scored higher than Austrian economics on the evolutionary/survival test
telling us?" (p. 151).
    The answer to this query, it would appear, is that Austrians should cease
and desist from research and publication. We have lost the market test, have
we not? Surely, we must admit, mainline economists are more numerous that
praxeologists. Therefore, why don't we play fair, abandon Austrianism, fold-
up our tents, and attempt to pass muster under neoclassical auspices. He even
comes close to asserting that refereed periodicals such as QJAE should discon-
tinue publication: "From the Austrian point of view, there is no dearth of
intellectual entrepreneurs looking for heretofore unrecognized opportunities
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                                         47



to peddle their wares" (Rosen 1997, p. 151). We should do this because we have
long ago worn out our welcome:

        The great Austrian economists were recognized as such in their day.
        The Austrian approach dominated American economics at the turn of
        the century. They are not forgotten and many of their ideas have
        been incorporated into the canon. However, others have been for-
        gotten. (p. 151)

In other words, mainline economics has already long since taken unto itself
what was true of praxeology, and consigned the rest to the dust bin of history,
where it richly belongs. Only spoilsports such as the editors of QJAE would
continue to promote this school of thought at this late date.
    But if anything indicates just how tightly closed-off is the mainline schol-
arly press in economics to the Austrian School, and thus the continued need for
independent journals emanating from this quarter, it is the fact that the Journal
of Economic Perspectives, the publisher of Rosen (1997), did not call upon a
praxeologist to take the other side of this debate, and defend Austrianism
against his attack. Instead, they chose Yeager, one of their own,2 and an
avowed opponent of Austrianism on business cycle theory, subjectivism,
methodological individualism, the hundred percent backed dollar, the gold
standard, time preference, interest rates, and other public policies and meth-
odologies associated with this school of thought (Yeager 1997).
                                          YEAGER
As a presumed defender of Austrianism against the onslaught against this
perspective by Rosen, Yeager can hardly be said to have gotten off on the right
foot. He implies that all Austrians follow a "party line,"3 he mistakenly con-
flates Austrianism and libertarianism, and he sees this school of thought as a
"sect" (Yeager, 1997, p. 155). For a person who claims to be a "fellow traveler"
(p. 153) of Austrianism, this is all but incomprehensible. How, moreover, is it
possible to defend against such a critique when Yeager offers no citations?

    2
       To his credit, Yeager (1997, p. 153) explicitly disavows that he is "a spokesmen for the
Austrian school." As well, all throughout his paper, he refers to Austrian economists in the
third person.
     3
       Because Yeager takes no marching orders, presumably from Austrian central control,
he is "free to reject" Austrian "fondness for methodological brooding, pointless profundi-
ties and verbal gymnastics" (Yeager 1997, p. 155). Since, in sharp contrast, I am tightly con-
trolled by the praxeological bosses, this permits me to object to this schoolyard type of name
calling. Had Yeager attained the usual scholarly requirements, he would have supplied
some examples, or citations, documenting this "brooding," etc.; certainly, the disinterested
reader might have benefitted from some evidence in this regard. What makes matters
worse is that Yeager is presumably defending the Austrian side of this debate vis-à-vis
Rosen.
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     In addition, Yeager (1997, p. 155) maintains, again without benefit of
citation, that some Austrians have wanted to ban mathematics from econom-
ics. There are problems here. First of all, Austrians do not reject mathematics
out of hand. Rather, while denying its relevance for economic theory, we accept it
for purposes of doing economic history. Second, in the ranks of Austrian econo-
mists are included distinguished econometricians and mathematicians
(Hoppe 1988). So, it is not a case of "the Austrians distaste for mathematics"
(Yeager 1997, p. 156), but rather opposition to misplaced mathematics. Third,
Austrianism, as a praxeological science, is not an inductive but rather a deductive
enterprise. As such, it is akin to mathematics, not the physical sciences (Hoppe
1988, 1992; Selgin 1988; Rothbard 1993; Mises 1966; Herbener 1995). How can
we oppose mathematics per se if Austrianism is but a branch of this endeavor?
     Another gratuitous and undocumented attack by Yeager on Austrianism
is the claim that "some Austrians go so far as to suspect an affinity between
statism and a passion for statistics" (Yeager 1997, p. 156), as if an interest in the
intricacies of statistical theory would incline a scholar toward dirigisme.4
    Nor can we allow to pass without criticism Yeager's attempt to conflate the
view of Rosen and Mises (p. 157). The latter does not at all use "a priori" in an
unusual way, in analyzing the essence of economics. For Mises, economics is
not at all a positivist science which apes physics and chemistry in applying
empirical methodology to economic issues and facts. Rather, it is akin to the
discipline of geometry, or pure mathematics, which rely upon the deductive,
not the inductive method (Hoppe 1988, 1992; Selgin 1988; Rothbard 1993;
Mises 1966; Herbener 1995).
    Yeager's (1997, p. 157) position on the future places him at the extreme
Lachmannian­Schakellian (Lachmann 1976) wing of the Austrian distribu-
tion: "As for predictions, Austrians take another fact seriously: the economic
world is an open rather than closed system and as such has an unknowable
future." Nothing in the future is knowable? Hardly. I know that I shall never
become the Queen of England, and that Murray N. Rothbard will not be
posthumously awarded the Nobel Prize in economics.
    Despite the fact that Yeager is no Austrian, and seems to bear a great enmity to
this school of thought and its practitioners with his incessant name calling, his
(Yeager, 1997) reply to Rosen (1997) still functions as a good antidote to the latter.
Of great value is Yeager's criticism of Rosen's analogy between ideas on the one

     4
     Advocacy of government-forced collection of statistics, as is done by the Bureau of
Labor Statistics, or the Commerce Department, or coerced census reporting of information
not called for in the Constitution, is, of course, entirely a different matter. See on this Roth-
bard (1997a), Van Creveld (1999).
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                                   49



hand and goods and services on the other. States Yeager (1997, p. 159) of Rosen:
"He evidently holds it against the Austrians that they do not pass his market test
in the intellectual atmosphere created by members of his own camp, an atmos-
phere pervaded by narrow yet tacit methodological preaching." Yeager (p. 161),
moreover, is perfectly justified in plaintively asking "Since when, anyway, was
the market, even the actual business market, the arbiter of excellence in consumer
goods, literature, art, music, science, or scholarship? Since when does the market
decide truth and beauty?" Surely rap music sales vastly outstrip those of baroque
music, and Puff Daddy is far more popular than Mozart. According to the
"market" criterion adumbrated by Rosen, we would be forced to conclude that
mere popularity, mere purchase levels, are an unambiguous indicator of
beauty. The National Enquirer outsells the Wall Street Journal; presumably,
according to Rosen, there is more truth in the former than in the latter.
     But the fact of the matter is that Rosen is committing a category mistake. He
is conflating scientific fact, and truth, on the one hand, with profits and sales on
the other. He is attributing to markets that which properly belongs to the realm
of truth or falsity.
    Yeager states:

       Scholars should approach each school (and each sect) for what they can
       learn from it, not as a target of polemics for polemics' sake and not as
       a foil for self-congratulation. The neoclassical and Austrian Schools,
       each stripped of excrescences, are complementary. Aspiring Aus-
       trian economists should indeed take the standard Ph.D. courses.
       (1997, p. 164)

But where are the "excrescences" in praxeology? Where are the "polemics"?
Further, if there is as much "complementarity" as Yeager claims, why does he
content himself with only the claim that "aspiring Austrian economists should
indeed take the standard Ph.D. courses"? Why is this not coupled with the
obverse, namely, that aspiring neoclassical economists should take the stand-
ard Austrian Ph.D. courses? The two-way street advocated by Yeager, curi-
ously, runs in only one direction.
                              L ABAND AND T OLLISON
The major thesis of Laband and Tollison is that there is no warrant for the
existence of any academic, scholarly refereed journals devoted to the Austrian
perspective. The reason that "so-named Austrian economists" (Laband and Tol-
lison 2000, p. 45) 5 fail to "publish in the regular journals of economics . . . is that

    5
      Presumably, we are to infer from this that there really is not a core Austrian per-
spective worthy of the appellation "Economics" without t he "so named," and worthy of
50    THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)



their work is flunking an important market test." In other words, whether real
or only "so named," Austrians are purveying a particularly inferior brand of
economics. The mainstream journal editors and referees see through the falla-
cies6 of praxeology, and, not taken in by them, reject submissions from this
dubious quarter.
    And how do the Austrians react to these eminently justified rebuffs? Do
they go back to the drawing board, rethink their misbegotten positions, and
return with a higher quality (e.g., more mainstream) product? They do not. Do
they realize that "even the best and brightest among us usually fail. To succeed as
scientists we must come to grips with rejection and failure to convince others"
(Laband and Tollison 2000, p. 45)? Again, unhappily, no. Do these Austrians
incorporate the fact that "sometimes the failure is temporary, overcome by redou-
bled effort to prove one's point. Sometimes the failure is permanent and the
putative contribution must be discarded as either incorrect or insubstantial"
(p. 45). Not a bit of it. Very much to the contrary, they engage in "general
grumbling"; they indulge in "sour grapes" (p. 45) and "crybabyism" (p. 47). If
they had any sense, the Austrians would regroup, and realize that the negative
judgment made of them by their intellectual betters is a valid one.7 They would
keep trying to "convince nonbelievers" on the editorial boards of mainstream
economic journals even though "this is difficult." And why should Austrians
do this? Because this is the only way "to make contributions."
     Here, in a nutshell, is Laband and Tollison's advice to Austrians: knuckle
down, shape up, get real, avoid the evils of crybabyism, grumbling, and sour
grapes; but above all, never never, never start your own journals. For to do this
is to leave the intellectual battlefield. They state (p. 45):

     Imagine a young tennis player who complains that he cannot win his matches
     because the linesmen call too many of his shots out. Sure, the linesmen make
     mistakes, but does anyone think that the best players are not playing in the
     major tournaments? It is one thing to win the Austrian Open and quite another
     to win Wimbledon.



distinction from that of any other school of thought. But were this true, why are Laband and
Tollison castigating Austrians for inaugurating journals devoted to this topic? If there are
no real Austrians, but only "so-named" ones, why the fuss on the part of Laband and Tol-
lison over a "so-named" Austrian journal? As a nonreal journal, it should hardly give them
offense.
     6
       But Austrianism is more than merely incorrect. For Laband and Tollison, too, this
school of thought is composed of "true believers" (Laband and Tollison 2000, p. 44) and
leads a "basically cult like existence" (p. 43).
     7
       But not a perfect one. Laband and Tollison (p. 45) concede that "on occasion . . . (the
neoclassical) vetting process is subject to type I error."
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                                         51




    In the event, however, the Austrians have eschewed this counsel. While still
continuing to devote a part of their time and effort to publishing in mainstream
journals (following Rothbard's advice about "two way streets") they have also
had the temerity to start up and contribute to refereed periodicals open to their
own perspective.
    This is neither the time nor the place to take on the major challenge of
Laband and Tollison: that all of value in Austrian economics has long since
been incorporated by the neoclassical school; that what remains the sole prove-
nance of praxeology is all wrong; that there is nothing both true and original in
praxeological economics as currently practiced. Much of the research and publi-
cation in this tradition has been devoted to blazing new and important paths (e.g.,
appraisement, information, fractional-reserve banking, subjectivism, socialism,
property rights) and to a panoply of criticism of the mainstream showing that its
analysis in great part is either misguided or pernicious.8 Instead, I shall critically
examine Laband and Tollison's case against the very existence of Austrian
scholarly journals.
    Let us begin with their tennis analogy. My contention is the Austrians are
not poor players of this game, called down for their errors by very accurate
albeit imperfect linesmen. Rather, Austrians are engaged in baseball, and don't
even make it to first base since tennis has no umpires capable of distinguishing
a ball from a strike. While there are indeed two schools of economics, compet-
ing with each other in seeking truth in terms of explaining and understanding
economic issues, the two are very different enterprises. They have different
rules, criteria of success, methodologies, literatures, histories, etc. To ask one to
abide by the rules of the other would be to put the former at a great disadvan-
tage.
    But this is a two-way street. Yes, Austrians have great difficulty publishing
in mainstream journals. However, the same undoubtedly applies when neo-
classicals submit articles to praxeological journals. In point of fact, however, it
is undoubtedly the case that non-Austrians are represented in praxeological
journals to a far greater extent than is the reverse.9

    8
       If Laband and Tollison wish to enter the lists and debate praxeologists on any of these
specifics, they will be following in the path of several eminent neoclassical economists who
have already done so. For recent criticisms of Austrians by neoclassicals see Tullock (1988),
Demsetz (1979, 1997), Yeager (1987, 1988, 1989, 1994, 1997), Timberlake (1987, 1988, 1989),
Caplan (1999), Nozick (1977). For Austrian rejoinders to Tullock, see Salerno (1989); to
Demsetz, see Block (1977a, 1995, 2000); to Yeager, see Block (1988), Barnett (1989b) and
Salerno (1994b, 1995); to Timberlake, see Rothbard (1988, 1992) and Barnett (1989a); to
Caplan, see Block (1999) and Hülsmann (1999); to Nozick (1977), see Block (1980). Unhap-
pily, Laband and Tollison write as if this literature did not exist.
     9
       See the literature cited in the previous note.
52    THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)




    Another difficulty with the Laband and Tollison position becomes clear
when we attempt to generalize. That is, let us search around and see if we can
uncover other schools of thought beside the Austrian which have set up jour-
nals of their own, in order to escape from the judgment of tennis linesmen to
whose tender mercies they would otherwise have been consigned. Exhibit A in
this regard is surely the Public Choice School. These scholars have had the
audaciousness not only to create the journal Public Choice, but several others as
well, including Constitutional Political Economy, The European Journal of Political
Economy, The Journal of Public Finance and Public Choice, and The Journal of Public
Economics. Public Choicers approach questions of politics from an entirely new
and different methodology (economics) compared to what has gone on with
this field before their advent. That is, previous to the arrival of Buchanan and
Tullock and their numerous colleagues, such issues had long been addressed
using the method of political scientists. In order to be logically consistent,
Laband and Tollison would have to upbraid the Public Choice School for
starting their own journals. Instead of sour graping and "chatting" (Laband
and Tollison 2000, p. 6) among themselves, 10 these scholars should have sub-
jected themselves to the righteous judgment of the editors and referees of
political science journals.
    I mean this as no criticism of Buchanan and Tullock.11 But had they al-
lowed political science journal editors to determine the fate of their school of
thought it is entirely likely that it would be far less developed than it is now.
For the "tennis linesmen" of political science are no more fair to public choicers
than are those of mainstream economics to Austrians.
    But this is the mere beginning of the troubles for Laband and Tollison on
this ground. It is only the veritable tip of the iceberg. Exhibit B might be the
work of Gary Becker. Much of his intellectual contribution was to explore
questions hitherto in the domain of sociology.12 He did so, of course, with the
tools of economic analysis, not sociological analysis. Had he submitted his
unpublished works to the editors of sociological journals, is there anyone rash
enough to believe, as Laband and Tollison imply, that they would have been
judged by fair and competent "linesmen"? It is of course impossible to say for
     10
        In addition to setting up journals, both Austrians and Public Choicers have also con-
ducted annual meetings of their own in competition with the ASSA.
     11
        For criticism of the Public Choice School from an Austrian point of view see Rothbard
(1997b) and Block and DiLorenzo (forthcoming).
     12
        See in this regard Becker (1957, 1964, 1974a, 1974b, 1975, 1976, 1978a, 1978b, 1980,
1981b, 1984, 1990a, 1990b, 1990c, 1991, 1993, 1996). To modern economic sensibilities, this
very large literature (I confine myself only to a sampling of his books, for brevity) sounds
like economics, not sociology; but especially when Becker began his career, and even nowa-
days, his work was widely seen as "poaching" on the preserves of sociology.
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                               53



sure, but it is extremely likely that had Becker followed the path advocated by
Laband and Tollison, he would have enjoyed far less publishing success than
he did.
    But, again, this phenomenon is ubiquitous; it transcends any one individ-
ual, such as Becker, or even any one school of thought, such as Public Choice or
Austrianism. To begin with, it applies to every single solitary subdiscipline of
economics. Consider labor economics, as but one case in point, by consulting
the Journal of Economic Literature listings for subfields in economics, or by
perusing only the titles of the hundreds of actual economics journals (Cabell
1998). Why create the Journal of Labor Economics (JOLE), or the Journal of Labor
Research (JLR) or any of the other prominent mainstream scholarly periodicals
specializing in labor economics? According to Laband and Tollison (2000), if
we generalize from these authors, the editors, referees and contributors to
JOLE, JLR, and their many counterparts should have, instead of inaugurating
their own periodicals, tamely submitted to the judgment of the "tennis lines-
men" of the American Economic Review (AER), the most prominent economics
journal of them all. From whence sprang the sheer audacity of JOLE, JLR, etc.,
in rebelling against the just (albeit imperfect) rule of the even more prestigious
AER? In other words, if QJAE is illicit because it is an attempt to evade the just
rule of the economics profession as a whole, then this goes, too, for JOLE, JLR,
and all the rest.
    And it goes in spades. For the journals devoted to labor economics (ditto
for international trade, economic development, history of thought, economic
history, money, macro, etc.) at least share a common logical positivist method-
ology with AER. Far less reason, then, for them to break away from the just
authority of the "tennis linesmen" of the American Economic Review than for
Gary Becker, Public Choice or Austrianism to seek to escape the rule of those
with whom they do not share a methodology.
     Again, we have only begun to scratch the surface of the logical implications
of Laband and Tollison (2000). For if their message applies to schools of
thought within economics, if none of these other journals were justified in
opening their doors, the implication is that there should only be one economics
journal, namely the AER. But why should there be any economics journals at
all? Economics, after all, is but one discipline out of many in the social sciences.
Surely, using the "logic" of Laband and Tollison, there were others before
economics. The dismal science broke away from these others, presumably, due
to the same need for specialization and division of labor which now accounts for
the separation between neoclassical and Austrian economics. But if the latter is
not justified, then neither is the former. Within social science, journals from the
54   THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)



various disciplines of sociology, political science, history, anthropology, psy-
chology, etc., should all coalesce into one big social science journal. And if the case
for a journal articulating the vision of these traditional social science disciplines
is thrown into question by Laband and Tollison, how much weaker, even, is
the case for specialized journals for the newer social science subdisciplines
such as "feminist" studies, "queer" studies, "black" studies, "transgendered"
studies, "multicultural" studies, etc.
     As a matter of fact, the logical implication of Laband and Tollison is not
only that there should be but one economics journal, not only that there should
be but one social science journal, but that there should be only one scholarly
publication, period. For, why should the chemists be able to escape the proper
authority of the physics "tennis linesmen"? Why should the biologists be
allowed to rebel against their proper lords and masters, the chemists? And
why should any of these disciplines, let alone economics, be allowed to kick
over the traces initially forged by the first discipline, the "Queen of the Sci-
ences," that is, philosophy. Chemists, too, are just a bunch of whiners, who
"chat" amongst themselves, indulge in "sour grapes" and "cult-like" behav-
ior.
    A word on Laband and Tollison's claim that their view represents the "free
market" and that the opposite perspective, the one which supports the exist-
ence of such journals as the QJAE is characterized by "market failure." This
contention must be rejected on several grounds. It comes with particular ill
grace from authors who argue for, in effect, only one economics journal (and in
the extreme, the publication of only one periodical in total). This is incompat-
ible with the neoclassical economics interpretation of single sellers of items
being "monopolists." On the one hand, the logical implication of Laband and
Tollison, as we have seen, is that there should be only one publication; on the
other, it is a well-established neoclassical claim that one of practically anything
is equivalent to "monopoly," which, in their lexicon, constitutes a "market
failure." The point is that it is their own perspective, not that of the Austrians,
which is compatible with market failure. And, in turn, it is the Austrians, not
the mainstream economists, who have done more than anyone else to under-
mine the intellectual credibility of the concept of market failure (Rothbard
1962).
    Since when, moreover, is it an example of antimarket activity to set up a
new business venture? Surely this is an example of entrepreneurship, some-
thing fully recognized at least by Austrians (Kirzner 1973), if not neoclassical
economists, as an integral aspect of business enterprise. Presumably, if Laband
and Tollison were analyzing not academic publishing but rather ordinary
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                              55



commerce, they would have stood with the butter interests which tried to
prevent the colorization of margarine, with the horse and buggy industry
which tried to stifle the early horseless carriage firms with a welter of restric-
tions. Laband and Tollison are in the tradition of the medieval guilds which
long succeeded in preventing competition against themselves.
    As a young Austrian economist, I wondered for many years how the
academic establishment would respond to Austrian criticisms, when and if
they ever condescended to recognize this literature. Although there have
indeed been substantive criticisms13 penned, a substantial part of the response,
exemplified by Laband and Tollison (2000) and Rosen (1997) is the ad hominem
dismissal of praxeology on the ground that there are far more adherents of the
logical positivist paradigm than there are of praxeology.
                            VEDDER AND GALLAWAY
Vedder and Gallaway (2000) have written a very interesting and informative
paper on the issue of whether journals which specialize in Austrian economics
are justified. They answer this in the affirmative (p. 13): "Since historically the
discrimination against Austrian scholarship has been high, a new Austrian
academic infrastructure has emerged. . . . Institutions evolve to meet needs
prompted by human action."
    Their analysis is problematic, however. One difficulty is that Vedder and
Gallaway unnecessarily concede to the very editors they accuse of bias against
Austrians a modicum of legitimacy. They state (p. 1): "presumably the rise in
the last generation of Austrian economics' market share" in the academic
milieu reflects mainly the empirical fact that Austrian concepts have proven
useful and relevant in explaining contemporary human action." But ifincreases
in Austrian market share stem from the explanatory use and relevance of the
contributions of this school, then so does the level of its market share arise from
this quarter. However, according to Vedder and Gallaway's Figure 1, this
market share is pitifully low, barely above 3 percent. I agree with Vedder and
Gallaway that this is a roughly accurate estimate of the proportion of econo-
mists now practicing who could be characterized as Austrian. But this means,
then, that the praxeological share of correct analysis of contemporary human
action is also at about this level. And that is a claim I find very much incorrect.
    Another problem arises with their statement that the "leading economic
journals . . . are mainstream forums" (p. 34). In my view, the leading economic
journals are the Austrian ones. To be sure, I have no objection to the main
subject of their query, to wit, what is the case for and against praxeologists

    13
     See note 8 above.
56    THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)



publishing in the leading mainstream journals, only to deprecating the Austri-
ans journals vis-à-vis the American Economic Review and its ilk.
    A third difficulty arises with regard to their claim that the Austrian is
complementary to, rather than rivalrous with, the other free-market schools of
thought such as the Chicago, the Public Choice, and the New Institutionalist
(p. 35). This impacts, also, their problematic Figure 2.
     Imagine a Venn Diagram, with two overlapping circles indicating, respec-
tively, the Austrian views (A) and those of the Chicago, Public Choice and
New Institutionalist Schools (B).14 We further label as X the views which are
unique to praxeologists (e.g., which are not shared by the other free-market
schools of thought), as Z those perspectives which are unique to the Chicago,
Public Choice, and New Institutionalist Schools (e.g., which are rejected by the
praxeologists) and as Y those positions which are shared by both camps. What
are some examples for each of these subcategories? X contains the praxeologi-
cal finding that economics is a deductive system, methodological individual-
ism, the understanding of competition as rivalry, not based on the number of
participants in a market but rather on whether entry is legal, and alternative or
opportunity costs on a subjective basis; on a public policy level, adherence to a
gold standard, a 100 percent backed dollar (no fractional-reserve banking),
opposition to the concept of market failure, fixed exchange rates, rejection of
all antitrust legislation and advocacy of laissez-faire capitalism. In very sharp
contrast, Z would include interpersonal comparisons of utility, objective costs,
logical positivism, the idea of competition as based on the number of competitors
in an industry, acceptance of the logical coherence of indifference curves, and the
notion that economic laws must be tested by empirical evidence; on a public
policy level, there would be acceptance of at least some antitrust (e.g., antimerger,
price fixing provisions), advocacy of fiat currency and fractional-reserve banking,
flexible exchange rates, some sort of limited welfare state (e.g., negative income
tax, school vouchers, tradeable emissions rights). What are the areas of agree-
ment in Y? That an increase in the money supply (not the "greed rate")
accounts for inflation, the median voter analysis, the importance of markets,
freely fluctuating prices, institutions, and equilibrium tendencies; on a public
policy level, that rent control, minimum wages, unions, tariffs, central plan-
ning, government ownership or regulation of airline prices, nationalization of
newspapers, steel mills, and oil companies are disruptive to an economy.
   With this introduction, we are ready to tackle the claims of Vedder and
Gallaway (2000, p. 36). Can these authors be fellow travelers of "both the

     14
      Although there are of course differences amongst these three, for present purposes of
distinguishing them all from the Austrian perspective, I in effect assume these away.
SYMPOSIUM: PUBLISHING IN AUSTRIAN ECONOMICS, PART 2                                       57



Austrian and Chicago Schools simultaneously"? Yes, if they completely es-
chew both X and Z, and embrace Y and Y alone. Then and only then can they be
fellow travelers of both. But to the extent they accept X they must reject Z, and
of course vice versa, since these elements are contrary to one another. Logically
Vedder and Gallaway can reject both X and Z, but cannot accept both of
them.15 What if Vedder and Gallaway agree with Y, but also with some parts of
X and others of Z. Then they are partially Austrians, partially neoclassicals,
and somewhat internally self-contradictory; i.e., they are eclectic.
    The next mistake of these authors (p. 37) is their claim that Gordon Tullock
when he edited Public Choice and James Bennett, the present editor of the
Journal of Labor Research exhibit no discrimination against publishing in their
journals "Austrian ideas." While I have no doubt this is true of Austrian ideas
in category Y (which also include neoclassical ideas), I defy anyone to show me
the publication of Austrian ideas in category X (which are decidedly not
compatible with those of the mainstream) in either of these journals.
    I entirely agree that Hayek and Kirzner "have been more accommodating
of non-Austrian beliefs" than either Mises or Rothbard (p. 37). Hayek has
made numerous compromises with doctrine which can be categorized as
violative of X, and even Y (Block 1996), while Kirzner (and Mises, too, in this
one case) has opposed the total elimination of antitrust (Block 1977b). But none
of these economists ever published anything he knew to be untrue, much less
with the goal of enhancing his career. Nor can it be denied that the award to
Hayek of the Nobel prize in 1974 heightened interest in Austrian economics.
However, I date the modern rise of praxeology a decade earlier with the
publication of several of Rothbard's books and articles, particularly Rothbard
(1962). In any case, the version of Austrian economics most directly furthered
by Hayek's prize was a watered down interpretation of the praxeology of
Mises and Rothbard.16
    I especially appreciate Vedder and Gallaway's (2000, p. 37) application of
the median voter phenomenon to referees of mainstream journals to explain
why Austrians have an even more serious obstacle placed in their path for
obtaining an acceptance than otherwise would have been supposed.
    Consider now the case posed by Vedder and Gallaway (p. 38) of the author
of an Austrian paper on the Mises­Hayek trade cycle theory, whose editor

     15
        If Vedder and Gallaway sign on to both X and Y, they are Austrians, pure and simple;
if Y and Z, then they are members of the Chicago, Public Choice, or New Institutionalist
Schools.
     16
        The "dehomogenization literature" blazed by Salerno is of relevance here. On this see
Salerno (1990, 1993, 1994a) and Block and Garschina (1996).
58   THE QUARTERLY JOURNAL OF AUSTRIAN ECONOMICS VOL. 3, NO. 2 (SUMMER 2000)



demands econometric evidence. Would it be a violation of Austrian principle
to comply? In one sense, of course it is, since empirical work is considered by
praxeologists to illustrate, not test, apodictic theory. That is, regression analy-
sis is a legitimate part of Austrian economic history, but this does not hold true
for theory.17 However, it is by no means necessary to advise the editor about
this complication. All the author need do, if he judges it worthwhile, is to
provide what he considers an empirical illustration of the principle. If the
editor wants to interpret this as evidence of relevance to the Austrian business
cycle theory, that is his business. However, if this editor demands that the
Austrian author characterize this illustration as evidence, then all bets are off.
We have now moved into the thickets of area Z. If the praxeologist publishes
on this basis, he is indeed selling out in an unprincipled manner.
     I also have problems with Vedder and Gallaway's (p. 39) version of the
publication process of their project "Out of Work." They state "Rothbard
(1983) confided in us that he did not like the double-blind refereeing system,
but was being coerced into following it to demonstrate the presence of schol-
arly standards." This is entirely incompatible with my own recollections of this
issue. As coeditor with Murray Rothbard of the Review of Austrian Economics, I
can assure the reader that Murray took on the task of inaugurating this journal
on a double blind refereeing basis completely voluntarily. Those who know
him know full well that, apart from the state of course, Murray was never
"coerced" into doing anything in his entire adult life. Last, they imply (p. 41)
that regression analysis is "mainstream" methodology, i.e., a part of Z not, Y.
But this is not necessarily so. It is true if and only if the econometrics is used to
test praxeological discoveries. But regressions can also be used to illustrate
theory, in which case they fall into category Y, not Z, which is claimed by both
schools of thought, not by the neoclassicals alone.
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