The Hole We’re In

My fellow trustee Steve Baker has just forwarded me this speech by Mark Littlewood, the new Director General of the IEA.

I was inspired by the IEA in the mid-to-late 80’s to deepen my understanding of how society works. It is with great hope that I sense there is a true desire to promote the classic economic works of F. A. Hayek, who was of one of the inspirations to IEA founder Sir Anthony Fisher. Hayek’s economics are much neglected. He foresaw the booms and busts of the 20’s and 30’s, unlike his Chicago and Keynesian School contemporaries, who were building ever more remote and abstract, beautifully mathematical, but utterly irrelevant and downright dangerous models of the economy. Their heirs continue in that tradition, and are still in amazement as to why we are in the state we’re in today. Only an Austrian School economist can shed any light on these grave matters.

Mark’s fable of heaven and hell will stick in my mind.  It touches on both our Health and Safety culture and the reticence of our politicians, and is sadly very apt for today.

Mark is right about the size of the hole we are in.  It will not be possible to deal with it in conventional terms. Mark says that only new thinking will address our economic problems, and I agree. However, I prefer actually to say we can apply the long-standing wisdom of our great intellectual forefathers, whose work has much been neglected even in the halls of the IEA. We must recall the wisdom and vision of Edwin Cannan, the founder modern economics at the LSE.  It was Cannan’s students W H Hutt, and Lionel Robbins who brought Hayek to London, where he furthered the work of his own mentor, Ludwig von Mises, perhaps the greatest of all Austrian thinkers.

At the Cobden Centre we promote Honest Money as a solution, and there are a variety of radical suggestions. There is the proposal by De Soto, and a similar one by George Reisman. We also promote others that we think will work, such as Kevin Dowd’s, Paul Birch’s, and most recently Laurence Kotlikoff’s.

We welcome any new suggestions, and will continue to contribute to the debate.  The IEA will have a central role to play in furthering Honest Money and responsible government, just as it did in the 70’s when it inspired the Thatcher revolution.  For that alone we are eternally grateful, and also hopeful that the IEA will prosper under Mark Littlewood’s fresh and capable stewardship.