I suppose I can date my interest in both libertarianism and Austrian Economics from the day I was born. The doctor grabbed me by my little feet, turned me upside down and spanked my tiny bottom.
I began to cry out. That is when I realized the fundamental axiom that, “man acts.” In addition, I appreciated that what the doctor had done was in violation of the “non-aggression” principle.
The rest is history. Well . . . maybe not quite.
For some reason, I had found history and current events interesting when I was in my early ‘teens in the 1960s. I had a part-time job at the Hollywood Public Library in Los Angeles when I was in high school. Part of responsibilities was to maintain the magazine collections on a balcony in the building. I would finish my work, and hide up in the balcony reading new and old political and news publications.
The Confusions of “Left” and “Right”
But I soon was confused. When I read “left-of-center” publications like The Nation or the New Republic, they always seemed to have the moral high ground, making the case for “social justice,” “fairness” and morality. On the other hand, when I read “right-of-center” publications like Human Events or National Review the argument was made that all that “bleeding heart” stuff just did not work. There was a “bottom line”: it cost too much, screwed things up, and socialism and communism seemed to kill a lot of people.
When I was about seventeen, and living in Hollywood, I met two men who introduced me to the works of Ayn Rand. I ran into them at a restaurant called “Hody’s” that was at the corner of Hollywood and Vine. Drawing me into a conversation, they asked if I had ever heard of Ayn Rand. I replied that I had heard of the Rand Corporation, but was an “Ayn”?
They handed me a copy of Ayn Rand’s Capitalism: the Unknown Ideal, and told me to read it and come back in three days. I did, and we met. I found her case for capitalism transformative. They then handed me a copy of her book, The Virtue of Selfishness, and again told me to read it and come back in three days. I did and we met again. They now handed me a paperback copy of Atlas Shrugged. My heart sank, fearing they’d again say to come back in three days! I wiped the sweat from my brow when they said to read it and come back in ten days.
The Influence of Ayn Rand’s Ideas
Ayn Rand’s writings brought about an ethical and practical revolution in my thinking. From now on I did not have to feel guilty when I saw some bum in the gutter – he had no moral claim on the product of my mind and effort. In addition, free market capitalism not only “delivered the goods,” but also was the only political-economic system consistent with man’s nature and the individual’s right to peacefully and productively live for himself.
In 1968, I was visiting family in New York City and took the opportunity to go the Nathaniel Brandon Institute several times, then still headquartered in the lower level of the Empire State Building. One evening during a “social” night, Ayn Rand was there and very kindly took about a half an hour to talk informally with a small group of us.
All the stories about her are true. She had dark eyes that never left looking right at you while she was both hearing your question and giving her answer. She spoke with a calm certitude and deliberate clarity that made her comments reasonable and in no way “dogmatic.” It was truly a memorable interaction for me.
I might add that for that social evening, Ayn Rand was dressed in a red denim railway man’s-like outfit with a train conductor’s cap, and her husband, Frank O’Conner, was in a Nehru suit with beads. I have no idea of the meaning or reason for either one.
From Ayn Rand to the Classical Liberal and “Austrian” Traditions
But my intellectual odyssey did not end there. I read the books referenced and footnoted in Ayn Rand’s non-fiction writings. This soon led me to reading Henry Hazlitt, Frederic Bastiat, Herbert Spencer, William Graham Sumner, and, of course, Ludwig von Mises, Eugen von Böhm-Bawerk, and Carl Menger.
In 1967, one of the issues of Human Events had an ad for the Conservative Book Club. If you signed up to buy a certain number of books they offered over the next 12 months, you would receive as a free gift the selection for that month – the recently released new third edition of Ludwig von Mises’ Human Action: A Treatise on Economics.
Around this time, I discovered The Freeman, published by Foundation for Economic Education, which resulted in my finding out about Friedrich A. Hayek’s The Road to Serfdom. I was soon in correspondence with Bettina Bien Greaves, a senior staff member at the Foundation for Economic Education. She generously guided me to begin reading a much wider group of works on free market economics and the Austrian Economists in particular.
By the time I began college I had read most of the major works and many of the minor writings of the Austrian Economists, and many of the books in the classical liberal and libertarian tradition. Indeed, it was these readings that made me decide to major in economics.
What a rude awakening I had when in my first economics class, the assigned textbook was the seventh edition of Keynesian economist, Paul Samuelson’s, Economics, and I found the form of economic theorizing and the policy conclusions to be significantly different than what I had been absorbing on my own!
Against the Collectivist Tides in College
I finished my undergraduate degree in economics at California State University, Sacramento. All my economics professors were either textbook Keynesians, Stalinist Marxists, or Institutionalists. I made a nuisance of myself in virtually all my economics classes, since it bothered me that the other students were absorbing their arguments at uncritical face value.
I tried to explain and argue about Hayek’s version of the Austrian theory of the business cycle in Macroeconomics and Money and Banking classes. I would defend economic theory and the market order in Comparative Economic Systems. And in my Development Economics course, I attempted to articulate the arguments of the free market economist, Peter Bauer, as to why markets were essential to eliminate poverty in “third-world” countries.
I’m sure I drove some of my Keynesian and communist professors crazy. Economics majors and professors shared a common coffee lounge near the department office. On the lounge bulletin board I once put up a picture of the four Marx bothers – Harpo, Chico, Zeppo, and Groucho — with their heads poking out of old fashion beer barrels. I wrote underneath, “Four leading Marxist theoreticians.”
When Mises died in 1973, I wrote a piece about his contributions to economics for the university student newspaper. The only response was one of my professors coming up to me and saying, “Mises? Mises? I thought he died in the nineteenth century!”
When Hayek won the Nobel Prize in 1974, my professors were flabbergasted, and bewildered by my very public excitement. Some had never heard of him; others only knew him as the author of The Road to Serfdom and they asked what that had to do with “real economics”? One or two asked, “Wasn’t he the economist who assumed ‘full employment’ during the Great Depression?”
Since there were no professors who came anywhere near to my views on either economic theory or policy, I was “on my own.” While other students were at weekend parties or football games, I was in the university library going through all the old economics journals (many of which the library had bound volumes from the starting issues), finding all the articles by Austrians and others related to Austrian views as to be found in the old Index of Economic Articles volumes published by the American Economic Association.
Through this method, I ended up reading virtually all the journal articles by Austrians in English from the 1880s onwards, as well as their critics. But I also discovered a great underworld of other great economic theorists and analysts who almost were never referred to in history of economic thought books or the modern textbooks.
Going through every issue of these economics journals especially from the 1880s through the 1940s, and reading many of the articles by the various authors in each issue (not just Austrians) made it very clear to me that mainstream microeconomics and macroeconomics was a narrow and false conception of all that had been written and insightfully understood by a large number of economists, the vast majority of whom had gone down an Orwellian “memory hole.” There had been a wonderful world of economics before John Maynard Keynes and Paul Samuelson.
I also read backwards through the Classical Economists of the eighteenth and nineteenth centuries, and soon discovered that there were few things “new under the sun” that these earlier generations of thinkers – especially, the Scottish Moral Philosophers such as Adam Smith, David Hume and Adam Ferguson – had not already understood and analyzed, and often far better than most modern mainstream economists.
An Austrian Conference and Spending Time with Hayek
In 1972, while still an undergraduate student, I met Floyd “Baldy” Harper, founder of the Institute for Humane Studies, at the Institute’s headquarters in Menlo Park. I explained my interest and self-taught knowledge in Austrian Economics.
I must have sufficiently impressed Harper and his colleagues, George Pearson and Kenneth Templeton, because in the spring of 1974 I was invited to attend the first Austrian Economics conference in South Royalton, Vermont in June of that year. This was my first meeting and interaction with “real, live Austrians,” many of whom became dear friends. Meeting Israel Kirzner, Ludwig Lachmann, and Murray Rothbard for the first time at the conference was for a young man in his twenties, who had only read – and in some cases practically memorized – their works, was like being introduced to intellectual “gods” from Mount Olympus.
Bettina Bien Greaves also arranged for me to attend a FEE summer seminar at Irvington-on-Hudson, New York the week after the South Royalton conference was over. So I also had the additional opportunity to meet Leonard Read, the founder and long-time president of FEE, as well as Austrian economist, Hans Sennholz, and free market journalist, Henry Hazlitt, both of who spoke at the seminar.
Then in both 1975 and 1977, I was offered summer student fellowships at the Institute for Humane Studies at their Menlo Park, California headquarters. IHS brought together a group of promising young Austrian-oriented students, some of who had been at that first Austrian Economists conference in South Royalton, Vermont in June 1974.
But the especial highlight of these two summers was that for both of them Friedrich A. Hayek, who had been awarded the Nobel Prize in Economics in the autumn of 1974, was present as a senior research fellow. By chance, during both summers Hayek’s office was situated only one or two doors down from mine.
Hayek was in his late seventies at that time, and being only in my mid-20s, he seemed “ancient,” to me and likely to die any day – he actually lived until he was 92 years ago. So I was determined to go into his office almost every day that he was around to pick his brain for an hour or two about the “old Vienna days” with Ludwig von Mises and the other Austrian economists of the interwar period, his “battles” with John Maynard Keynes in the 1930s, and his clashes with the advocates of socialist central planning.
I must say that Hayek was the epitome of the old world Viennese gentleman, generous with his time, patient with questions many of which he must have heard a hundred times over his long career, and often amusingly self-deprecating in telling the stories of his intellectual exchanges with those on the collectivist and interventionist sides in the grand ideological and economic policy debates in the middle decades of the twentieth century in which he participated.
Hayek had been a life-long pipe smoker, but his doctor had insisted he give it up. But needing his nicotine “fix,” he would sit while talking to you sniffing snuff, with the snuff threads and residue dribbling on to his mustache and down on to his tie. Sometimes it was hard to focus on the conversation as your attention, uncontrollably, was drawn to watch where the snuff would fall next.
In retrospect, I am especially grateful that he was so pleasantly tolerant for what he must have considered a brash and pesty young man who imposed on his time day-after-day. If one could have an image of what an ideal Nobel Laureate might be in personality and temperament, Friedrich A. Hayek would fit that image perfectly.
Austrian Economics at New York University
I also started attending graduate classes in 1976 at New York University as part of the Austrian Economics program organized by Israel Kirzner. The weekly Austrian Economics seminar with the other graduate students and often famous visiting guests who delivered papers was one of the most thrilling and educational experiences I’ve ever had. It gave all of us a sense and feel of what Ludwig von Mises’ famous “private seminar” in Vienna in the 1920s and early 1930s must have been like.
The discussions at the NYU Austrian seminar encompassed everything from critiques of the frontiers of mainstream economics, to attempts at new and original contributions to Austrian theory, to interpretative investigations into the history of economic ideas and questions concerning the methodology and methods of economic science, and the economic policy issues of the day.
Ludwig M. Lachmann, who had studied with Hayek at the London School of Economics after having left Germany in 1933, had made major contributions to Austrian capital theory and a dynamic conception of the competitive market process. Long a professor of economics in South Africa, he came to NYU as a visiting professor on a regular basis.
His graduate seminar was a stimulating experience in which after delivering a series of lectures himself for the first few weeks of the semester, the rest of the term was taken up with the graduate students delivering papers and having them subjected to challenging criticisms from both Lachmann and the other participants.
Lachmann’s office door was always open, and I consistently took advantage of it. He would say in his gravelly, sing-song voice, “Well, Mr. Ebeling, in these four walls we can speak our mind.” And soon the discussion was drifting to the rarefied heights of abstract economic theory, and to his own recollections of those great economic battles of the 1930s and 1940s between the Austrian economists and their Keynesian and socialist critics. And to how, in an almost hushed conspiratorial whisper, he suggested the “Austrian” approach could be advanced in the hostile climate of mainstream economics and wrong-headed economic policies.
Israel Kirzner was and is the “ideal type” of the economist’s economist. Whether in his office at NYU or in the Austrian Economics seminar, Kirzner was the deliberative, balanced and thoughtful thinker, who in the most scholarly manner explained the Austrian theory of entrepreneurship and the market process, while always showing the most careful respect and attention to alternative approaches and conceptions of the market order within the economics profession.
His training as a rabbinical scholar, with its detailed appreciation to words, meanings and conceptual nuance was ever present in his careful and comprehensive textual analysis and critique of both Austrian and mainstream works in economic theory and its applications to the nature and logic of the market process.
Evenings with “Mr. Libertarian”
Murray Rothbard’s influence was different. I learned a great deal of clear and logical thinking from his writings on Austrian Economics, especially his monumental two-volume treatise, Man, Economy and State, which systematically stated, refined, and advanced the entire corpus of Austrian theory from the conception of human action to the nature and effects of government intervention in the market economy.
But he was the radical libertarian – “Mr. Libertarian” as some came to call him – the master system-builder of a “science of liberty” based on the “natural rights” of individuals to freedom on Aristotelian philosophical foundations.
Anyone who spent an evening that usually went long into the night at his Manhattan apartment lived a unique experience. His huge apartment was crammed with books in every room from ceiling to floor on every conceivable subject, with every volume of which he seemingly had read based on his ability to restate and then critically evaluate the content of virtually any one of them that you pulled off a shelf.
Rothbard would regale with personal stories, amusing narratives of historical epochs, details of economic theories and policies with their strengths and weaknesses, and an unending stream of political jokes and songs from all along the political spectrum with which he would entertain his visitors until way into the wee hours of the morning.
But he could be a difficult person, who you did not want to get on the wrong side of. You could find yourself condemned, criticized and banished from the Rothbardian circle – a fate worse than death for any young admirer who felt as if he had been expelled from the libertarian intellectual Garden of Eden.
From Student Days to the Present
I went on to earn by MA degree in economics from Rutgers University, and a PhD from Middlesex University in London, England. I’ve had the wonderful opportunities to hold the Ludwig von Mises Chair in Economics at Hillsdale College, to be vice-president of the Future of Freedom Foundation, the true honor to serve as the president of the Foundation for Economic Education (FEE), followed by professorships at Trinity College in Hartford, Connecticut and Northwood University in Midland, Michigan, until now my current position as the BB&T Professor of Ethics and Free Enterprise Leadership at the Citadel in Charleston, South Carolina.
It was during my time at Hillsdale College that I had the good fortune, with the invaluable assistance of my wife, Anna, to locate and succeed in getting copies of Ludwig von Mises’ “lost papers” – almost 10,000 pages in total – from a formerly secret archive in Moscow, Russia. Confiscated by the Gestapo from Mises’ Vienna apartment in 1938, his papers were among a vast collection of documents and papers plundered by the Nazis as they conquered much of Europe. All of these stolen collections were captured by the Soviet Army at the end of the Second World War and transported to the Soviet Union under Stalin’s orders.
I had the privilege serving as the editor of a three-volume collection of these “lost papers” that have been published by Liberty Fund of Indianapolis under the title, Selected Writing of Ludwig von Mises.
My story, therefore, is of a person who by chance was introduced to Ayn Rand’s writings and followed some footnote references in her books, and spent a lot of time in a university library discovering much of the Austrian Economic literature and the classical liberal, free market tradition, and reading most of these contributions totally on his own.
In my undergraduate days, I had no one to talk to about these ideas. My professors were at best indifferent and most often antagonistic and ridiculing of these “anachronistic” thinkers that some very peculiar and irritating student had dug out of old dust-collecting books and journals in the library.
But it was the starting point for the rest of my intellectual and professional life. I’ve had no regrets and an immense enjoyment along the way.
Well thank you for an interesting life-story.
For my part I think that my work will start yet another new school of thought. It will be published soon, probably in a number of volumes.
Today I am editing the paper for academics to introduce them to the principles of Macro-economic Design.
It has a very enthused following among academics and practitioners.
I respect the Austrian School but have little time for the Keynesian School – most of it.
Keynes diverted the minds of economists away from Adam Smith, who was a free marketeer, and onto the interventionist way of thinking which rules today. Interventions do not create wealth, they re-distribute it.
It is quite wrong.
Adam Smith basically said that all prices should be free to adjust, and that includes interest rates. They should not be managed. Look what a mess they have made of that.
Keynes decided that financial instability was caused by inflation and he wanted to show how to manage it. He accepted the banking system as it is and he accepted fixed interest bonds and the unstable mortgage system and the way that currency markets work.
I do not accept any of that. It is the all causing needless instability and attracting the wrong kind of attention – interventions. It is all contrary to Adam Smith.
What I do accept is what Keynes wrote here in Chapter 1 paragraph 1 of his ‘A tract on Financial Reform:’
“If, by a change in the established standard of value [of money], a man received and owned twice as much money as he did before in payment for all rights and for all efforts, and if he also paid out twice as much money for all acquisitions and for all satisfactions, he would be wholly unaffected”
But in his preface Keynes ignored this possibility and so set modern economics on a trail of seeking financial stability by other means, including interventions which should not be necessary in a financially stable economy. He chose to say that the problems are caused by the falling value of money and set out to explain how to limit that rate of devaluation and to manage it.
Keynes also identified that economic activity can spiral downwards and said that a remedy is needed. One such remedy suggested by Keynes was that of printing new money and burying it in bottles for people to dig up. The modern version of that is called helicopter money – dropping it from helicopters. We will come to that in my own tract and we will look at the different kinds of money stock management available.
We will look at management of the stock of money leaving interest rates free and we will look at natural cycles of spending as people chose to save more or save less, borrow more or borrow less, and import more or import less. The people need to be free to make these choices but these choices can lead to a need to intervene in some way – or not. If you intervene and (easily done) get that wrong, or if you try to manage the value of money or freeze it you cannot win. But if the financial framework is designed in accordance with Adam Smith’s principles most things will adjust and make people almost unaffected by the falling value of money. We have to change the way that finance is done, currency exchange is done, and monetary policy is managed.
So how should we manage new money creation? Professor Milton Friedman got that (nearly) right – steadily. Then you will not need to worry about natural spending cycles leading to a downwards spiral and you will not need to intervene to limit those cycles in case they lead to a downwards cycle. A little too much liquidity will ensue no needless slowdowns and people will be mostly unaffected by the falling value of money..
I am 76 years old.
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