Context, continuity, and truth: theory, history, and political economy

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Peter J Boetkke

Peter J. Boettke | Professor of Economics and Philosophy, George Mason University; Director, F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics, Mercatus Center; and Research Fellow, Independent Institute

It is a great honor for me to give the Liggio Lecture here at Atlas Network’s Liberty Forum. Leonard Liggio truly was the Ambassador of Liberty throughout his amazing career. He was also a great friend and mentor to many of us in this room. My first interactions with Leonard were through the Institute for Humane Studies in the early 1980s, and as a teacher, and as a mentor. My last interactions with Leonard were through our work together with the Fund for the Study of Spontaneous Order in the 2000s and 2010s. In between, Leonard became a constant source of encouragement in my career, of ideas of interest to pursue, of connections to develop within the network of scholars as a graduate student, and then as a faculty member. At my first job, Leonard arranged for the Liberty Fund catalogue of books to be donated to my university library.

Leonard pushed me to submit my work to be considered for awards, such as the Hayek Prize from Mont Pelerin Society, and he also championed my membership with MPS early in my career – and now I am President of that organization. Leonard arranged to get me invited to Liberty Fund conferences, and even to be hired by Liberty Fund to consult on a project to reinvigorate the economic wing of their conference and publishing program. Leonard also encouraged me to attend the History of Economic Society meetings, as well as the American Economic Association, the Association for Private Enterprise Education, the Public Choice Society and the Southern Economic Association. Leonard argued that Professional engagement for scholarship and network building was important to one’s career. He celebrated my faculty appointments at NYU and then at GMU, and he convinced me to apply to be part of Templeton’s Freedom project.

As you can tell, Leonard’s support, encouragement, and intellectual example was indispensable in my own development as an academic economist. Leonard always exhibited deep, not surface level, learning across disciplines, but especially history and intellectual history – so scholarship. Leonard always exhibited respect for others, not strategic manipulation, and mutual respect in the community of learners – so Left and Right. And, finally, Leonard, while always curious and always respectful, was also firmly planted in the sciences of human action – so Mises and praxeology. And by praxeology, Leonard meant not a restrictive methodological/epistemological stance, but instead the application of the methods associated with the economic way of thinking beyond the study of the market process to all walks of human actions and interaction.

Leonard tells us in his biographical notes that when he first came to study with Mises after reading Human Action upon its publication in 1949, the Mises seminar was devoted at that time to his presentation of the materials that would become Theory and History (1957). This is important because Leonard was studying history and engaged in the literature in European political, legal and economic history, as well as intellectual history of classical liberalism, in particular the French liberal tradition of Jean-Baptiste Say and Frédéric Bastiat. In short, it is always important to remember that as a scholar, Leonard was both a historian and a historian of ideas, and he weaved between these seamlessly to address liberty and power from the Middle Ages to the 20th century.[1]

So, on this occasion I believe it is appropriate to take a moment to acknowledge Leonard Liggio’s life of scholarship, teaching, mentorship, and institutional entrepreneurship. Leonard identified, encouraged, connected, and created opportunities for many of us in this room, and without his presence in our lives we very well may not be here right now. We all owe him so much.

And for my talk I hope to suggest one way we can repay that intellectual debt. The most obvious is to be a good steward to the intellectual tradition of classical liberalism. The great Frédéric Bastiat once wrote that we should never fear an artful critique of our position, but always fear an inept defense. It is our responsibility to be the best scholars and teachers of classical liberal political economy that we can be – to think clearly, speak clearly, and write clearly, and to tackle tough questions and take on, in the most rigorous and sophisticated way possible, the popular fallacies of our age that tend to cut against the argument for a society of free and responsible individuals.

With this task in mind, what I want to talk about today is the dilemma of our day in carrying out that task. There is, I contend, an intellectual crisis in both the fields of intellectual history and in the discipline of history more generally. It is a crisis regarding the status of truth seeking in the disciplines. A new generation of critical theorists are seeking to poke holes in the history of economic theory and liberal political economy, and to demonstrate the inherent inefficiency, instability, and immorality of the capitalist system. And just to hopefully ignite some stimulating conversation, I am going to suggest that economic approaches that are not rooted in the Misesian and Hayekian economic way of thinking that Leonard championed, are decidedly ill-equipped to face these new challenges. Instead, they lead to the abandoning of the disciplines of history and intellectual history. And, if we economists abandon history – in both senses – we leave our past to the kindness of our enemies.[2] This is an extremely vulnerable position to find oneself in. Yet this is where we are. Leonard would want us to correct that, so let’s do that.


What is truth in the social sciences and humanities? During the 1970s and 1980s, as the positivist philosophical program came under increasing scrutiny, among the post-positivist positions articulated was post-modernism, and among post-modernists were critical theorists and deconstructivists. It is one thing to claim that social scientists cannot hermetically seal themselves off from ethical values and various biases and pursue purely objective analysis, but it is quite another thing to claim that this means that the entire enterprise of “objective” analysis is a sham. To say knowledge of the social world – and knowledge of our efforts to understand the social world – is embedded in an intricate matrix of values, social meanings, and contextualization does not imply that there are no basic facts of the situation, or that there are no ways to adjudicate between competing explanations or theoretical frameworks. Of course, facts do not speak for themselves, and thus all knowledge of the social world demands contextualization and recognition of its social construction. But also not all interpretations of events are equally as grounded, and not all arguments are equally valid. Progress in the social sciences and humanities can be made.

Most economists are trained to avoid such murky epistemological waters. But even in their practice they don’t. Rather, they just avoid recognizing that they are drowning in them. To say that if something is important we must measure it, bleeds too quickly into the claim that whatever we can measure, we should claim as being important. It is not! Now is not the time to discuss in any detail the various shortcomings of the empirical project in the social sciences, except to note that the substitution of sophisticated statistical analysis for more narrative history does not solve the problems that have plagued social science and history since their very beginning. The only way to “solve” them is to recognize them, and embrace multiple forms of evidence and multiple methods of analysis. But many economic historians argue that this is precisely not the way to solve the problem. Instead, they insist we must just count, count correctly, and thoroughly. But let me be clear that nobody should be against counting. In fact, counting can fix a lot of confusion in social sciences and history. When Hayek edited Capitalism and the Historians, basic counting was used to challenge the prevailing opinions about the immiseration of the working class during the Industrial Revolution. And more recently Deirdre McCloskey stresses in her history of the Great Enrichment that you cannot answer empirical questions philosophically so we have to count when doing responsible history. But she is still doing history.

In a recent paper Robert Margo (2017) explored the progress economic historians have made over the last generation within the economics profession. How he measured progress, however, was whether economic historians looked in their work more and more like economists and less like historians. In other words, if you pick up an article in the Journal of Economic History (JEH) and compare it to the Journal of Political Economy (JPE), what do you see in terms of words, formulas, tables and charts? By Margo’s measure, what has happened over the past 20 years is that the form and substance of articles in the JEH and the JPE have become increasingly indistinguishable from each other. Economists count, and economic historians count, they don’t read so much as they once did, they don’t contextualize as was once expected, and they certainly don’t look for meanings associated with the human condition historically contemplated. Economic historians in essence have ceded history to the historians; they do economics but by counting and calculating with data from the deeper past, rather than the more recent past or the present. But let’s not get confused. These economic historians are economists and thus they approach their research and produce results that look the same as their fellow economists. Margo tells us not to fear, though, since economists have better employment opportunities and higher compensation. He is, of course, right on this last point. But what happens if economic historians abandon history?

We already know the answer – we get new histories of capitalism, which focus on exploitation of man, monopoly power, alienation, and periodic crises. Capitalism is plagued by inefficiency, suffers instability, and is characterized by injustice. (see, e.g., Beckert 2015) Effectively addressing these arguments requires more than counting. It might be important here to remember that there is a world of difference between being heard and being listened to, so in the exchange between historians of capitalism and economic historians of capitalism, insisting on counting by the economists while ignoring all the other issues — including the problems with power, politics, culture, and the long shadow of past imperfections — means one might be heard, but not listened to, and moving the intellectual climate of opinion requires earning such a hearing. Counting, in other words, is a necessary component to the explanation of capitalism, but not sufficient.

History is more than counting. It requires contextualization and comparative analysis, and to do that sound economic theory is critical. Enter once again Mises’s Theory and History – economists need to be economists, not mathematicians and statisticians, in order to do economic history. The problem with the contemporary histories of capitalism is weak theory more so than innumeracy, though innumeracy doesn’t help. Too many historians of capitalism are arguing that the legacy of slavery and colonization benefited the West and not trade, technological innovation, and entrepreneurial creativity. They see the world in negative sum terms, they misunderstand the institutional preconditions for realizing productive specialization and peaceful social cooperation among diverse and often distant people. In short, they have a bad theory of economic development and the role that a private property market economy plays in that process of material progress. Deirdre McCloskey refers to economic development as “trade-tested betterment,” and much of the modern history of capitalism is allergic to this way of thinking about it. History is too important to be left to the “historians.” I am arguing that this bad intellectual state of history is a consequence of economists abandoning economic history and the intellectual history of classical and modern political economy and economics to their intellectual enemies.

But the problem that must be addressed isn’t limited to bad history. The intellectual history of economics is also experiencing its own crisis. Reading the history of economic theory can be divided into at least 3 broad approaches: (1) internal logic of arguments in texts, (2) ideas in context, and (3) hermeneutics of suspicion. There are other fine distinctions that can be introduced such as Whig, contra-Whig, antiquarian, and instrumental (see Boettke 2000). The classic task for economists from prior to Adam Smith until the post-WWII era was for economists to engage in close textual readings of arguments and to assess the strengths and weaknesses of different arguments on their own internal consistencies, the comparative analysis with other arguments, and the correspondence with the issues in the world which the theories were being developed to address. Economics evolved during its first 150 years as a philosophical subject. During the past 70 years, economics has shifted from being a philosophical science to becoming a mathematical and statistical science. The transformation of economics can actually be traced to the turn of the 20th century, but it was not completely accomplished until after WWII — as prior to that the more philosophical thinkers existed side-by-side with the more scientific thinkers in the elite corners of the profession. Amartya Sen argued in On Ethics and Economics (1987) that economics as a discipline exists on an intellectual production possibility frontier between economics as a moral science and economics as social engineering. Since he was interested in reintroducing ethical discourse back into economics, Sen argued that the economics profession was operating in the corner solution of social engineering and it was time for the profession to trade-off and move back toward moral sciences. Of course, he doesn’t advocate a corner solution in that direction either, but just significant movement back toward political economy and social philosophy.

Studying the shifting intellectual landscape of economics is the task of historians of economics. The exercise of intellectual history in political economy and economics improved when close textual reading was complimented by contextualization in the same way that political theory was contextualized with the Cambridge School of intellectual history, our understanding of the evolution of ideas improved. Scholars and scientists do not work in a vacuum, but instead always within an intellectual, organizational, social, and cultural context. Ideas are not necessarily context dependent, but the way ideas are communicated, which ideas coalesce into a consensus and which ones get cast aside are context dependent. This is why the evolution of ideas is never smooth, but always full of fascinating twists and turns defined by missteps, wrong turns, and the continual re-evaluation of arguments. Thus, the potency of the contra-Whig position in intellectual history. The Whig tradition of intellectual history basically argues that all that is good in the ancients is embodied already in the moderns, so there really is not much value besides antiquarian tastes in reading Adam Smith or David Ricardo or John Stuart Mill.[3] But what if due to the misallocation of intellectual resources that results from fads and fashions in science, there are ideas from the past that have not exhausted their evolutionary potential? If this is the case, then ideas from an older thinker can remain part of our extended present, and could in fact be a vital input into contemporary theory construction.

As economists, this disruptive and disjointed evolution of ideas becomes even more fascinating when we place ourselves in the model of intellectual development itself. The economics of economics, or more broadly the sociology of science matters. In one sense, it is a natural outgrowth of putting ideas in context, but in another way it opens up another avenue of research and exploration. We can study the incentive structures of science and scholarship, including how professional activities in any discipline are organized. Funding, positions and prestige must be addressed alongside of the assessment of ideas and their application to the world of affairs. Again, our understanding of the process of scientific advancement is improved when we explore the “organization of inquiry”. But here is a critical point to remember about an economics of economics, to be effective it has to be grounded in sound economic theory. Sound economics doesn’t focus our attention on matters of personal psychology and strict adherence to preference and motivation based explanations. Instead, the focus of attention is on the systemic incentives that alternative institutional arrangements produce in commercial and non-commercial life, including science and scholarship. In an analysis so pursued, the advancement of science and the tracking of truth does not depend on the individual motives of those involved, but on the institutional incentives and the ability of the organization of inquiry to produce a constructive conversation in which views are subject to continual contestation.

The honorable tradition of liberal political economy sought first and foremost to explore the technical principles necessary to understanding how alternative institutional arrangements impact our ability to realize productive specialization and peaceful social cooperation. In developing this line of thinking, political economists adopted a sort of analytical egalitarianism — a basic behavioral symmetry. People are people, my Mom used to say, but so did my teachers James Buchanan and Gordon Tullock. Same players, different rules, results in different games.[4] The critical point to take away from economics is that its explanatory thrust is to be found in institutional variation, not in behavioral differences among people. Methodologically and analytically, the question then becomes how best to study institutional variation.

But isn’t it easier to focus on behavioral differences? Bad people do bad things. Stupid people do stupid things. So we want to avoid bad and stupid people, and trust in good and smart people. Such a perspective is problematic on many levels. But for our purposes here, let’s just state that once we move away from institutional variation, and instead look for our explanations in differences among people we invite the caricature of that we sort individuals into (a) those who are stupid, (b) those who are evil, and (c) those good and smart people who agree with me. Such a division doesn’t result in learning, and when taken to its limits destroys the trust among scholars in the quest for human understanding.

The real problem with preference based/motivation inferring explanations of intellectual history as opposed to close textual exegesis and the attempt to place ideas in their historical, philosophical, cultural context, is that personal psychology of ideas comes to be stressed rather than an assessment of arguments and adjudication of evidence for positions. Not only is personal psychology stressed, judgment is passed on the motives inferred (often never proven as this is often impossible to do so). So the hermeneutics of suspicion questions not arguments and evidence. And, in much of the literature on neoliberalism, such as the work on Milton Friedman, F. A. Hayek, James Buchanan, and the legacy of MPS, the logic of their arguments is ignored, the empirical evidence related to their arguments is unexamined, but the supposed financial motivations and “will to power” takes center stage and intellectual positions are tied to remote political realities such as Chile, or the global financial crisis.


This is our current intellectual climate. The history of capitalism by historians has resurrected arguments that were effectively challenged from Hayek’s Capitalism and the Historians to Nathan Rosenberg and L. E. Birdzell’s How the West Grew Rich, and of course the monumental trilogy by Deirdre McCloskey on the Bourgeois Era. And, the history of neoliberal thought and economics in general suggests that these theories and approaches didn’t emerge in The Clash of Economic Ideas as my colleague Larry White so brilliantly demonstrates, but instead through manipulation of the scientific process through unjustified positions of power in intellectual affairs obtained through the unwarranted intrusion of funding sources that have corrupted science. The Merchants of Doubt (2011) style of argument isn’t limited to nuclear power, tobacco, and climate change, but now spreads to the new learning in Chicago Price Theory and Industrial Organization, monetarism and macroeconomic policy, public choice and constitutional political economy, and Austrian economics and libertarianism. The House of Cards conspiratorial style of “story telling” about intellectual history identifies “evil geniuses” who devise “master plans” and find the funding from “dark money.” Along the way they have not only absconded with prestigious academic positions that are well funded and led to Nobel Prizes, but they have also ruined national economies and destroyed the hopes and dreams of the average individual, not to mention the oppression of their opponents.

These works, whether we are talking about Philip Mirowski or Avner Offer or Nancy MacLean, are easy reading. The story flows easily from their pen. They are entertaining narratives about the intellectual world in the same way as seeing Frank Underwood in the Netflix series House of Cards manipulate the politics of D.C. to rise to the Presidency. But just as House of Cards doesn’t not portray political reality accurately — it is not a public choice analysis of democratic processes — these critiques of the ‘neoliberal thought collective’ fall short of accuracy. As my good friend Michael Munger (2008, 2015, 2018) said of one of these works, it exalts “truthiness” over truth. Among a certain group of progressive intellectuals who have been challenged by the developments in economic theory associated with the Austrian, Chicago, UCLA, and Virginia schools that effectively poked holes in the Keynesian consensus in the decades following WWII with a rejuvenated microeconomics to challenge the hegemony of macroeconomics, and the innovative development of property rights economics, public choice economics, law-and-economics, market process economics, the ability to dismiss rather than having to provide counter arguments was (is) just too attractive. If they can discredit and delegitimize arguments why would they need to address them? Again, Frank Underwood has no legitimate claim to the office, right?

But rather than end on a note of scolding those I disagree with most about the intellectual descent into an unproductive hermeneutics of suspicion, I want to warn us – classical liberal scholars and intellectuals – about falling into a similar path. There is an allure, after all, to those ideological blinders, but it is a tragedy whenever we are seduced to pursue narratives that exhibit only truthiness at the expense of truth-tracking. We must always remember Bastiat’s dictum – never fear an artful criticism, but always fear an inept defense. Nothing worse, Bastiat warns, could happen to a good cause. True liberalism is a good cause.

A key to Leonard Liggio’s approach to history and intellectual history was no doubt the story of liberty versus power, but Leonard didn’t take the easy way out. He didn’t argue that the economics profession, e.g., was plagued by corruption and confusion due to major funding by those in political power. Austrian economics faced barriers, but Leonard Liggio’s argument was to aspiring professors – face those barriers head on and just do better work — work that others in the profession will have to pay attention to, and work that tracks truth. Never settle for comfortable “truthiness” that fits with your ideological priors. So yes, we should acknowledge that when we put economist in the model of economics itself, it does matter in terms of the structure of incentives within the organization of inquiry. But that doesn’t exhaust the narrative we tell; it is just one component. Our primary focus begins with the most charitable interpretation of arguments, a close and critical examination of the arguments, and a careful weighing of the evidence. As I said, Leonard taught us all to be better and to stress scholarship, to find common ground with other scholars left and right, and to practice praxeology to the high standard set by Mises, Hayek, Kirzner, etc. in our quest to understand the human condition. To do that we must recognize the tragedy that results when ideological blinders block scholarship and our continual learning. Let’s live up to the standard Leonard set as a life-long learner, and follow his lead in how he encouraged us to pursue and produce scholarship of impact, be teachers that excite, and be mentors that connect to a growing intellectual network.

Thank you.


[1] See the three-part biographical sketch on Leonard at the Liggio Project

[2] I owe the recognition of this basic dilemma that economists face to my colleague David Levy. A classic example of this is told in Levy’s How the Dismal Science Got Its Name (2002). Most commentaries uninformed about the economic content of the disputes of the time believe the name derives from some Malthusian observation or the disciplinary insistence on scarcity and constraints, but Thomas Carlyle and his literary cohort was attacking classical economists for their analytical egalitarianism and their refusal to accept a natural hierarchy of mankind. It was the classical economists, Levy documents, that opposed the institution of slavery, as well as argued that the Irish were not inherently inferior to the English. Thus, if economists abandon our history, we let others who are either unaware or unwilling to tackle the arguments that were actually made by economists in the time being discussed. Instead, they read back into the past the discourse that they are most familiar with and fits most comfortably into their ideological priors.

[3] The classic statement of Whig history of economic thought is George Stigler (1969) in “Does Economics Have a Useful Past?” In 1976, McCloskey asked “Does the Past Have Useful Economics?” part of my purpose here is to recommend that our contemporary situation demands that we re-examine these questions and re-engage the interrelationship between theory and history in our study of the past and the present.

[4] See the first chapter in the public choice primer, Government Failure written by Tullock and republished in 2005. Chapter one is titled “People are People: Elements of Public Choice Theory.” Also see Buchanan’s “Same Players, Different Game: How Better Rules Makes Better Politics” (2008).


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