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Larry White on the History of Free Banking

A History of Free Banking – Larry White from Mises Institute of Canada on Vimeo.

Posted Nov 15, 04:13 PM by Kevin Rollins · Ask and answer.


Communicating Quality Economics: Scholasticism versus Pietism

…structural scholasticism can in principle strive to avoid being scholastic; it can strive to be oriented toward meaningful issues and relevant public discourse. That goal would likely be better achieved, however, by undoing the scholastic structure.

— Robert Nelson, Scholasticism Versus Pietism: The Battle for the Soul of Economics, Econ Journal Watch, Volume 1, Number 3, December 2004, pp 473-497.

Here Nelson is making a distinction between two possible courses of action for those who would make economics less scholastic. On one hand, those economists for reform could work within the current system and try to make that system itself geared towards a pietistic effort. Alternatively, they could break the current structure. Nelson indicates he thinks the latter is more productive. In my view, this second option is clearly better. The scholastic hierarchy constrains the ability of those within it to change the hierarchy. This is a feature of the system. To see radical change, an exogenous pressure must be applied.

What form will the new pietistic economics take? What about the Martin Luther analogy? Do we need a man of the church to break the church, or can people outside the church hierarchy do so by simply ignoring it? Or if “ignoring” is too strong, perhaps we could say “not waiting for hierarchical approval, even while drawing on the insights of the hierarchy and tradition itself.” Or perhaps even better, “supplanting the hierarchy.” Would pietistic religion have achieved what it did without a Martin Luther figure? Similarly, can a pietistic economics go forward without one or more such figures?

I would argue not. The support of those who have been in the system lend credence to the actions and thoughts of the laity. Moreover, the reformer-scholar can provide guidance and intellectual ammunition to the laity. He can keep them from making the worst arguments. But, the pietistic scholar cannot make his reforms alone. The community of local lay reformers was critical. In the section, “How to Avoid Topical Scholasticism,” Nelson quotes Thomas Oden’s description of community-based action:

In the small communities in which they gathered, the “priestly functions were [instead] practiced by the laity.” The theology of Pietism “was oriented toward the practical implementation of behavioral change rather than its theoretical aspects”

Nelson observes:

Pietists did not impose strong theological preconditions for participation in their community discussions; they were willing to draw from many religious traditions in their intense search for a proper individual relationship with God.

To me this indicates the need for local economic “churches”, run by laymen, which aim at policy reform. The Libertarian Party is the closest organization I can think of that is doing something like this, however poorly. Perhaps a network of local “think groups”, ala Ralph Nader’s PIRG, could be organized. They would have the explicit purpose of developing useful ideas for individuals and their communities to live better and more justly. By helping people to develop better thinking on their own, economists who support this effort would be leveraging their knowledge to make much broader changes to the political and social climate. And equally important, the community of lay thinkers would provide a growing base of support for these economists, who would thus have a structure to stand on outside of academia. This translates into more freedom to criticize the system.

Adam Smith is used by Nelson as an example of the kind of notoriety an economist can achieve by supporting the pietistic notions of economics. Smith “worked outside the academic world and was writing in the eighteenth century for the full literate population of Britain” (477). But, nonetheless Smith was an academic. Would he have been able to achieve the notoriety if he hadn’t had his status as a member of the academic elite? In fact, would he himself had the wisdom to say what he did without having gone through the process of becoming an academic?

While at at APEE last year, a Catholic economist and I had a multiple hour conversation about the limitations of various libertarian ideologies. His criticism resoundingly focused on the mistaken animosity of libertarians to hierarchy in general. He said it was the belief in atomistic intellectual self-suffiency that led libertarians to reject God, tradition, and corporate life. I don’t think this applies so much to libertarian economists, many of whom were in attendance at the conference. There was a strong feeling that the system constrained their personal ascendence as well as the possibilities for liberty. They did not reject the system and as academics were inherently invested in and empowered by the system. It was rather a lament, that they could not succeed more within it.

But, this concern about the individual being as able as anyone to find and apply the truth without external help certainly applies to many members of the Libertarian Party, which abounds in great foolishness of thought1 and action. Can these wildcats be learned some social graces? Nelson asks, “How technical is economic knowledge?” (478). In other words, can solid economics only be practiced by those who have made a significant investment in learning the details of the theory? I don’t think so. Attaining a broad swath of good reasoning is often good enough to avoid the worst policies and errors. People with good enough reasoning can smell a dead rat in political discussions. With enough knowledge, they at least know which big gun to bring in to provide the details of the theory. Consider the value of a layman quoting FA Hayek, or adopting the friendly disposition of David Henderson or Russ Roberts rather than the extremely radical and ugly (and dangerous?) ideas of someone like Hans-Hermann Hoppe.

We need economists who consciously work to aid laymen to avoid promotion of unsound theories and guide them to better ideas.


1 I will have to write an essay someday about the zany ideas I’ve heard from Libertarian Party members. One party member proposed that the best way to do ballot access petitioning was to have members dress in garish outfits (like clown suits) with bold lettering that announced “Libertarian Petitioner”. The theory was that people would see the outfits, understand the purpose, and react accordingly (run away in terror?).

Posted Mar 18, 06:10 PM by Kevin Rollins · Ask and answer. [1]


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Macro Midterm 2, UMW, Fall 2011
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Communicating Quality Economics: Scholasticism versus Pietism

Posted Jan 8, 12:40 AM by Kevin Rollins ·


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