A Conversation With Jeff Deist About the Austrian School

Jeff Deist, president of the Mises Institute, recently spoke with The Free Market about his introduction to the Austrian School and his work with Ron Paul.

Mises Institute: How did you become interested in Austrian economics?

Jeff Deist: My journey with Austrian economics and the Mises Institute began in 1992. I was fortunate to have a good friend, Joe Becker, studying in the graduate economics program at University of Nevada, Las Vegas. Joe was a burgeoning Austrian scholar, and of course had chosen the program strictly because Murray Rothbard was on the faculty. At the time a small group of Austro-libertarian students had assembled in Las Vegas to study under Murray. With the addition of Hans Hoppe, UNLV clearly had become the top economics program in the US for graduate students interested in Austrian training. I was able to attend a few of Murrays course lectures, which not surprisingly (to those familiar with his lifestyle) were held in the evening! Needless to say the lectures were fast-paced and filled with references beyond the mainstream, giving only a hint of Murrays vast range of knowledge. Encouraged by Joe and his excitement for Rothbards teaching, I decided to explore further.

At the time I was already a committed libertarian, but lacked any real intellectual framework to integrate free market economics with ethics, philosophy, law, and political liberty.

Remember that much of what passed for free-market or libertarian thought at the time remained mired in 1980s Reaganite clichs. Supply-side economics was still the focus of the Right, with many otherwise sensible people talking about the Laffer Curve and maximizing tax revenue! Quasi-utilitarian arguments flourished in the economics mainstream, ceding the intellectual high ground in favor of arguments that free markets merely worked better. Law and economics theories were trendy, with strict liability tort models offered as the supposed remedy to judicial overreach and externalities. Tax cuts and enterprise zones typified the weak-tea fiscal policy ideas coming from the political class, even as Clinton outfoxed the elder Bush by co-opting limited government rhetoric. Of course both Alan Greenspan and the Fed were wildly popular across the political spectrum, with some pundits promising not only an end to poverty (through monetary policy) but an end to history itself. Democracy, so we were told, had triumphed.

Against this backdrop Austrian economics opened up a whole new world for me. It became clear that antipathy toward government and support for free markets was not enough: it was necessary to understand and explain the harm caused by all kinds of government intervention in economic terms, which is to say, human terms. Reading breezy libertarian books and articles could never substitute for more rigorous academic self-study.

MI: Describe how your interest in Austrian economics evolved.

JD: Like so many before me, I began reading the great works of Mises, Hayek, and Hazlitt. These works demolished, point by point, the case for communism and socialism, while warning against the abandonment of the old liberal order. They also effectively predicted the failure of social democracy models that had replaced monarchies in Europe and constitutionalism in America. Once one understood and accepted Austrian teaching regarding the fundamental choice between laissez-faire and statism, the conclusion became clear: there was no third way.

Traditional Austrian explanations of capital, interest, and time preference refuted the tired yet sometimes subtle fallacies and class arguments underpinning not only Marx and Keynes, but even most neoclassical schools. The subjective theory of value showed that consumers, not intrinsic material or labor components, determined value. Austrian business cycle theory explained not only particular booms and busts (such as the S&L bust), but also the broader need for commodity money and the inherently destructive effects of central banks. Meanwhile, Austrian methodology taught that markets are not mysterious, anonymous, or inhuman: on the contrary, they simply reflect human action, however imperfect, in economic terms.

Perhaps most importantly, the Austrian School helped me understand the impossibility of socialism as an economic system. By demonstrating the critical need for price signals and profit/loss feedback among business owners, Austrians demolished the entire range of modern arguments for state economic planning.

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A Conversation With Jeff Deist About the Austrian School