Jesse Walker’s Reason blog post, Memo to Stockholm, references Timothy (Wirkman) Virkkala’s suggestions to thoughts about the Bank of Sweden’s upcoming Nobel Memorial Prize for Economics. I posted a comment there:
Hans-Hermann Hoppe notes in an interview:
among Austrian economists there has been some speculation why Hayek’s recognition came so late (in 1974). One highly plausible explanation is this: If the prize is awarded for the development of the Mises-Hayek business cycle, then as long as both Mises and Hayek are still alive you can hardly give the prize to Hayek without giving it also to Mises. Yet Mises was a life-long opponent of paper money (and a proponent of the classical gold standard) and of government central banking–and the prize money for the economics “Nobel” was “donated” by the Swedish National Bank. Mises, then, so to speak, was persona non grata for the “donors.” Only after Mises had died in 1973, then, was the way free to give the prize to Hayek, who, in contrast to his “intransigent” master and mentor, had shown himself sufficiently willing to compromise, “flexible,” and “reasonable.”
Update: A friend told me Friedman was in favor of Mises getting a Nobel; I expressed disbelief, so he quoted to me from p. 353 of Ebenstein’s Hayek bio:
Friedman has written in response to a query from Mark Skousen: “I believe Ludwig von Mises was certainly of a quality that would have made him an entirely appropriate recipient of a Nobel Prize” in Economics (Friedman letter to Mark Skousen, March 5, 1996).
I don’t get this. How can Friedman think this if Mises’s methodology was so much at variance with Friedman’s positivism? See, e.g. Friedman’s comments, as quoted on p. 273:
In 1995, Friedman made the following comments about Hayek’s and particularly Mises’ methodological positions:
I never could understand why they were so impressed [at LSE] with the lectures that ended up as Prices and Production, and I still can’t. As of that point, he [Hayek] had not freed himself from the methodological views of von Mises. And those methodological views have at their center that facts are not really relevant in determining, in testing, theories. They are relevant to illustrate theories, but not to test them, because we base economics on propositions that are self-evident. And they are self-evident because they are about human beings, and we’re human beings. So we have an internal source of final knowledge, and no tests can overrule that. Praxeology.
That methodological approach, I think, has very negative influences. It makes it very hard to build up a cumulative discipline of any kind. if you’re always going back to your internal, self-evident truths, how do people stand on one another’s shoulders? And the fact is that fifty, sixty years after von Mises issued his capital theory–which is what’s involved in Hayek’s capital theory–so-caled Austrian economists still stick by it. There hasn’t been an iota of progress.
It also tends to make people intolerant. If you and I are both praxeologists, and we disagree about whether some proposition or statement is correct, how do we resolve that disagreement? We can yell, we can argue, we can try to find a logical flaw in one another’s thing, but in the end we have no way to resolve it except by fighting, by saying you’re wrong and I’m right.
On the other hand, if you take more like a Karl Popperian approach, an approach which says what we do in science is to offer hypotheses about the consequences of certain events and, if we disagree, we test those by trying to seek empirical evidence that contradicts our predictions–if you and I disagree, we have another way to solve our problems, resolve our differences. I say to you, what facts can I find that will convince you I was right and you were wrong. You say to me, what facts can I find that will do the opposite. Then we go out and observe the facts. That’s how science progresses.
Now, as I said, I believe that Hayek started out as a strict Misesean, but he changed. The more tolerant atmosphere of Britain, then subsequently of the U.S., and his exposure to a wider range of scholars, led him to alter that position.
Does this sound like someone who would respect Mises enough to think he deserves a Nobel Prize?
Update: See also Hoppe’s comments about Hayek, Mises, and the Nobel prize in his Mises University 2001 lecture “Mises and the Foundation of Austrian Economics” (starting at about 1:10:20 or so), where Hoppe notes that f you want to win the Nobel peace prize, it helps if you are a mass murderer; if you want to win the economics Nobel prize, it is always of advantage if you have contributed to ruining various countries’ economies or you have written completely irrelevant mathematical treatises that are of no concern to anyone whatsoever (he also notes that the economics prize is donated by the Swedish central bank and the committee members are life-long appointees and except for two years social democrats have run the show so that it is roughly predictable who can possibly win the prize; thus, James Buchanan has advocated a 100% inheritance tax and is hailed as a free marketeer, so he can win; Milton Friedman, a free marketeer who fought for paper money all his life, endorsed the negative income tax (guaranteed income), educational vouchers (like food stamps for education), can of course win. I.e., socialists can win and be presented to the public as free marketeers.Hoppe notes in another interview:
A&K: Supposing you sat on the Nobel Prize committee for economics, who would you consider deserves the Prize–please exclude yourself.
HHH: Anyone of the leading lights associated with the Ludwig von Mises Institute. However, the nominating committee is filled with statists, and the prize itself has been established by the Swedish Central Bank, and so, given the fact that Misesian economists are uncompromising free-marketeers and oppose in particular any form of monetary socialism (central banks), their chance of ever winning the prize is virtually zero.
A&K: Why would you nominate them?
HHH: Because Misesian – Austro-libertarian – economists have the best grasp of the operation of free markets and of the detrimental effects of government (states) on the formation of wealth and general prosperity. This is illustrated by the fact that Mises, and those economists following in his footsteps, have by far the best record in predicting the outcome of socialism, of the modern redistributive welfare-state, and in particular of government-controlled paper-money regimes and of central banking.
Jesse Walker mentioned to me that Hayek didn’t publish The Denationalization of Money until after he won his Nobel, and wondered if Hayek really supported central banking at the time he collected the prize. Comments?