I used the verb “remind” instead of “teach”, because I recognize that the lesson is not new to the Austrian School. But, I do think that many Austrians (and not necessarily those in academia) do need to be reminded; but, this doesn’t mean that all Austrians need to be reminded.

A few academic examples of more mechanized Austrian discussions of economic growth include some of the essays in Making Poor Nations Rich, edited by Benjamin Powell. The book gives a large role to the entrepreneur, but the treatment is mechanistic in that it talks more about institutions and environment. But, understandably, some of the most obvious examples are non-academic, including many Mises Daily articles published on this website. I’m not saying they’re bad articles, or that they are wrong; rather, I’m suggesting that some of them don’t place enough emphasis on the role of creativity and the intellectual role of the entrepreneur (some Mises Daily articles do, though, and when I was writing the blog post I thought it would be more appreciated by this crowd, since many articles published here do emphasize entrepreneurial creativity and the role of ideas).

Why I think McCloskey is so unique, especially in the approach she uses in Bourgeois Dignity, is because she makes the issue a bit more artificially black and white. At least, that’s how it comes off to me. She writes off the role of things like capital accumulation, property rights, et cetera, to place the reader’s attention wholly on the issue of entrepreneurial creativity. This is why, to me, her recent writing comes as an important reminder of the more human side to the story of economic growth.

A cursory glance through Human Action, for example, reveals that Mises has a much more profound insight into the entrepeneur’s role and the “human element” in capital accumulation than we find in McCloskey’s musings. According to Mises:

“Capital is a praxeological concept. . . .It is a product of reasoning, and its place is in the human mind. It is a mode of looking at the problems of acting, a method of appraising them from the point of view of a definite plan. It determines the course of human action and is, in this sense only, a real factor. It is inescapably linked with capitalism, the market economy. It is a mere shadow in economic systems in which there is no market exchange, and of no money prices of goods of all orders.” (Human Action, Scholars edition, p. 512)

In other words, according to Mises, under socialism, there are physical capital goods, but no “capital, ” which is a product of the intelleclual operation of entprepreneurial calculation.

Regarding the decision to capital accumulation, Mises highlights the entrpreneur’s role and specifically denies its automaticity:

“[T]he employment of the gross proceeds of production, their allotment to the maintenace of capital, consumption, and the accumulation of new capital is always the outcome of prurposive action on the part of entrepreneurs and capitalists. It is not ‘automatic’; it is by necessity the result of deliberate action. And it can be frustrated if the computation on whch it was based was vitiated by negligence, error or misjudgementof future conditions.”

These points have been made repeatedly by Mises, Hayek and Rothbard through out their works. I do not see what McCloskey’s essay adds to any of this. Perhaps, his essay will inspire those Austrians who missed the lesson the first time through and who have conjured up some “simplified Austrian model” to go back and carefully reread these works.

The mechanistic view of economics is part of the problem, but I think the main problem was forging economics in the shape of Darwinian evolution. After Darwin, every science recast itself to demonstrate the Darwinian principles of gradual change caused by random events over long periods of time. Economic development became inevitable, slow, gradual, random change. Austrian econ seemed too much like intelligent design and we can’t have that in science. But entrepreneurial alertness is nothing but creative, intelligent design. People matter; ideas matter. Nothing that involves humanity is inevitable because people choose.