The Use and Abuse of the History of Economic Thought within the Austrian School of Economics

Nobody should believe that he will find in Smith's Wealth of Nations information about present-day economics or about present-day problems of economic policy. Reading Smith is no more a substitute for studying economics than reading Euclid is a substitute for the study of mathematics. It is at best an historical introduction into the study of modern ideas and policies.

—Ludwig von Mises, “Why Read Adam Smith Today?” (1953)

Essays on the history of economic thought are to be appreciated not only purely as history. No less important is the fact that they enable us to re-examine the present state of economic theory in the light of all attempts earlier generations made for their solution. In comparing our point of view with past achievements and errors we may either detect flaws in our own theories or find new and better reasons for their confirmation.

—Ludwig von Mises, “The Economic Point of View” (1960)

In an examination of the paradoxical situation that characterizes the study of the history of economic thought within the economics profession, Mark Blaug (2001) points out that those attracted to the serious study of economics are usually of one of two types of mind.¹ One is drawn to economics either because it affords the application of technical mastery in mathematics or because one is of a philosophical bent and is concerned with the policy relevance or the social philosophical relevance of the discipline.² If, Blaug conjectures, one is attracted to economics for philosophical reasons, then the history and evolution of ideas move to the center of scholarly attention. On the other hand, if one is more mathematically inclined, then the study of the history of economic thought is viewed as not vocationally useful. The majority of economists are of the mathematical bent; however, there is a small (but vocal) minority who are of the philosophical bent. The history of economic thought as a subfield within economics provides an intellectual “home” for these economists. As Blaug (2001, 147) points out, “It is a striking fact that conferences in history of economic thought attract Austrians, Marxists, Radical political economists, Sraffians, institutionalists and post-Keynesians in disproportionate numbers, all non-neoclassicals or even anti-neoclassicals who have no place else to go to talk to scholars outside their own narrow intellectual circles.” History of economic thought has become an intellectual haven for heterodox economists (see tables 1 and 2).³ Blaug further speculates that the foundation for heterodoxy can be found in a certain type of mind and style of thinking about economic issues, which provides common ground among the heterodox despite their many differences.

This factual situation within the history of thought community in economics has been a cause of concern for many intellectual historians of economics. The reason for the concern is the potential misuse of the history of economic thought by the ideologically or methodologically dispossessed within the economics profession. The subfield of the history of economic thought ought to uphold high intellectual standards: standards that meet those set in the field of intellectual history (and history of science) in general. A legitimate contribution to the history of economic thought is made not by people who simply engage arguments historically, but instead by people who write original intellectual history. The fact that history of thought meetings attract the dispossessed is in fact an undesirable situation because it reflects an unwillingness by scholars within the field to insist on rigorous standards. Just because someone is identified with a heterodox group of scholars in economics (say, Austrians) and tends to engage arguments historically doesn't mean that the history of thought community should embrace that person. Instead, whether a particular member of a school of thought considers himself or herself a historian of ideas...