A small thought on Austrian economics

Austrian economics is generally antithetical to state actions supposed to make things better. No, it isn’t anti-state. There are somethings that must be done and which can only be done by government thus they must be done and by government. But beyond that the general assumption, the ethos if you wish, is that asking government to do it means it’ll get buggered up.

That’s not an unfair description of the base idea. It’s also not an unfair view to reach if you’ve been governed by Austrians for a few centuries.

The problem with this as an explanation is why in buggery do Russians always seem to desire more government?

16 thoughts on “A small thought on Austrian economics”

  1. I wish I could find the paper on this, but there’s a whole thing how much individual liberty there is, and about how your society is balanced in terms of land vs industry.

    The less your country depends on land, the more democracy it has. If it’s all about making money from land, it’s about using violence to get the land. Which means building big “tribes” to bring the fight. And those tribes want a payoff for winning, so you do that with lots of lovely government.

    Russia is something like 50% oil in terms of exports. It’s a heavily land-based economy. More so than anywhere else in Europe, so you’re going to get a lot more bullshit projects created to reward people.

  2. Why just accuse the Russians? Truth is the electors of many modern democratic states seem to vote for more government (most of them?). My suspicion is it’s hardwired in. In the DNA of a species evolved group cooperation. Socialism is the default setting. It takes sophistication to accept that what optimal in small groups, where all know each other, doesn’t scale up.

  3. With Russia it’s cultural – when Brits were asked to choose their greatest they went for Coalition leader Churchill and an engineer who was a quarter foreign I think. Ask the Russians and Peter and Catherine the Great will be way out in front.
    The more western countries like strong institutions and weak leaders. In the USA around 3 million voters went for a Dem Pres and a Rep Congressmen or Senator – heroes all, because they at least get the principle of keeping the bastards in check. With Russia the culture is to like strong leaders. They might not like the current strong one, but the replacement should be another strong one.

  4. Austrian economists such as Eugen von Bohm Bawerk and Joseph Schumpeter (both pbuh) didn’t really last long as finance ministers because there’s nothing that civil servants hate more than some smart-arse coming along and saying “Look you idiots, this is how it’s supposed to work.”

    Actually the A-H empire was not badly run economically. The collapse on the home front during The Great War was partially caused by all the horses ( as well as the workers) being drafted into the army, which heavily affected agricultural production, coupled with the Hungarian side of the empire refusing to “export” food to the Austrian side and a massive refugee crisis that overwhelmed the state.

  5. Ottokring

    “Actually the A-H empire was not badly run economically. ”

    True. If you have to live in an empire, and we all do, effectively, then the Hapsburgs are a good choice. Very pleasant while it lasted.

  6. BiS: Is it even optimal in small groups? According to William Bradford in “Of Plimoth Plantation” the Pilgrim Fathers tried to run the colony along socialist lines but that failed:

    All this whille no supply was heard of, neither knew they when they might expecte any. So they begane to thinke how they might raise as much corne as they could, and obtaine a beter crope then they had done, that they might not still thus languish in miserie. At length, after much debate of things, the Govr (with ye advise of ye cheefest amongest them) gave way that they should set corne every man for his owne perticuler, and in that regard trust to them selves; in all other things to goe on in ye generall way as before. And so assigned to every family a parcell of land, according to the proportion of their number for that end, only for present use (but made no devission for inheritance), and ranged all boys & youth under some familie. This had very good success; for it made all hands very industrious, so as much more corne was planted then other waise would have bene by any means ye Govr or any other could use, and saved him a great deall of trouble, and gave farr better contente. The women now wente willingly into ye feild, and tooke their litle-ons with them to set corne, which before would aledg weaknes, and inabilitie; whom to have compelled would have bene thought great tiranie and oppression.

    The experience that was had in this com̅one course and condition, tried sundrie years, and that amongst godly and sober men, may well evince the vanitie of that conceite of Platos & other ancients, applauded by some of later times;—that ye taking away of propertie, and bringing in com̅unitie into a comone wealth, would make them happy and florishing; as if they were wiser then God. For this comunitie (so farr as it was) was found to breed much confusion & discontent, and retard much imploymēt that would have been to their benefite and comforte. For ye yong-men that were most able and fitte for labour & service did repine that they should spend their time & streingth to worke for other mens wives and children, with out any recompence. The strong, or man of parts, had no more in devission of victails & cloaths, then he that was weake and not able to doe a quarter ye other could; this was thought injuestice. The aged and graver men to be ranked and [97] equalised in labours, and victails, cloaths, &c., with ye meaner & yonger sorte, thought it some indignite & disrespect unto them. And for mens wives to be commanded to doe servise for other men, as dresing their meate, washing their cloaths, &c., they deemd it a kind of slaverie, neither could many husbands well brooke it. Upon ye poynte all being to have alike, and all to doe alike, they thought them selves in ye like condition, and one as good as another; and so, if it did not cut of those [164]relations that God hath set amongest men, yet it did at least much diminish and take of ye mutuall respects that should be preserved amongst them. And would have bene worse if they had been men of another condition. Let none objecte this is men’s corruption, and nothing to ye course it selfe. I answer, seeing all men have this corruption in them, God in his wisdome saw another course fiter for them.

    Probably one of the best demolitions of socialism.

  7. “and an engineer who was a quarter foreign I think”: I’ve seen it suggested that the ludicrous choice of Brunel was a feat accomplished by students at Brunel Uni.

    In a nation that produced (for instance) Newton, Faraday, Maxwell, and Darwin; Watt and Stephenson – no sane man could choose Brunel.

  8. Bloke in North Dorset

    Are the EU apparatchiks better than the Hapsburg Emperors? Close run thing, I’d think.

    Quite a few of those apparatchiks fancy themselves as Mitternich judging by the way they act on the international stage.

  9. Dearieme, you are partly correct but don’t forget the fact that Jeremy Clarkson did an amazing job of selling Brunel to the public, so a fair proportion of the Top Gear demographic also piled in for him.

  10. The last Tsar fatally turned his back on the reforms which would have allowed Russia to develop normally, with the result that the country was overtaken by the barbarities of socialism in which – amongst all the other victims – anyone deemed to be middle class was murdered; and it’s the despised middle class which is critical in the development of property rights and liberty for all.

    And socialism destroys civil society so thoroughly that, when it finally collapses, there is little hope of a free-market economy emerging. Putin’s mafia-style kleptocracy is the almost inevitable legacy of socialism. They are Lenin’s bastards.

  11. Brilliant list by dearieme to be fair.
    Two of that lot, Watt and Stephenson, magnificently adorn the Keleti Station. I suppose that if had to and were pushed to choose one engineer to represent them all… you’d have to go with IKB, imv of course.

  12. wat dabney.

    “The last Tsar fatally turned his back on the reforms which would have allowed Russia to develop normally, with the result that the country was overtaken by the barbarities of socialism in which – amongst all the other victims – anyone deemed to be middle class was murdered; and it’s the despised middle class which is critical in the development of property rights and liberty for all.

    And socialism destroys civil society so thoroughly that, when it finally collapses, there is little hope of a free-market economy emerging. Putin’s mafia-style kleptocracy is the almost inevitable legacy of socialism. They are Lenin’s bastards.”

    It doesn’t matter if it’s a Tsar, communist party, theocracy or someone like Putin. If somehow the Tsars had won, the discovery of oil would have entrenched their power for decades just like it did for the communists. The Soviet Union would have collapsed within 10-15 years without the oil. They had a shot at democracy when the wall came down and within a decade it was gone.

  13. @Tractor Gent

    “Is it even optimal in small groups”

    Nice choice of example.

    Having said that, agriculture seems particularly badly set up to be handled in a purely socialist way. But BiS is right that humans evolved to be small groups of hunter-gatherers not as farmers. And anthropologists do seem to think that in those small groups, there is generally not a strong sense of “private property” like there is for agriculturalists. (Perhaps not the same thing as “socialism” but as BiS says, it’s close conceptually.)

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