I’ve been enjoying listening to a reading of Murray Rothbart’s Economic Thought Before Adam Smith. I’m even finding the slow monotone of the the reader quite a pleasure. Rothbart is a contemporary adherent of the Austrian School of Economics; this book examines the development of economic thought in the context of philosophy, theology, and history from the Greeks down to Adam Smith (I’m about halfway, in the 13th to 16th centuries.)
The Austrian school proper was founded by Carl Menger, with Principles of Economics, published in 1871. His work resurrected the Scholastic-French approach to economics, an approach which can be traced back to fifteenth century Scholastic followers of St. Thomas Aquinas at the University of Salamanca in Spain.From these Scholastics came the recognition of the existence of economic law and many of the basic features of economic activity, including supply and demand, inflation, and the subjective nature of economic value. They were (relatively) pro-market, in favor on individual economic freedom to trade and make contracts and opposed to taxes, price controls, and regulations which inhibited enterprise.1
There have been a few particular ideas which stand out in the course so far. Rothbart compares his Austrian school views on economy with those in the tradition of Adam Smith by noting that the school of economic thought he follows originated and established itself in Catholic countries. In Catholicism, he maintains, consumption is the goal of production, and consumer utility and enjoyment in moderation are valuable, all of which leads to a subjective utility theory of economics, that the value of an item is determined by its value to an individual consumer. Adam Smith, on the other hand, from a Calvinist country, with its stern emphasis that hard work is a great good in itself and consumer enjoyment merely a necessary evil, proposed the labor theory of value, wherein the value of an object is tied up in the amount of labor that went into its production. This insight into how the religious traditions can influence economic thought in fundamental ways, is quite engaging, and more so when we imagine applying it to other areas of thought.
Rothbart makes a second interesting point when he contrasts Scholasticism with Calvinism in the way they view God, and in the consequences of those views. For Scholastics, God can be approached and apprehended by all of man’s faculties, not only faith, but also reason and the senses. There is a natural law which governs our world, which can be discovered by reason and which we can use to guide our actions. Calvin, on the under hand, saw man as too depraved to have reason capable of approaching God in this same way. God was outside of man’s faculties; for men, then, God is unknowable and seemingly arbitrary. Nor can reason apprehend natural law, and this diminishes its value. Rothbart mentions a few consequences of this. Calvinists, unable to use reason to guide their lives, either had to rely on instructions, which they found in a strict adherence to the Bible; or had to rely on revelation. Rothbart details some of the almost humorous, if tragic, consequences which followed the revelations of certain individuals and their adherents. A second consequence is that the early Calvinists (and Lutherans) supported the absolutism of the state and the mingling of state and religion.
Rothbart also makes what I thought was a rather provocative critique of the scientific method. After decrying the split between reason and empiricism in later European thought, with Descartes and the continental rationalists practicing reason divorced from empiricism; and English empiricists concentrating on empirical facts without applying reason; Rothbart maintains that modern scientific method is hobbled by emphasizing empiricism without man’s reasoning faculties. I wonder what more a scientific method informed by reason might accomplish.
My understanding of Austrian (and classical, Adam Smithian) economics is thin, but I suspect that my political leanings lean away from the direction of the Austrian school. Nonetheless, Rothbart uses reason to interpret facts about economics, bringing in history, theology, and politics to bear on the investigation in a manner much as I hope to do in examining and thinking about the political mind.