Ep. 52: The Dismal Science (with Steve Horwitz)

Anthony Comegna: Steve Horwitz is the Distinguished Professor of Free Enterprise at Ball State University’s Economics Department. He has a PhD in economics from George Mason, and his most recent book is Hayek’s Modern Family: Classical Liberalism and the Evolution of Social Institutions. In the interest of more clearly identifying the relationship between his highly theoretical [00:00:30] discipline and our evolving set of humane histories here on Liberty Chronicles, Professor Horwitz joins us now.
Welcome to Liberty Chronicles, a project of Lib​er​tar​i​an​ism​.org. I’m Anthony Comegna.
So, Steve Horwitz, you’re an economist. [00:01:00] What use have you found for reading history?

Steve Horwitz: Oh, I think there’s so many, and I think one of the great things, one of the great flaws in graduate education in economics these days is that young economists don’t read enough history. For me, when I think two things. I think one of the things economics does is to help us explain history, right? That it becomes a theoretical framework that we can use to understand the world as it has been and the world both in the distant past, but recently as well. I think in some [00:01:30] sense, one of the whole purposes of economics is to be able to tell those historical stories.
But I also think good economics, or economics rightly done, recognizes that there’s a small core of things that are universally true that economists talk about, but when we want to apply those to the world, we need to know what the institutional framework is like, what the actors were thinking at the time, all of those things. Economics by itself, economic theory by itself, can’t explain [00:02:00] much of anything, and what economists need historians and history for is to sort of fill in those details and help us figure out how our theory applies, and why the story that we want to tell and the historians want to tell might have relevance. So it’s both a purpose of economics, but in some sense, you can’t even tell a full economic story without all of that institutional detail, with all of that sense of what people were thinking, why they acted the way they did, and so on.

Anthony Comegna: Even a simple [00:02:30] example like “How much do you like chocolate ice cream versus vanilla ice cream?” is full of all sorts of historical baggage and details that go into decision-​making.

Steve Horwitz: Sure, right, and again, if we want to understand, the economist’s question might be “Why does one flavor of ice cream cost more than the other?” Right? Knowing that sort of thing, and understanding all of that history and institutional detail, is what we have to bring to the party to be able to have those economic explanations.

Anthony Comegna: Now, I’m curious about some [00:03:00] of the economist culture here.

Steve Horwitz: No, no one should be curious.

Anthony Comegna: Well, in-

Steve Horwitz: Morbidly curious.

Anthony Comegna: In economics departments, how do they talk about historians? How do they think about that discipline in relation to their own?

Steve Horwitz: I think that’s a really interesting question. Part of the problem of having been a George Mason graduate, and in the world of Austrian Virginia political economies, I think we tend to be much more respectful about history and historians than many of our colleagues do. [00:03:30] I think the real answer is, and kind of your economist off the street doesn’t pay that much attention to history at all. They’re busy model-​building, and trying to come up with an answer to a puzzle that often abstracts away from the questions that historians find interesting.
I’ll just give you one example. I had this exchange in Economic Journal Watch with Gauti Eggertsson, who’s a big macroeconomist over the Great Depression, and one of the things that was driving me bonkers in this exchange was that he had this interesting model, and was trying to explain why [00:04:00] the Depression lingered and all this, and yet he was either ignorant of or ignoring important historical details that I think made that model not nearly as applicable, or at least suggested that it was problematic in some [inaudible 00:04:15] ways that he just didn’t see. But I think that so many economists go so fascinated by the model, and the aesthetics of that mathematical model, on one end, that that they don’t pay attention to history.
On the other end, you start playing with data, [00:04:30] and you start running regressions, and the danger there, of course, is always you’re just, whatever comes up with the strongest correlation, the biggest R-​squared, whatever you’re looking for, becomes the thing, right? And you’re not actually paying any attention to the primary sources, and to sort of digging in, saying, “What did people think? What did people say? How did they perceive this particular set of issues?”

Anthony Comegna: At economics conferences, did they have some choice words for historians in the open bar setting?

Steve Horwitz: You [00:05:00] know, it’s interesting, it’s not historians, it’s sociologists who tend to be the target group. I think historians are sort of neutral. I don’t think they’re seen often as a positive nuisance, but the problem is that they’re not seen as a benefit, as a group that we should be talking to and engaging with. And again, some of the best work in economics, I think, has been the really, really good economic historians who are willing to dig into that, whatever one thinks of the particulars. You mean, [00:05:30] McCloskey, Joel [McClure 00:05:31], I could keep going.
Even[inaudible 00:05:34] depression, all of these folks have done this kind of really good work and I think among the friends of mine, Bob Higgs’ work, for example, here’s someone who is not afraid to go digging into history in the ways that historians do and doesn’t think that the traditional economic variables speak for themselves. I think that’s the important thing to me is really going digging.
A former colleague of mine has a new book out, [00:06:00] has been writing on the economic effects of race and he has just dug deep. He’s an economist, but he’s dug deep into these primary sources of things like wills and legal documents to sort of get at this stuff. To me, that’s amazing work and I think that’s what we need more of. Telling historical stories. For people who are sympathetic to markets and classical liberalism, I think one of the reasons that [00:06:30] our ideas have struggled is that we have not been able to tell good historical stories. We’ve lost the battle over interpretations of history and the best example of this is the Great Recession.
Up comes the Great Recession and everyone reaches in to their pocket and pulls out their old high school history Great Depression narrative, which we know from historians and economists and others is problematic, but there it was. All of a sudden we’re back to this, you know, Hoover stood by and did nothing, FDR did all these wonderful things that were all motivated by modern deficit … [00:07:00] I mean, no. The story’s much more interesting and complicated than that and the bad guys are more evenly distributed.
But everyone reached right into their pocket for that narrative and I think that’s a problem and I think telling better historical stories, which is why McCloskey’s work, maybe it didn’t take three volumes, but I’m glad she did, ’cause it’s a glorious story, whatever its flaws in its details.

Anthony Comegna: Well, I have to say, it sounds like economists feel [00:07:30] better about historians than historians do about economists.

Steve Horwitz: That’s probably true. Notice I didn’t ask what you guys say [inaudible 00:07:38]. But I suspect it’s probably the kinds of things are fair criticisms, right?

Anthony Comegna: I think it’s the same kinds of criticisms that you, an Austrian, would have for mainstream economics.

Steve Horwitz: Right, right.

Anthony Comegna: It’s all top down with, like you said, model-​making and basically imposing behavior on the past.

Steve Horwitz: That’s right.

Anthony Comegna: As opposed to investigating from the bottom up and building narratives of stories that way.

Steve Horwitz: Right, and I [00:08:00] think for me, those are us who are friends with my good friend Pete [Betky 00:08:05], sometimes refer to the Good Pete and the Bad Pete and what we mean by that is that I think those of us who are Austrians and who are deep into economics, at one level we really like those sort of rational choice stories, and thinking about Pete Leeson’s work here, for example, where we want to say, “There’s a [inaudible 00:08:22]. Yes, we can reinterpret all these historical things as people just maximizing subject to constraint.”
And I don’t think that’s [00:08:30] automatically wrong. I think it’s useful to start thinking that way. But then I think one has to say “Okay, is this just a sort of just so story? Let’s really go in and look at the primary sources and see. Was it really this way?” And I think if you can back it up those ways then you’ve got a really interesting story, and if you don’t, then you’ve got something interesting as well, but it’s going to be more complicated.

Anthony Comegna: Now since you brought up Pete Leeson let me say, he was on the show some while ago, a couple dozen episodes ago now [00:09:00] and we talked about pirates, of course. I’m not totally sold on this point of his and maybe you can sell me on it. People are so incredibly bizarre and the more you look into them and study them at an intense, eight hours a day sort of level for years on end, you just are swept away in their bizarreness. They’re so weird. They have strange ideas, strange [00:09:30] notions about causality and the nature of the universe, strange ideas about forces that transcend what we can measure and observe directly and things like that and it just seem so bizarre the way people behave sometimes, what their motivations are.
They’re totally foreign to us, especially the further in the past you go. And you know, it strikes me that we might not be able to call these people rational utility maximizers in all these cases. [00:10:00] Some pirates had totally joined up because they had a death wish. They were driven to this point of, I don’t know, not quite insanity but something very close. They’re right there on the border being pushed and pushed and pushed and pushed by the world constantly.Maybe they’re not trying to maximize utility anymore.

Steve Horwitz: Yeah, so here’s my view of these things. I think when you see a practice surviving for some significant period of time, I think it’s not a bad sort of first cut [00:10:30] to say, “There must be something to this. There must be some sort of functional type story that you can tell, that this process, this institution, this behavior has survived.” You think about some of the stuff in Pete Leeson’s new book, right?
So as a first cut saying, “You know what? Let’s try to understand this as rational behavior and maybe we can understand it, that it survived that way.” I think even if you can construct a good explanation there that doesn’t necessarily mean every actor involved with it is there for behaving … The rationality is sort of built [00:11:00] in to the process, into the system, into the institution that it’s solving some social problem, even if the actors themselves might be in it for the wrong reason. [crosstalk 00:11:09] Right, the non-​rational, in the way that you’re talking, reason.
So I think that’s the really tricky part for good subtle economists is to kind of navigate that distinction and say, “You know, this is sort of Vernon Smith’s kind of ecological rationality story.” That these practices and things have survival value to them and that it’s not so much that [00:11:30] we are rational but that we engage in what amounts to rational problem solving because we operate within institutional frameworks that give us the information and the incentives we need to solve whatever that problem is.
It’s sort of moving back and forth between the perspective of the actor and that systemic perspective, which is, I think, what good historians do to, right? Sort of becomes a way to not have to commit to, “Oh, everybody’s a calculating machine,” [00:12:00] sort of story.

Anthony Comegna: But in any case, whatever people are doing, they’re experiences come from a long string that’s basically built from the bottom up again, and if you do enough digging, you come to understand pretty clearly why people are doing the things that they’re doing.

Steve Horwitz: Yeah, and I think one of the things that, when you understand economics and a little bit of cognitive psych and these sorts of things, you kind of recognize that look, at some level, human beings share some stuff. We’re [00:12:30] products of that same evolutionary process, we’ve got the sort of, if you want to use these metaphors, the hardware of our brains share a lot of things. But we also all go through unique life experiences and we know from how the brain operates the brain has plasticity and people change and they think differently as they move along and I think again, finding out where those universals and call it human nature if you want, but whatever you want to call it, where those universals are and then where the unique pieces of human beings are [00:13:00] and sort of using that as our way to look at the world, I think is the way to go here. I think a good subtle economics can handle that. I’m not sure mainstream economics has the subtlety, the subtlety of a of a sledge hammer, to do that well.

Anthony Comegna: So then what do you think really is the relationship between our two disciplines here?

Steve Horwitz: I think they inform each other. It’s interesting that you ask this question by the way, I’m in the process of re-​reading Mises’ Human Action cover to cover for the first time since maybe graduate [00:13:30] school. So I’ve been thinking a lot about these questions. So I think, in a Misesen vein, I don’t think you can do good history without some understanding of economics.
On the other hand, economics becomes sterile if it doesn’t have history informing it and history as the thing it wants to explain, right? And by history, I include the very recent past we call policy applications and things like that. So [00:14:00] I think there is this relationship and I think the division of labor is that economists have to learn from historians and read history. I mean at graduate students, I want so, “You want to do a dissertation, first thing you should do is go read a bunch of history about this thing. Figure out, whatever this event or this thing, how it came to be, how it works. Then, as you read, think about how might the tools of economics help you tell a story about this event or this period or whatever this thing is, that others haven’t [00:14:30] told or that adds something to it that others haven’t told.”
So I think you can’t do that without history. On the other hand, you can’t do it without the economics either. So I think, if it were a healthy relationship, each side would recognize that aspect of the other. But again, I speak here as someone who does unorthodox economics and I think if you sort of grab the random economist of the street, I think the answer is more, “Yeah, I read some history on the side, but I’m not sure what it does.” Or to [00:15:00] them, history is simply econometrics and all we do with history is we go out and we find the statistical data and we look for correlations and we hope we have a theory to explain them.
I think that, again, that’s not valueless, but it doesn’t allow us to get inside and understand the actor’s point of view to engage in that hermeneutic, interpreting and explaining behavior and its consequences, intended and unintended.

Anthony Comegna: Can the facts [00:15:30] of history overturn the laws of economics?

Steve Horwitz: Oh, that’s the big question, isn’t it? Here’s where I become a kind of hardcore Austrian and say not that sort of core propositions and I think it’s a fairly small number. I wrote about this for Cato Unbound back in 2012 and a whole thing on praxiology and history that several of us were part of and I think there’s a small core of ideas that are really truths about how humans [00:16:00] that are either hardwired into us or truths about how humans behave in the world that history and other things can’t overturn. We can’t even make sense of the world without them.
But once you get outside that, however, everything becomes in some sense institutionally contingent. So there we can learn things from history, we can learn things from cognitive psych and I think the behavioral economics revolution has made us think about some things. So we can learn from other disciplines about where that line is. [00:16:30] I do think it’s an interesting counterfactual. I think Mises, for example, and other perhaps economists who liked his work 75 years ago, 100 years ago, would have had a broader scope of things that they thought and certainly even today there are more Rothbardian Austrians who would put a lot of things into that apriori box.
I think a careful reading of Mises suggests it’s not as many as that, but it’s not zero. I think [00:17:00] when Mises and others talk about that apriori, it’s that organizing framework. We can’t even begin to understand the world, not just as economists or historians, but as actors we can’t even understand the world until we recognize that there’s those universals that are just truisms about how humans perceive and organize the world.

Anthony Comegna: So then if you think that you see somebody in the historical record pursuing their less valued wants first, does that mean the economics [00:17:30] is wrong or have we severely misinterpreted the records on that?

Steve Horwitz: Right, I think it’s the latter. I think the economists first instinct to is to say, “Okay, something more complicated is happening there. We’re missing some piece of the historical puzzle or some piece of historical information that would help us make sense of this.” Again, I think all the stuff that Leeson’s doing in the new book is sort of looking at these things that seem so irrational on first glance, but in fact we can explain rationally. It’s fun and it’s counterintuitive and all that, [00:18:00] but I think it’s important too that we at least interrogate those things that seem to not follow what we imagine, what economists imagine about how people behave and ask ourselves, “Is this really the case?”
And that gets us into looking closely at the details to see whether or not it is. I think there’s a sense in which, when we understand both the economics here, but some of the cognitive stuff and I think reading things like Hayek Sensory Order and so on, we think about how brains work and how our minds work. I’ve been reading Daniel [00:18:30] Dennett these days too. This notion that we have these principles that organize the world for us and things that are in that core of economic theory might be part of that, that simply can’t be overturned because they’re just built in to how we perceive the world.

Anthony Comegna: So historians should read at least, let’s say, Austrian economics to find that core-

Steve Horwitz: Well, everyone should.

Anthony Comegna: Well, sure.

Steve Horwitz: But yes, yeah. I mean, I think that would be an interesting exercise for me to sort of look. [00:19:00] Two things, I think one for historians to read Austrian economics, but also to look at the kind of applied and historical work that Austrians have been doing for the last 30 years. I think, may he rest in peace, Don [Levois 00:19:13], one of his great contributions was to encourage us who were there at George Mason in the mid and late ’80s to do this kind of work, say, “You know what? You gotta do history. You gotta out and get your fingers dirty in the archives or in this or in that, and tell better stories.”
And you look at the dissertations that were produced under Don, they were for [00:19:30] the most these kind of applied historical, we want to overturn a tale type bits of economic history. I think that was really, really valuable. It led to all kinds of debates about the nature of economics and so on, but you strip away those debates, some of which I think were a folly of youth, the core point of what economics is for is to go out and explain the world outside the window and to tell better historical narratives, right? Yes. It’s the same time that McCloskey [00:20:00] was working the rhetoric of economics and this whole argument that in fact it is all about better and worse storytelling and you can kind of see how all that stuff was coming together 30+ years ago.

Anthony Comegna: Yeah, I mean, if you go to IHS events or Libertarian conferences or whatever, you can barely tell the difference between a professional economist and a professional historian. They do the same things, basically.

Steve Horwitz: Right, and I just finished this book a couple years ago on the family and the fun part for me was reading all the history. [00:20:30] I mean, it wasn’t always fun. I can think of a couple days where I spent reading these histories of 18th centuries families and the lives of children and how they dealt with their kids, poor families, and I was like, “Okay, enough now.”
But that to me was the really interesting part and the intellectual excitement of that whole project working on family stuff for me came from that ability to say, “Look, here’s people telling stories that I think are good stories, but I can add to those stories because I have this [00:21:00] understanding of these economic ideas, or these broader things that can come to it that the historians doing this work didn’t have.” So you’re building off that story, but you’re adding to it and really, for me, more intellectually exciting ways.

Anthony Comegna: Now I have two sort of propositions that I want you to evaluate. Something I’ve gotten from studying Austrian economics is the idea of marginal value and utility here. All value [00:21:30] is established on the margins or in the marginal units of something. I think that in a way all historical change happens on the margins. On the margins of society, marginal considerations that people make during their day, every time they’re choosing to change their condition, they’re doing so based on marginal evaluations. Marginal populations usually end up making the biggest differences, the most profound revolutionary changes or what have you. What do you think about [00:22:00] that?

Steve Horwitz: Yeah, I think that’s right, it seems to me. This is argued, perhaps one reason why Tyler Cowen and Alex Tabarrok named their blog Marginal Revolution. My friend, Tom Bell, has been known to say that he’s in favor of revolution, and then pause, at the margin. I think there’s a profoundly important point there that you cannot engage in wholesale social change. You can’t swap out one set [00:22:30] of institutions for another. A very Austrian point, right? That institutions evolve and any social change that we want to push for is going to be, I think, evolutionary, not revolutionary.
It’s true, I think, that there are sometimes crisis points, where we reach a turning point and we find ideas on the shelves, to use Friedman’s sort of image, that come in and can have a kind of turning point, but even there, you’re never going to replace. I mean, we saw in the 20th century what happens [00:23:00] when you try to replace institutions wholesale. I do think equally going the other way. If we think about moving toward a freer society, it’s not as though we can just kind of rip out all the wires at once. We have to think carefully about how to get from here to there and you’re not going to change people’s ideas all at once. Persuading people of the value of markets and limited government and so on, itself happens on the margins by multiple exposure to good stories and good ideas.
So yeah, I [00:23:30] think that’s right. I think one of the, again, sort of follies of youth is that you’re impatient and you think you can make change happen quickly and I think the older I get, the more patient I am and part of me is somewhat sad about that because I’d like to see change happen more quickly, but at the same time I think it’s just the reality of existing in a world of human beings that you can’t change things overnight.

Anthony Comegna: Yeah, something I’ve been struck by in my personal research is how many revolutionaries who wanted to be were actually really regretted [00:24:00] what they did and the cost that it put on people around them. Now what about the idea that all of history is really a mass of individual conspiracies?

Steve Horwitz: Oh, so all right. I have a really fascinating relationship with conspiracy theories in general. Part of, sort of indirectly, why I’m a libertarian has to do with conspiracy theories. When I was a kid in my mid-​teens, I was reading anyone [00:24:30] who had a theory, a weird wacky theory, of the world. So like Bible prophecy and Erich von Däniken Chariot of the Gods. I was just fascinated by all that stuff. Then I got fascinated by the Kennedy assassination and there was a period, I don’t know how old I was. I can tell you this, it was before I was 16 because I can remember clear as day coming home from school when Reagan was shot in 1980, coming home and hearing the news and like yelling at my mom, “Tell [00:25:00] me you put the VCR on and taped this. We need to have visual evidence!”
Suddenly I’m [inaudible 00:25:06], like no one else has a VCR. It was early in the VCR years, but I was in the middle of it then and so I think all of that stuff, it so happened that when I began to read libertarian stuff one of the first books I read was a book called Restoring the American Dream by Robert J. Ringer. I was working at the library at the time and it came across the desk and I looked at this thing and I said, “Oh, here’s another guy with a wacky theory.”
[00:25:30] Turns out, it was a good one. So that got me interested and it was because of that sort of fascination by all this weird stuff. So I conspiracy theories fascinate me. Here’s why I think libertarians are attracted to conspiracy theories. Because for many of us the world is such a messed up place and it’s so obvious to us how messed up it is and how much better it could be if we only did [00:26:00] these other things. Of course someone is messing it up on purpose. Some evil actors must be frustrating the good, right?
I mean, if you have any belief in the good of ideas in human beings, why are things so messed up? I think, by the way, the antidote to that is public choice theory and these sorts of things which help us understand how we could get in such a bad place even if people aren’t evil, right? That institutional structures guide people’s behaviors in those ways. So I think at one level [00:26:30] libertarians are attracted to it because it helps explain why we haven’t won. There’s these evils and we’re not powerful enough. Our ideas are still good and we’ve expressed them well, just these guys, they have all these magical …
On the other hand, libertarians should be the last people to believe in conspiracy theories because at some level it suggests that people have the ability to manipulate social outcomes according to their intentions. I mean, I wrote a piece for FEE years and years ago called Conspiracy Theory Socialism, which is sort of making this point [00:27:00] that if you really take that version of conspiracy theory, socialism should work. The difference is you just have the bad guys with conspiracy theories. Socialism’s just a good guy conspiracy theory, if you really believe that people can manage outcomes and manipulate us like puppets that way.
I think that’s all in there. I also think we’re forced as libertarians to confront conspiracy theories because there are people attracted on the fringes for whom, and this has become certainly a bigger problem with the alt-​right and all these sort of stuff. [00:27:30] So we can’t ever avoid it and I find them endlessly fascinating. I also find they’re resistance to falsifiability to be one of the most intellectually amusing things to watch. The lengths people will go to say, “Well, the evidence you think undermines it actually shows that it’s …” You can think of the way people create this epistemic bubble around conspiracy theories.
I think that’s really important for libertarians to understand and think about and realize that, “Hey, wait a second, we don’t want to do that around our own [00:28:00] ideas. We want to make sure that we’re making claims that are in that broad sense of the term, falsifiable, that we’re backing with evidence. That we don’t just automatically reinterpret every piece of evidence.” And go back to our earlier conversation, it’s a problem mainstream economists have is reinterpreting every piece of history to automatically fit the new classical model, right?
I think we just have to be able to step back and look at our own biases that way.

Anthony Comegna: Now, on the one hand, we know that an actor’s designs are never [00:28:30] the same as the outcome of a situation or at least you can’t count on it.

Steve Horwitz: Right, and that’s the important insight that people sometimes forget about public choice theory. Public choice theory is an unintended consequence of story about how bad things happen that are not the intention of the actors. And that’s different, because people would say to me, “Well, wait, isn’t public choice just a version of conspiracy?” No, it’s not. Conspiracy theory seems to me to neglect unintended consequences in a way that public choice doesn’t.

Anthony Comegna: Well, maybe [00:29:00] it’s more correct to say public choice is a story about why conspiracies go wrong.

Steve Horwitz: That would be another way to put it, right.

Anthony Comegna: ‘Cause I mean, part of the Austrian credo here is that individuals act always to satisfy their own interests and to change their condition to one more satisfactory. So in some sense at least, everything is a conspiracy to improve yourself, people you value, their condition or whatever. But things definitely don’t [00:29:30] always work out that way.

Steve Horwitz: Right, and the other problem, I call it sort of the Rodney King problem, is are people incompetent? You can’t think people are both incompetent and brilliant enough to hide their incompetence at the same time. So conspiracy theories face that too. For people who are skeptical, who don’t even think that the government can deliver the mail, that it could hide a multi-​year, generational conspiracy of powerful people. What? [00:30:00] You can’t even deliver the mail, but somehow you kept all this a secret?

Anthony Comegna: Secret space program.

Steve Horwitz: Yeah, right, exactly, right. So to me that’s another problem here.

Anthony Comegna: Let’s run down, then, a couple conspiracy theories that you think are true.

Steve Horwitz: Oh, okay. It’ll take a lot of work to convince me Oswald acted alone. I still, I can’t. I stopped reading that stuff sometime in college [00:30:30] and so people are going to hear this and start sending me emails saying, “Well, you haven’t read this book and this book.” Yeah, I have and all right. But to a young 14 or 15 year old there were all kinds of things that just pushed all the buttons there. Even today part of me, I’m not sure I really believe that he didn’t act alone, but it’s like a hurdle that has to be overcome.
That’s the one, if you want to think about a [00:31:00] traditional conspiracy theories, that’s the one. And it’s only because I think that I was so primed at just the right age to think critically about it. I should, I suppose, since I’ve written a lot about it, I should say a word or two about the Fed here, right? Because there’s plenty of people who want to make that point too, that this was, again, some kind of conspiracy theory.
Okay, but it’s a really nice example of what we were just talking about, which is it’s true, there were some bad actors who thought that they could get control of the monetary system and [00:31:30] do bad things with it, but their intentions didn’t play out the way they thought because the creation of that beast happened through the Democratic political process and the real problem with the Fed is not that it’s the creation of four guys or six guys at Jekyll Island who dreamed it up, but that it was a political compromise. That was this thing that is a decentralized central bank and all the problems that come with it.
So here’s an interesting case where there’s some evidence that makes it look like the conspiracy theory story is true, [00:32:00] yet when you dig deep enough into it, you realize, no it’s actually just really the same old public choice story that about the ultimate result doesn’t bear out the intentions of those within the political process. Now, compromise is necessary and you get these things that don’t work very well, and the Fed does real damage, but that’s not because the Rothschilds are behind or apparently now the Rothschilds control the weather, as we’ve learned in the last couple weeks.

Anthony Comegna: [00:32:30] Now, speaking of that story, by the way, what do you think are some of the more important conspiracy theories that we should, whether true or not, that we should take seriously because enough people find importance there?

Steve Horwitz: Sadly, all the ones that you might just call the tropes of anti-​Semitism. I mean, this is personal for me at one level, but I do think it’s not just personal and it’s getting worse again over [00:33:00] the last, really I think, decade. This sort of whether it’s just people thinking it’s funny to troll with this stuff. I don’t think it’s just that. I think we really are seeing a return of this belief that Jews have not just, and what’s interesting this time, not just manipulated the world of finance in the ways that have historically been the case, but the new one is that Jewish ideas are responsible.
That Marxism is a Jewish thing. Socialism is a Jewish thing. [00:33:30] The Frankfurt School is a Jewish thing.

Anthony Comegna: Globalism.

Steve Horwitz: Globalism, right, right. I’m happy to call myself a globalist and a cosmopolitan-

Anthony Comegna: Oh, here we go.

Steve Horwitz: I know, right. I’m happy and people tell me, “You can’t say that.” No, they’re not. They shouldn’t be anti-​Semitic. We should not let those words go. But anyway, yeah, I think this kind of stuff, again, they are conspiracy theories because the form that anti-​Semitism [00:34:00] frequently takes is this kind of thing, where Jews secretly manipulate and control not just, again, the material world, but now the world of ideas.
I mean, there’s the versions of other anti-​Semitic stuff like blood liable and all that, which isn’t quite conspiracy theory. Nasty in it’s own right, but I do think that’s the one that I’m seeing these days and frankly, that’s going to lay all the blame on the right. I think our friends on the left have to be careful here too in the stories they tell about AIPAC and the Jewish lobby [00:34:30] and all this kind of stuff. The sort of whole ‘influence of Israel’ thing verges into conspiracy theory at time from people who ought to know better.
And again, it’s just more complicated than that and one of the things I tend to say to people on the left who bring that stuff up is “Have you actually gone to a temple or synagogue recently and asked the people there what they think of those issues? ‘Cause ask 40 people, you’ll get 50 different opinions.” It’s not like there’s this monolithic Jewish [00:35:00] view of Israel and of the Middle East and that whole conflict. For American Jews it’s really difficult and troubling and to have reduced down to this story about money and AIPAC and whatever, it’s not as nasty as the other stuff, but it’s in the ballpark.

Anthony Comegna: If you’ve liked what you’ve heard today from Professor Horwitz, then keep a close watch on Lib​er​tar​i​an​ism​.org. We will very soon be launching our latest Guide Series. None other [00:35:30] than Steve Horwitz on Austrian economics.
Liberty Chronicles is a project of Lib​er​tar​i​an​ism​.org. It is produced by Tess Terrible. If you’ve enjoyed this episode of Liberty Chronicles, please rate, review and subscribe to us on iTunes. For more information on Liberty Chronicles, visit lib​er​tar​i​an​ism​.org.