The Austrian School of Economics

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I wanted to become an academic economist after discovering the Austrian school as an undergraduate. This prompted an interest in economic methodology and I’ve written articles that explain (and defend) methodological individualism; and argued that recent developments in the Austrian school have extended the use of thought experiments to create an entire family of comparative and counterfactual analysis research strategies. I believe that there is currently a second revival in Austrian economics, and wrote a brief survey of contemporary developments in the Austrian school of economics, signalling that: (i) the amount of Austrian research and the number of Austrian researchers is growing exponentially; (ii) good Austrian economists are not being marginalised by the economics profession; and (iii) there have been significant advances in our understanding of economics made recently.

If you are interested in learning more about Austrian economics, I recommend:

Pedagogy


In December 2020 one of my favourite teachers, Walter E. Williams, passed away. Although my research in pedagogy is focused on innovative methods I always try to remember the key lessons of (i) knowing your content; (ii) delivering it well; (iii) conveying empathy and passion. Walter excelled at all three.

I’ve utilised experiential evidence to argue that my dissertation advisor, Peter J. Boettke, utilises a successful pedagogical philosophy that is common to being both a sports coach and graduate teacher. I also argued that  the “case method” is a pedagogical method that should be of particular interest to economists.

As an instructor of managerial economics I try to employ innovative pedagogical techniques. I have created an app to help students learn about the financial crisis, and a simulation to understand the EU debt problem. I’ve also tried to champion the Dynamic AD-AS model.

I have written the following cases:

  • 2021 “Fanelli’s Pizza”, The Case Centre
  • 2019 “La Marmotte”, Sage Business Cases Originals
  • 2018 “The Suitcase Case”, ESCP Working Case
  • 2018 “Taxi for Professor Evans”, ESCP Working Case

ABC2K

Mises-and-Hayek


I believe that Austrian business cycle theory is both highly important and severely misunderstood. I’ve provided a simple framework for comparing Austrian approaches with Monetarism and Keynesianism, surveyed increasing attention to Austrian ideas in mainstream media, and claimed that it deserves a place at the top table of policy debate. Contemporary economic commentators tend to dismiss the Austrian position, so I have clarified what Austrian business cycle theory does and does not claim as true.

In a broad and wide ranging theoretical article I’ve attempted to look at Austrian business cycle theory in light of rational expectations, in particular at the role of heterogeneity, the monetary footprint, and adverse selection in monetary expansion. I’ve looked at the upper turning point of the boom bust cycle, and written about how access to finance impedes entrepreneurship. Empirically, I’ve argued that the monetary base still matters and found an estimate of the natural rate of interest for the UK economy.

I’ve attempted to disentangle the heterogeneous nature of entrepreneurship with some interesting empirical applications. I’ve used the Sunday Times Rich List to claim that those who fell out of the top 100 as a consequence of the credit crunch were disproportionately likely to have been recent new entries. And I’ve used Property Ladder to illustrate ways in which the 1994-2007 UK housing boom is a manifestation of the Austrian theory of the business cycle. I’ve also written a book chapter that utilised the concepts of “regime uncertainty” and “Big Players” to the financial crisis in the UK.

I have applied the Austrian theory of the business cycle to assess the Irish economic “miracle”, and asked whether it’s an example of a tiger economy or bengal kitten.

I’ve also written a “Choose your own adventure” style account of the UK financial crisis, which I turned into an iPhone App (coverage here).

I have also attempted to contribute to the literature on free banking, both in terms of pointing out scholarly flaws in criticisms of fractional reserve banking, and defending the legitimacy of (voluntary) demand deposit contracts, (twice). Also, here is a pamphlet with a simple proposal to reform the banking system.

I’ve also published many reports and blog posts through Kaleidic Economics.

Cultural Theory

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“Between private, subjective perception and public, physical science there lies culture, a middle area of shared beliefs and values”

Douglas & Wildavsky, 1982:194


My desire to understand corporate culture in a broad way, rooted firmly in social anthropology, led me to the Grid/Group (or “Cultural Theory”) typology pioneered by Mary Douglas. I was fortunate to meet her several times before she passed away, and we worked on an application of Cultural Theory to organisational behaviour. I have attempted to bridge cultural theory with an epistemic and institutional approach to economics, and highlight some methodological parallels with Austrian economics.

Douglas 1970 - GG1

Some of the examples of the usefulness of a Cultural Theory approach to organisational culture are internal prediction markets, and whistleblowing. In terms of the latter, I provide an explanation for why legislative and internal systems typically fail, and suggest ways to nourish a culture of dissent as a strategic advantage. My work on whistleblowing led to several trade journal articles and some media coverage.

I also believe that Cultural Theory can help to explain the fascinating social dynamics that occur in Office Christmas Parties. Just after the launch of ‘The Office‘ there was a fly on the wall documentary called ‘The Armstrongs‘. You can find some episodes on YouTube, but the pilot episode (filmed in 2003) isn’t available. After I blogged about the series I received a DVD through the post from one of the production team. This is important because it focused on the Christmas Party. One of the best ever cinematic moments occured during an Christmas Party scene in Tinker Tailor Soldier Spy. And indeed it’s no coincidence that the high point of the UK series of ‘The Office’ was Tim and Dawn’s kiss, which occurred at the Christmas Party. My ambition was to conduct an anthropological study of the Christmas Party. One day

I still have plans to run an MBA course called “Corporate Cultural Theory“. I am collecting cases and if I find sufficient interest (either from co-instructors, universities, or potential students) then I will pick it back up again. For an indication, see my 2007 article: “Towards a Corporate Cultural Theory“. It was published as a working paper by the Mercatus Center, and it also appeared in a Semiotics course on Cultural Theory.

Subjectivist Political Economy

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During my graduate studies I specialised in the field of Public Choice. I took classes with Charles Rowley and Gordon Tullock, and attended James Buchanan‘s seminar. However I felt there was a tension between the “Virginia” school and “Chicago”  school. I’ve argued that the latter approach reached a dead end, and advocated a distinctly subjectivist approach to political economy based on the core insight of the “Epistemic Primacy Thesis”. An example of this is the difference between radical and rational ignorance – if people acquire information through “browse” rather than “search” there is scope for a genuine theory of error.

Companies can and do build unique constitutional orders, and there’s lots of potential to apply the field of Constitutional Political Economy to the study of organisations. One example of constitutional management that I am especially interested in is Market-Based Management (R), which treats the institutions that generate economic prosperity as being analogous to the institutions that improve corporate performance.

As part of the Mercatus Center‘s “Global Prosperity Initiative” I undertook fieldwork in Liverpool’s Chinatown to understand the economic organisation of ethnic communities. I used interviews, surveys and observation to show how the availability of regeneration funds can create incentives for voluntary community associations (i.e. “clubs”) to switch into predatory rent-seeking collectives.

I’ve attempted to apply a subjectivist approach to public choice theory to the collapse of communism in Eastern Europe. I’ve utilised the concepts of operational codes, epistemic communities and the structure patterns of ideas to argue that “constitutional moments” show how ideas can can underpin and direct the formation of interest groups.

I have also documented the spread of the Austrian school in Central and Eastern Europe following the fall of the Berlin Wall, providing a rare history of “centre-right” political ideas in Eastern Europe; a chronology of the development and influence of libertarianism; cursory intellectual biographies of neglected Austrian economists; and empirical evidence that contributes to the epistemic communities approach to the study of idea diffusion.

My 2009 book, The Neoliberal Revolution in Eastern Europe, (co-authored with Paul Dragos Aligicadeveloped two research agendas: the study of the spread of ‘neoliberalism’ – as seen from the perspective of Eastern European post-communist evolutions; and the study of Eastern European transition – as seen from an ideas-centred perspective.

I have also done fieldwork in Romania to understand the spread of the flat tax. I utilised the “economic theology” literature to claim that whilst ideas are usually adopted for their empirical and operational content, if this is lacking, due to the novelty of the idea, or the uncertainty of the political environment (for example when following regime change), their normative content can generate a crucial carrying capacity. I have also introduced and applied a synthetic comparative method to study its spread in nine Eastern Europe countries. According to this book I have produced “seminal analysis of the spread of the flat tax throughout much of Central and Eastern Europe”.