Last night I conducted my first graduate class in the newly established Mises Seminar Room, which is part of the office suite of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics. Mises and Hayek. I have had in my office since the mid 1980s a picture of Mises and Hayek together looking over a manuscript. I don't know if the photo was staged, but it has always been to me the imagined relationship as we should understand it if we want to see Austrian economics as a progressive research program in the contemporary context. It is a shared research program, not a conflicting one. Human Action and Individualism and Economic Order are foundational texts in our educational programs, and have been for the history of the Mercatus Center.
GMU became an independent university in 1972, roughly a decade later the university established a PhD program in economics. In 1983, F. A. Hayek visited and delivered a talk dealing with ideas that would later be published in The Fatal Conceit. One productive way to read Hayek's work in this area is his attempt to restate Mises's argument for the Law of Association and the rules than enable free individuals to engage in productive specialization and live in peaceful cooperation with one another. Mises's argument was more rationalistic, Hayek's more evolutionary -- but both were striving to identify those rules that enable human actors to live better together than they could apart. To realize the gains from social cooperation, men must live by the rules of just conduct. To Hayek, human reason is a by product of these rules, not the source. As he put it in The Constitution of Liberty and even more clearly in Law, Legislation and Liberty, we have reason because we followed rules, we didn't follow rules because of our reason.
In the current issue of The Review of Austrian Economics there is a wonderful tribute to Hayek by James Buchanan from 1979. One highlight from this tribute from the vantage point of today looking back on the situation in academic economics in 1979 is the following:
We are now winning a few battles in the ongoing war of ideas, but we cannot lapse into complacency. The islands of comparative strength in modern American academia (Miami, VPI, UCLA, Chicago, Rochester, NYU, Washington)—these must be strengthened and new islands (Auburn, Colorado) must be created. The diverse approaches of the intersecting “schools” must be the bases for conciliation, not conflict. We must marry the property-rights, law-and-economics, public-choice, Austrian subjectivist approaches. And we must continue to be able to secure sufficient independent and external financial support to ward off threats from the academic enemies within our institutions.
This, of course, was written before the GMU island was forged with the move of Buchanan and the Center for Study of Public Choice and the joining of forces with Rich Fink's Center for the Study of Market Processes through Karen Vaughn's academic entrepreneurship. The Mercatus Center, which evolved out of CSMP, has always been grounded in the work of Mises and Hayek, but took seriously the Buchanan message of conciliation of the diverse schools of thought -- property rights, law and economics, public choice, and market process analysis -- and has let that effort be the defining guide in our research and graduate education programs.