As an undergraduate my intellectual imagination was switched on by my economics professor Hans Sennholz. He did this in 3 ways. First, and foremost, by presenting basic economics to me he helped me understand the way the world worked around me and especially the dysfunctions that I had experienced first-hand due to the gas shortages and long lines at the pumps that characterized the late 1970s. Second, he alerted me to the great thinkers such as Adam Smith, JB Say and Ludwig von Mises who had developed and refined the economic way of thinking over the previous 200 years. And, third, he persuaded me of the urgency of fighting the battle not only in the realm of ideas, but also in the realm of action -- "the battle in Washing" as he put it. So by the time I graduated from Grove City in 1983 (33 years ago), I knew I wanted to be a professional economist and to devote myself to the further development and communication of these ideas. I was then, as I remain today, an "Austrian" economist at a methodological, analytical and ideological level. If anything, the past 30+ years have only increased my appreciation for the lessons I learned from Dr. Sennholz and the urgency of what he was trying to teach us.
But my position has become more subtle -- or at least I think it has -- than how I thought about these issues back when I started graduate school in 1984. And that subtlety -- if there is any -- is due to James Buchanan. In the fall of 1984, I took Buchanan's class in Economics and Philosophy. I sat in the front row eager to absorb every wise word uttered by the great man, and learn how to better "fight that battle in Washing". Yet, two things took place -- (1) Buchanan asked us to ponder fundamental philosophical questions, not practical questions -- e.g., who is the individual in economics?; if a fly grew 9 times its size, it couldn't fly, what does that say about fiscal dimensionality and the functioning of government?; when along the path in Nozick's tale of the slave are we free men? how can a man be free, yet subject to wills other than his own?, etc., and (2) he stressed time and time again that "You cannot envision yourself as an economist proffering advice as if to a benevolent despot." That isn't what we are supposed to do as economists. But how then do you "fight the battle in Washing"? Isn't our understanding supposed to enable us to improve public policy with a reformist zeal? Can't the free market saviors simply substitute for the interventionist saviors and all would be right with the world?
There is a lot packed into Buchanan's declaration, and it was usually followed by reference to the "establishment economists" who does envision themselves as proffering such advice to the benevolent despots here and an abroad. Don't catch, Buchanan would stress to us, "Potomac fever" but stay the course as a scholar-scientist. Yet, a close reading of Buchanan would reveal that he believed that reform was indeed possible, and that the economists can play a vital role -- in fact, an essential role. But what mattered to Buchanan, as laid out in his justly famous paper from 1959 on "Positive Economics, Welfare Economics and Political Economy", was the manner with which the economist approached the reformers task.
Consider the following statement by Buchanan of the fundamental difference in attitude as he saw it between an economists trained as he was and as he taught, and those trained in the "establishment". This is from Buchanan and Musgrave, Public Finance and Public Choice (MIT Press, 1999), pp. 16-17.
One characteristic feature of graduate training in Chicago, then as well as now, warrants mention here. The Chicago economist does not project an image of becoming an adviser to governments, thereby proffering advice on how to manage national economies, in the large or in the small. The Chicago economist learns how economies work rather than how economies might be controlled. Of course this generalization has its notable exceptions, but the contrast in professional attitudes in this respect between Chicago, and, say, Harvard, maybe critical in influencing both career and research paths.
Of course, Greg Mankiw has made a similar observation -- though somehow this has alluded the critics who want to blame the Global Financial Crisis on Chicago economists and neoliberalism. But lets forget that for now. Instead, what do you think about this general orientation that Buchanan points to?
Later in the book Public Finance and Public Choice, Buchanan asks Musgrave whether he believes it would be sensible to put a muzzle on a pet tiger least he bite innocents who pass by, Musgrave understanding that Buchanan was using the analogy to talk about constitutionally constraining government responds by saying -- No, I wouldn't muzzle the tiger because I might want him to eat the grass.
In the introduction to our edited volume, The Economic Role of the State, Peter Leeson and I talk about these presumptions in political economy. We can envision predation coming from private and public actors, our point was simply that positions in political economy are often dictated by the optimism or pessimism one has about dealing with the different forms of predation. To those who are more or less in favor of the self-regulation of the market, there tends to be an optimism about private predation being self-disciplined, while pessimism concerning the ability to constrain public predation. And, on the other side, those who favor more activist government tend to be pessimistic about the self-regulation of private predation, and very optimistic about limiting public predation. Recognizing the presumptions in political economy (often held tacitly) will, Leeson and I argue, improve our discourse on these fundamental issues -- or at least that is the hope. It will improve our understanding of how the world works, and how scholars/scientists frame the discussion.