The current issue of The New Republic has a long attack on Friedrich Hayek, Milton Friedman, and free market economics generally by the Nobel laureate economist Robert Solow, entitled “Hayek, Friedman, and the Illusions of Conservative Economics.” Ostensibly a review of the brand new book The Great Persuasion: Reinventing Free Markets Since the Great Depression by Angus Burgin, the review is less about the book than it is an excuse for Solow to vent his complaints against the more popular Friedman and Hayek. (That TNR intends it as a hit piece is seen from the unattractive photos TNR chose to use with the online version of the article.)
It really chafes his chaps that people like Hayek and Friedman receive such attentiveness from biographers while no one ever writes books about Solow, or Galbraith, or Samuelson. And Solow works overtime to heap scorn on the Mont Pelerin Society (MPS), the intellectual organization Hayek helped to found in the late 1940s that became a leading node for reviving free market thought. And Solow employs one of the oldest tricks in the book, trying to divine a “good Hayek” from a “bad Hayek,” which is what you do when you want to marginalize the uncongenial findings of an intellectual that are impossible to dismiss.
It’s even worse than that when you think about it for a moment. While conservative intellectuals, office holders (think of Paul Ryan, or Michele Bachmann, who cited Ludwig von Mises as an influence in her thinking), grassroots Tea Party activists all speak openly of the their fondness for Hayek and Friedman, when was the last time you heard a liberal—any kind of liberal—express excitement over or attribute inspiration from a liberal economist—even Keynes? Does anybody still read John Kenneth Galbraith? Does any real human being anywhere say, “Oooh, Paul Samuelson! He’s my hero!” Does anyone still read the economist who was the co-winner of the Nobel Prize along with Hayek in 1974? (Anyone know who it was? Bueller? Bueller? It was Myrdal . . . Gunnar Myrdal.) Is there any equivalent organization to the Mont Pelerin Society for liberal economists? If there is, I’m unaware of it. (Offering the American Economic Association is cute, but doesn’t count.) Yes, liberals love Paul Krugman, but not for his economic scholarship. Can anyone at MSNBC name a single economic concept of Krugman’s? (Higher income tax rates don’t count. Heck, Krugman hasn’t even bothered to come up with his own curve on a restaurant napkin.)
So, yeah, this review looks like a fancy case of envy mixed with sour grapes, which is not a drinkable varietal except in appellation Harvard Square. Moreover, it seems to me that his dismissal of the Mont Pelerin Society is way off the mark. So what if the MPS didn’t publish an academic journal; by my count, its membership or frequent attendees includes at least seven Nobel Prize winners—Hayek, Friedman, Buchanan, Stigler, Coase, North, and Bhagwati. (Cancel Bhagwati: turns out he only won the Nobel Prize on an episode of The Simpsons.) It also counted among its members Vaclav Klaus, the splendid sometimes president of the Czech Republic. Not bad for what Solow finds an “insignificant organization.”
Now I could go through a lengthy fisking of Solow’s piece, but Tyler Cowan has a nice short smackdown over at the Marginal Revolution blog (a site worth reading frequently if you follow economics):
Solow neglects to mention that Milton Friedman turned out to be right on most of the issues he discussed (though targeting money doesn’t work), that MPS economists shaped at least two decades of major and indeed beneficial economic reforms across the world, or that some number of the economists at MIT envied the growth performance of the Soviet Union and that such remarks were found in the most popular economics textbook in the profession. You can consider this essay a highly selective, error-laden, and disappointing account of a topic which could in fact use more serious scrutiny. . . Solow should have started his piece with a sentence like “Milton Friedman was not right about everything, but most of his criticisms of my earlier views have been upheld by subsequent economic theory and practice….”
And that’s just the warm up act. I’ll add that it is some of Solow’s core ideas about economic growth that are now under suspicion by a number of economists, as noted in my post here just the other day. I’ll confine myself to just one observation about the churlishness of Solow’s piece, which comes with this statement: “There is not much guidance here for a member of the Interstate Commerce Commission who has to worry about the regulation of imperfectly competitive railroad and trucking industries.” Wait a minute—would this be the same Interstate Commerce Commission that was abolished 25 years ago primarily as a result of the critiques of people like Friedman that ICC regulation actually stifled competition and harmed the consumer? Perhaps no one has told Solow. . .