A kind of coda and suggestion for future work regarding Corey’s essay on the links between Nietzschian thought and modern economics. In one respect, I’d ask whether there may be stronger connections than Corey suggests. In particular, I can’t help wondering whether Max Weber might be an interesting vector of contagion. His more sociologically inflected account of the economy clearly had great influence on the Austrians whom Corey is interested in, but his later work, especially Politics as a Vocation, has strong and explicit Nietzschian overtones. However, for Weber, politics rather than the market is the “theater of self-disclosure, the stage upon which we discover and reveal our ultimate ends.” His heroes are politicians, who attach themselves to an end, follow a particular god despite that end’s radical contingency – the value of politics is that it provides a ground in which these very few individuals can fully develop themselves through struggle with others holding equally strongly to other gods who are equally contingent.
Weber’s political aristocracy, however, has little directly to do with the actual aristocracy of German politics in the early twentieth century, despite his right wing views. It’s clear that those on the left, as well as those conventionally subject to contempt as journalists and scribblers can be as heroic as those on the right, as long as they recognize and embrace the paradoxes of political action. It seems to me at least possible that this account might have served as a bridge, through which Nietzschian influences might have escaped into economic thought. If this were so, though, it would suggest that the key was not marginalism, so much as a very particular interpretation of marginalism by Austrians, whose relationship to mainstream economics has always been rather awkward.
This, in turn would lead to a somewhat different interpretation of Hayek, Schumpeter and the others. What is most valuable about Corey’s essay to me is its discovery of a frankly aristocratic element in Hayek’s work (this is less surprising in Schumpeter’s, since Schumpeter, if not quite a fascist himself, was likely a sneaking regarder). An alternative hypothesis is that this aristocratism was less rooted in marginalist accounts of values, than in the fundamental problem that standard economic theory has in dealing with innovation. Standard economic models tend to predict equilibria from which there is no very good reason for economic actors to deviate. This more or less rules out radical innovation by definition – while economists can make some arguments about e.g. the incentive effects that different institutions might have for innovation, they are very clearly outside the territory where standard economic theory is most comfortable and most useful. To the extent that true innovation is in the realm of uncertainty rather than risk, it is outside the realm of things that can usefully be analyzed by standard economic theory.
What Schumpeter and Hayek tried to do was to come up with accounts of economics which were less formally neat, but which provided greater room for understanding where innovation might come from. This, I think, is where the notion of the entrepreneur comes in – Hayek and Schumpeter’s understandings of innovation are very different from each other, but both emphasize the role of entrepreneurship in spurring change. For Hayek:
the method which under given conditions is the cheapest is a thing which has to be discovered, and to be discovered anew, sometimes almost from day to day, by the entrepreneur, and that, in spite of the strong inducement, it is by no means regularly the established entrepreneur, the man in charge of the existing plant, who will discover what is the best method.
This seems to me to plausibly link to Corey’s quote about the crucial importance of rare individuals in spurring change in tastes (they are different kinds of discovery, but both discovery nonetheless). Schumpeter’s account of the entrepreneur-as-innovator is more direct still – it is the innovative action of entrepreneurs that drives Schumpeter’s cycle of creative destruction.
So what this suggests to me is a kind of consonance of methodological problem and political priors. The methodological problem is that of making an inherently rather static framework – equilibrium-centered economics – something that is better able to take account of dynamic effects, and in particular of the ways in which individuals may innovate. However, there are many ways in which one might theorize innovation – much recent work has looked at the role that contexts rather than individuals play. The political priors have to do with a vision of the world that is most aptly expressed by Nietzsche and perhaps others, which emphasizes how the individual self-development of those few with the capacity for heroism is being stifled by an increasingly routinized and banausic world of bureaucracy and restraint. Weber most obviously expresses this in Nietzschian terms (and makes clear his debt to Nietzsche). But something similar spurs both Schumpeter and Hayek’s pessimism about the likely consequences of social democracy.
What we see (if this guess is right) in the varying Austrian approaches to economics are the consequences of a perceived coincidence of the methodological and the political problems – a set of arguments which are intended both to provide a counterweight to more standardly marginalist accounts of the economy, and a possible antidote to the political disenchantment of the world. Again, what I really like about Corey’s take is that it highlights the specifically aristocratic implications of Schumpeter’s and Hayek’s answers – one could have come up with different possible solutions, and the solution that they did come up with reflects a specific set of political values, and either an elective affinity with, or indirect influence from, the ideas of Nietzsche.