Austrian Economics and the Political Economy of Freedom

Austrian Economics and the Political Economy of Freedom

New Thinking in Political Economy series

Richard M. Ebeling

Richard Ebeling’s insightful and highly readable book explains and applies the ideas of the Austrian economists to a wide range of contemporary public policy issues. He combines intellectual political–economic history with the modern Austrian theory of the market process to challenge the premises and uses of mainstream neoclassical economics.

Chapter 1: How Economics Became the Dismal Science: The Classical Economists and 20th Century Economics

Richard M. Ebeling

Subjects: economics and finance, austrian economics


CHAPTER 1 9/4/03 1:14 PM Page 1 1. How economics became the dismal science: the classical economists and 20th-century economics THE 19th-CENTURY CRITICS OF CLASSICAL ECONOMICS Economics was first called ‘the dismal science’ by the 19th-century English essayist and man of letters, Thomas Carlyle. He wanted to capture in a phrase all that he thought was wrong with the ideas of the economists of his own time. Carlyle focused all his literary venom on the proponents of the free market. He first used the phrase in an 1849 essay where he referred to economics as ‘the Social Science … which finds the secret of this Universe in “supply and demand”, and reduces the duty of human governors to that of letting men alone … Not a “gay science,” I should say, like some we have heard of; no, a dreary, desolate, and indeed quite abject and distressing one; what we might call by way of eminence, the dismal science’. In Carlyle’s mind, 19th-century economics was a ‘self-cancelling Donothingism’. He deplored ‘all this Mammon-Gospel of supply and demand, Competition, Laissez-faire, and Devil-take-the-hindmost, [which] begins to be one of the shabbiest Gospels ever preached, or altogether the shabbiest’.1 Carlyle much preferred the world before the classical liberal era in which he was living, an older time of class distinction and political paternalism in which everyone in the society knew his place and everyone was secure in his station in life. The newer world of free enterprise industrialism and free market competition disturbed him....

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