This class is designed for the graduate student who has decided to specialize in the area of market process economics and political economy. The readings are divided into three groupings: background for the class; classic works; and contemporary engagement. As a background for this class I have requested that students have read over the winter break Bruce Caldwell’s Hayek’s Challenge and Philip Mirowski’s Machine Dreams. The first and second lectures of the course will be devoted to these books and the history of 20th century economics that they present to the reader. We are reading history of thought to provide the context for modern theoretical and empirical developments and the opportunities for making contributions to modern economics and political economy. The focus of this class is not on arriving at a correct understanding of doctrine, and thus we will not be primarily engaged in doctrinal exegesis of classic texts in the Austrian School of Economics. It is assumed that students have read the Austrian works and understand the basic positions. We are, instead, focusing on a productive reading of these and other works that permits us to gain a better understanding of the economic forces at work in a modern society.

The classic works we are reading include Mises’s Human Action, Hayek’s Individualism and Economic Order, Rothbard’s Man, Economy and State, Shackle’s Epistemics and Economics, and Kirzner’s Competition and Entrepreneurship. To contrast the market process contribution we are also reading from the definitive work in mid-century economics from Paul Samuelson – both his Foundations of Economic Analysis and Economics. Samuelson from the 1940s to 1970s controlled both the educational agenda in undergraduate and graduate economics. Thus, the gap between Samuelsonian economics and market process economics is our starting point. We will then explore the evolution of economic thought from that time forward. It is my contention that the history of modern economics is best understood as the move away from Samuelson and toward Mises --- though this is largely unrecognized within our profession. I want us to critically engage my hypothesis and draw out the implications for carving out a research and educational niche in the contemporary profession for those of you entering into the research community.

The books of contemporary engagement that I have selected are from authors who challenged the Samuelsonian edifice in one way or another, and have in effect moved the professional discourse in a direction more inclined to the Mises/Hayek research program as set out in the 1940s. These include Buchanan and Wagner’s Democracy in Deficit, Schelling’s Micromotives and Macrobehavior, Hoover’s New Classical Macroeconomics, Lucas’s Lectures on Economic Growth, Milgrom and Robert’s Economics, Organization and Management, Smith’s Constructivist and Ecological Rationality in Economics, and North’s Understanding the Process of Economic Change. In addition, I will have articles from journals (including the Review of Austrian Economics which you should all browse through to get a sense of the literature … http://www3.gmu.edu/rae/ … and selections from books published in ‘The Foundations of the Market Society’ that is the premier book series in Austrian economics edited by Mario Rizzo and Lawrence White).

The reading for this class is quite demanding as you are expected to master not only classic texts, but the secondary interpretative literature that surrounds them, and relate that to modern developments in economics. Don’t fall behind on the readings as this is your chance to really invest in learning a literature that will stay with you the rest of your career. I am, for example, still writing papers that were first put to me by my professors in graduate school and I hope that you will say the same thing about this class 20 years from now.

*Note on the readings: The books listed first are the required books for the course. The readings listed in the slightly smaller font are suggested readings, and those in the finest font are for further reading to be pursued and the references therein. My lectures will not be on interpreting the reading, but instead will draw inspiration from the readings and will be more focused on the lecture topic assuming that you have read all the required, suggested and follow up readings. The class style will be a combination of lecture and research seminar, and the research seminar segment of the class will only work if you have something to bring to the table on the subject so again I urge you to not fall behind on the reading and your thinking about the subject.

Grades for this course will be based on your participation in class, your grade on the final, and an original research paper that strives to be of professional quality. A paper that is publishable with minor revisions will earn an A, a paper that is potentially publishable will earn a B, and a paper that is not publishable (though perhaps an acceptable term paper) will receive a C. Please consult with me early and often about your paper. The final exam will be useful for preparing to take the field exam in Austrian economics.

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