Abstract
Heterodox schools of economic thought often claim that discrimination takes place in the market for academic articles. Biases exist that prevent heterodox ideas from appearing in mainstream journals. We assess the claim in the context of Austrian economics. First, we document that the research topics pursued in Austrian journals differ significantly from mainstream journals. Austrians pursue different questions. Second, we argue that Austrian articles do not suffer from discrimination based on lack of formalism or ideology. Rather, the lack of Austrian articles in mainstream journals results from the lack of testable hypotheses in their arguments.
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Notes
Of course, the theory of the second-best had been developed and gained traction, which forced Chicago economists to reconsider and refine their arguments for perfect competition. Nevertheless, the perfectly competitive model remained the benchmark for welfare comparisons.
The work of Cowen and Fink [1985], White [1984], Selgin and White [1994], Kirzner [1997], and Caldwell [1997] stand out as exceptions to this claim.
We should note that the size of the Solow Residual, which attributes most of economic growth to “technology,” served as an impetus for the new research. New growth theory and recent mainstream development literature tried to understand the black box of technology by turning to cultural and institutional explanations [Rosenberg and Birdzell 1986; Romer 1996].
Krugman [2009, p. 561] writes In 1980, this similar-similar trade was still a relatively new phenomenon. Trade in the first great age of globalization — the age made possible by steam engines and telegraphs — was mainly dissimilar-dissimilar: trade in dissimilar goods between dissimilar countries. Comparative advantage, which one may define as the idea that countries trade to take advantage of their differences, clearly explained most of what was going on. It was only with the recovery of trade after World War II, and especially after the major trade agreements of the 1950s and 1960s, that the more puzzling trade patterns that fed the counterculture became prominent.
It should be noted that the number of articles devoted to economic history increased in the last couple of issues. The rise in applied Austrian economics coincides with Peter Boettke's editorship of the Review of Austrian Economics in 1997 and his commitment to an “analytic narrative” research program. Prior editors were Walter Block, Hans-Herman Hoppe, Murray Rothbard, and Joseph Salerno.
A notable exception has been the disputes between macroeconomists regarding calibration. See Prescott [1986] and Summers [1986] for an illuminating exchange.
Boettke [1995 [2001], p. 13] provides a nice critique of Hoppe's argument by pointing out that Hoppe and Murrary Rothbard, if correct, have successfully derived an “ought” from an “is” proposition!
For example, Hayek did not support free banking. See White [1999].
We thank Andrew Young for drawing our attention to this literature.
O’Driscoll and Rizzo [1985, Ch. 4] offered a critique of dynamic optimization models that could be extended to new growth models and better inform the limitations of the model, but no one has built off of this foundation for engaging the mainstream.
We should note that Engerman and Sokoloff's research has exerted a large impact on the recent literature on economic development, despite the absence of any econometric analysis.
See Foss [2000] for reasons why Austrians should incorporate aspects of game theory into their theoretical toolbox.
See Buchanan and Yoon [2002] for a fascinating discussion of the differing implications of the various trade models.
Haberler [1990] responded to Krugman as well.
According to Google Scholar, Hart and Moore [1990] has over 3,000 citations and Grossman and Hart [1986] has nearly 5,000 citations.
The few cases where Austrians do use econometric results include Keeler [2001], Boettke and Subrick [2002], and Montgomery [2006].
We do not mean to suggest that, in 2011, it would be impossible for an article without econometrics or formal theory to appear in the top economic journals. Rather, our point is that prior to the 1980s, an article without econometrics and formal theory was far more likely to appear in the top journals because there was a greater interest in conceptual papers that had widespread applicability.
Olson did subsequently formalize the argument in McGuire and Olson [1997].
Anderson and Hill [1975, 1983, 1991] published earlier versions of their theory in the Southern Economic Journal and the Journal of Law and Economics.
Vernon Smith has also examined Hayek's ideas in the context of experimental economics. See Smith [1982, 2003] for discussions.
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Acknowledgements
We thank Peter Boettke, Bryan Caplan, Christopher Coyne, Eric Crampton, Andrew Farrant, Peter Leeson, James Marchand, Skip Mounts, David Prychitko, Gilbert Skillman, and Andrew Young for useful comments and suggestions on an earlier draft of this paper. All remaining errors are ours.
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Beaulier, S., Subrick, J. Understanding Academic Journal Market Failure: The Case of Austrian Economics. Eastern Econ J 39, 444–463 (2013). https://doi.org/10.1057/eej.2012.32
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DOI: https://doi.org/10.1057/eej.2012.32