We all follow different paths in forming our views about political economy and the appropriate role of the state. However, my personal odyssey also is different from others Walter asked to contribute to this collection because of my economic specialty – agricultural economics.

I was born and reared on a small farm in Gaston County, North Carolina, which influenced my choice of college and major. I graduated with a degree in agricultural education from North Carolina State College (as it was then named) in 1954. The only economics course I took as an undergraduate was a highly descriptive one that had no influence on my way of thinking, either about economic issues generally or the appropriate role of the state.

Graduate Work

Following a two-year stint of military service, I applied to graduate school at N.C. State University and soon decided to specialize in agricultural economics. There I was introduced to neoclassical economics and began to study this subject seriously. Fortunately, I was in a department where several economics professors were products of the University of Chicago and critical of government intervention in U.S. agriculture. While I obtained a good foundation in microeconomics in my graduate work at N.C. State, I gained no understanding of the market as an entrepreneurial process.

Reared in a conservative environment and suspicious of big government, I was always a critic of government farm programs. The positivist neoclassical economics in my master’s program provided an efficiency justification for my views about government farm programs; but I acquired no framework for thinking about the appropriate role of government in agriculture – or, more generally, the role of the state in a free society. After working for a couple of years as a research assistant in the Department of Agricultural Economics at N.C. State, I enrolled in the Ph.D. program at Michigan State University, obtaining the Ph.D. Degree in Agricultural Economics in 1963. At MSU the influence of the Chicago School was much less pronounced and attitudes more favorable toward government intervention in agriculture. In my MSU graduate work, I was surprised that professors in the Economics Department were much more critical of farm programs than professors in the Department of Agricultural Economics. The explanation became clear years later when I was exploring the relationship between the source of financial support for academic research and freedom of inquiry in agricultural economics. The funding arrangement for teaching and research in the USDA–Land Grant University complex tends to make agricultural economists (when contrasted with economists generally) much less critical of government intervention in agriculture.

Exposure to Austrian Economics

I suspect that my exposure to Austrian economics came later in life than it does for many, if not most, economists today. My introduction to, and appreciation of, the ideas of Hayek, Mises, and other Austrians did not occur until I was finished with graduate school. It is my impression that most current economics graduate students have at least been exposed to Austrianism while in graduate school – even if the introduction was only to show how unrealistic such ideas are. The increased familiarity with – though not necessarily greater understanding of – Austrian economics by economists upon the completion of their graduate work may be one measure of the increased impact that these ideas now have within the profession.

My graduate and early professional work – in agricultural production economics and marketing – was quite conventional at that time for economists majoring in agricultural economics. In most land-grant universities, agricultural economists are in a separate department from other economists. [1] At the Ph.D. level of graduate studies, I took courses in agricultural economics, including agricultural policy, agricultural production economics, and agricultural marketing, in the Department of Agricultural Economics. Micro, macro, international trade, other theory and applied non-agricultural courses, such as industrial organization, were taken in the Department of Economics. I do not recall the ideas of Hayek or Mises being discussed – or their names being mentioned (although it is quite possible that they were) – during my graduate work, even in the history of economic thought courses. [2]

My first exposure to Austrian economics that I can recall – and its relationship to the Chicago approach to neoclassical theory – occurred shortly after completion of graduate school in an article by Israel Kirzner that was published in The Intercollegiate Review. [3] Writing in the mid-1960s, Kirzner’s focus was on the minority of economists who defend the efficiency of the “unhampered market economy” and stress that “measures put into effect by governments must lead to consequences worse than the evils that they seek to avoid.” [4] Kirzner pointed out that most of the economists who emphasized efficiency and other advantages of the free market were associated either with the “Chicago School” or with “…an expanding, well-articulated influence that clearly traced back to the Austrian subjectivist school.” [5] Kirzner held that the influence of the latter school was “almost synonymous with Ludwig von Mises.” 

Kirzner devoted most of the article to showing how the Austrian subjectivist school differed from the Chicago School. He stressed the differences between Austrian and Chicago theories concerning the role of equilibrium and entrepreneurship, the role of empirical investigation, and the concept of monopoly. I was well aware of the work of Friedman, Knight, Stigler, and other prominent members of the Chicago School, but knew nothing about the “Austrian School” of economics prior to that time. Moreover, the distinctions between the schools emphasized by Kirzner had little immediate impact on my views about the appropriate approach in economic analysis.

Although I also read Hayek’s “Use of Knowledge in Society” around this time in my intellectual odyssey, I failed to grasp the implications of the article for government regulation of economic activity.  Consequently, the course I taught in price theory in the Department of Economics and Business at N.C. State University, as it was then organized, strongly reflected the Chicago approach to economics and much of my research involved various applications of constrained optimization techniques.

My view of economics and of economic research began to change, however, following a sabbatical in the Department of Economics at the University of Chicago during the 1970–71 academic year. There I became aware of work by Buchanan, Tullock, Stigler, and other public choice economists who emphasized the implications of the separation of power and responsibility in the political process for government regulation. This work provided a new insight for me, stressing that public officials generally have less incentive than private entrepreneurs do to economize because government decision-makers bear little of the cost and reap a much smaller part of the benefits of actions taken.

Cost and Choice

In the early 1970s following the sabbatical, I re-read Hayek’s “ The Use of Knowledge in Society” and his book The Constitution of Liberty. I also began to read works of other Austrian economists, including books by Mises, Kirzner, and Rothbard.  It was most notably, James Buchanan’s book Cost and Choice, however, that emphasized most strongly for me the implications of the subjective nature of cost as it influences individual choice – and the significance of the subjectivist approach in economics generally. My appreciation and understanding of Austrian ideas were increased following a week-long seminar in 1976 at the Foundation for Economic Education. Leonard Read, Henry Hazlitt, Ben Rogge, Hans Sennholz, Edmund Opitz, and Israel Kirzner were among those making presentations. Kirzner’s book Competition and Entrepreneurship, which I had read shortly before attending the seminar, helped me to understand the market as a process and to appreciate the role of the entrepreneur in the market process – as did his later books on entrepreneurship. I gradually began to appreciate the subjective nature of knowledge as it influences individual decisions and to appreciate the implications for government regulation. I became convinced that even if government agencies were run by selfless public servants totally dedicated to serving the public weal, they would be unable to do so because they cannot obtain the relevant information to do so.

I then began to use various Austrian and public choice concepts to analyze government regulation in agriculture and other areas. In doing so, two key ideas – the importance of narrowly focused benefits and widely dispersed costs and the separation of power and responsibility – helped explain much of what might appear to be irrational behavior of voters, legislators, and bureaucrats.

Austrian insights concerning the subjective nature of cost and the separation of power and knowledge in the political process proved to be especially helpful in analyzing government regulation, especially marginal cost pricing and land use planning. Buchanan’s Cost and Choice, and articles by Hayek, G.F. Thirlby, and Jack Wiseman in L.S.E. Essays on Cost (edited by James Buchanan and G.F. Thirlby) convinced me that marginal cost pricing is not an objective procedure that can be monitored by an external authority. This insight played a key role in shaping my thinking about government regulation in agriculture and other areas. Government regulators generally cannot do what they purport to do – even when they have the best of intentions.  Both the topics addressed and the approach used in my research and teaching were as a result quite different from those of other agricultural policy economists. [6]

Other Milestone Events

Rich Wilcke, whom I did not know, read my article “The Right to Food” in The Freeman and contacted me in 1977 or 1978. He had plans to form an Institute for the Study of Market Agriculture (ISMA) – as an institution independent of the existing agricultural economics establishment – which would analyze agricultural policy from a free market perspective. He asked me to participate in ISMA, even though I was employed in the Land Grant University–USDA complex that is responsible for the development, administration, and analysis of the maze of regulations affecting the production and marketing of agricultural products in the United States. Before he could launch his proposed Institute, however, Rich became the President of a new business organization – the Council for a Competitive Economy. The Council’s purpose was similar to that of Rich’s proposed free market Institute in agriculture, but with a much broader scope – its purpose was to promote and extend market, rather than political, forces throughout the economy.

The Council held The National Conference on Economic Freedom in 1981. [7] Discussion panels were held in a number of areas, including agriculture, health care, energy & resources, transportation, finance, and capital formation, productivity & taxes. Rich invited me to participate as a member of a panel on agriculture – to explain why economic freedom in this field is possible from a theoretical standpoint.

One can never predict what the outcome of participating in such events might be. Several years after the economic freedom conference, I received a call from John Fund, then an editorial page editor for the Wall Street Journal. John, as a college student, had heard my presentation on “Regulation versus the Market in U. S. Agriculture” at this Economic Freedom Conference. He proposed an idea for an op-ed piece for his newspaper – how government programs in agriculture are similar in vigor and persistence to the kudzu plant. The Wall Street Journal published the piece, “Kudzu: The Government Gift That Keeps on Growing” four years after John heard my presentation. Despite the fact that our collaboration in his ISMA dream was short lived, Rich has been a source of encouragement to me over the years in “going against the grain in agricultural economics.”

Lawrence Reed invited me to participate in a “Freedom in Third Century in America” seminar at Northwood Institute in Midland, Michigan in June 1982. Supply-side economics, much in discussion at that time in the first Reagan Administration, was the focus of my presentation. Larry had me billed on the program as an author of articles on free markets and Austrian economics. This was, I think, the first time that I had been formally identified with the discipline of Austrian economics. Larry’s designation was based on his assessment of articles that I had published in various market-oriented publications, including the The Freeman, The Intercollegiate Review, and Reason magazine.  Larry, a dynamic speaker and energetic proponent of the free market, later formed and still serves as President of The Mackinac Center for Public Policy in Midland Michigan (which became the nation’s largest state-oriented free market “think tank”).

Israel Kirzner’s encouragement (and his work on the entrepreneurial market process) facilitated my efforts in Austrian economics.  In 1981, Israel and his colleagues at New York University organized a conference to mark the one-hundredth anniversary of the birth of Ludwig von Mises and invited me to participate as a discussant of Gerald O’Driscoll’s paper on monopoly theory. Murray Rothbard, James Buchanan, Leland Yeager, Brian Loasby, and a number of younger economists – including Karen Vaughn, Richard Langlois, Lawrence White, Roger Garrison, Don Lavoie, Gerald O’Driscoll, Jr., and Joseph Salerno – explored various Austrian insights. This was my first encounter with many of the participants, including Murray Rothbard. He impressed me with his approachability and easy-going nature. [8]

A couple of years later, in 1983, I applied and was accepted as a participant in a Liberty Fund research seminar in New York organized by Mario Rizzo. Many of the participants were returnees from the earlier conference commemorating Mises’ birth. My paper on “rent seeking” was subjected to a lot of critical analysis by Israel Kirzner, Charles Baird, Gerry O’Driscoll, and other attendees. Following the conference, I submitted the paper to Murray Rothbard, Editor of the Journal of Austrian Economics, then in its formative stages. Murray liked the paper but asked me to “sharpen the analysis a bit.” His letter to me contained three single-spaced pages of comments (including a lot of typos and strikeouts – a standard feature of his letters) that were very much on target.

Following the formation of the Ludwig von Mises Institute, I received a letter from Murray in March 1983 inviting me to be a member of the Board of Advisors of a new Austrian economics journal – The Journal of Post-Misesian Economics.  However, the name of the journal was later changed to The Journal of Austrian Economics before the first volume appeared. Murray then published my rent-seeking paper in the initial volume of the JAE – which as he indicated was begun as a yearbook (“…so as not to run ahead of our limited resources”).

Influence of Free Market Think Tanks

John Baden, at that time Director of the Political Economy Research Center (PERC) in Bozeman, Montana, invited me to prepare a paper for a conference in late 1981 on “The Vanishing Farmland Crisis.” My paper, “Lessons from the Economic Calculation Debate,” explored the implications of the calculation debate for attempts to preserve agricultural land. Unfortunately, the conference conflicted with our final exam period, and I was not able to attend to present the paper and to interact with the other participants – including Julian Simon, Robert H. Nelson, Del Gardner, and Clifton Luttrell. [9]

Attendance at other PERC conferences enabled me to meet and interact with a number of individuals who were then or later became prominent in libertarian and Austrian circles. Terry Anderson, Jim Bennett, Bruce Benson, Dwight Lee, William C. Mitchell, William Niskanen, Randy Simmons, Fred Singer, Fred Smith, Vernon Smith, Jane Shaw, John Sommer, Rick Stroup, Karen Vaughn, and Bruce Yandle were among the participants. The Political Economy Research Center’s “New Resource Economics,” as it was then called, emphasized the importance of property rights and used insights from Austrian Economics and public choice theory in coping with “market failure” problems in the use of natural resources. The approach and insights of the New Resource Economics (which later evolved into “Free Market Environmentalism”) proved to be quite useful to me in the analysis of public policy issues in U.S. agriculture – especially in the area of conservation of natural resources.

In 1987, Jim Gwartney invited me to become a member of the Advisory Board for a newly formed James Madison Institute for Public Policy Studies at Tallahassee, Florida. This provided an opportunity to associate with Jim, Randy Holcombe, and Bruce Benson.

However, I resigned from the Research Advisory Council to become associated with the newly-formed John Locke Foundation, a Raleigh based public policy think tank launched in 1990, whose aim was to apply principles of limited government, individual liberty, and the free market to North Carolina issues. I was invited to serve on the Foundation’s Board of Academic Advisors and later served on the Economic Policy Board after Roy Cordato was appointed Vice President for Research and Resident Scholar of the John Locke Foundation.

Walter Block, who at the time was senior Economist at the Fraser Institute in Vancouver, Canada, contacted me in 1990. Walter, whom I was quite familiar with but had never met, was asked to edit a special issue of Cultural Dynamics journal on the potential of Misean praxeology for the study of cultural evolution and asked me to contribute a paper to it. The papers, including my contribution, “Human Action and the Role of the Economist in the Public Policy Process” were published in a special volume of Cultural Dynamics (Vol. 5, 1992). Walter was a source of encouragement in that project as well as others in which we collaborated, including a special issue of Cultural Dynamics (Vol. 8, November 1995) that he edited on “Judeo-Christian Perspectives on Economic Freedom.”

Agriculture and the State

During the 1980s, I taught a course in U.S. agricultural policy at N.C. State University and developed a manuscript analyzing the operation and effects of government programs in U.S. agriculture that incorporated various Austrian insights. The analysis included not only well-known production controls and price supports, but other programs that subsidized directly or indirectly the production and marketing of farm products, including credit, crop insurance, exports, food stamps, conservation, and agricultural research.

The analysis also highlighted the political process that generated and administered the programs. The effects of farm programs were shown to be counterproductive from the standpoint of many, if not most, people paying the tab. In 1986, I was invited to participate in a summer seminar at the Foundation for Economic Education (FEE). Greg Rehmke, Director of Seminars at FEE discovered that I had written a manuscript on U.S. agricultural policy and wanted to make it available for student use in a national high school debate program.  The manuscript was edited and published by FEE in 1986. I received a Freedoms Foundation Leavey Award for Excellence in Private Enterprise Education in 1989 based largely on this manuscript.

The agricultural policy manuscript later was expanded and published (with the assistance of David Theroux and under the auspices of the Independent Institute) by Holmes and Meier in 1990 as Agriculture and the State: Market Processes and Bureaucracy. The contents were significantly different – reflecting both a public choice and Austrian slant – from existing textbooks on agricultural policy. Bruce Gardner, a nationally prominent and market-oriented agricultural economist, wrote the Foreword indicating that the book owed “more to Friedrich Hayek than to any agricultural economist.”

Financial Support and Freedom of Inquiry

In 1987, Roger Meiners invited me to participate in an interdisciplinary conference in Hamilton, Bermuda. The focus was on the consequences of government sponsorship of higher education for intellectual freedom. My assignment was to explore the implications of the method of funding research in agricultural economics for intellectual freedom. Peter Aranson, W.W. Bartley, Leonard Liggio, Fred McChesney, John Sommer, Gordon Tullock, and E.G. West were among the participants. My contribution, “Source of Funding and Freedom of Inquiry in Agricultural Economics” was published along with the other papers in a book. [10]

In preparing the paper, I wrote to Professor T. W. Schultz (later Nobel Laureate in economics) at the University of Chicago, explained the nature of the paper I was working on, and requested his papers pertinent to the topic. Professor Schultz shared the letter with a University colleague, Professor Edward Shils, then on the Committee on Social Thought and Editor of Minerva, an interdisciplinary journal published in the United Kingdom. Professor Shils indicated that the topic was “of utmost interest” to him as editor of Minerva and requested that I send him a preliminary draft of my conference paper to receive his “…comments on editorial and substantive matters before the final version is completed.” Following his review, Professor Shils indicated that he would like to publish the paper subject to a number of stylistic changes and amplification of certain parts of the paper. The suggested changes were spelled out in six single-spaced typed pages! Following several follow-up exchanges, the paper (“Financial Support and Freedom of Inquiry in Agricultural Economics”) was published in the spring 1988 issue of Minerva.

Economists and Public Policy

In 1992, in an invited address to the New Zealand Association of Economists, I suggested that there are ample opportunities for economists to contribute to public policy because of information and incentive problems that are endemic in the political process. I contrasted this position with George Stigler’s argument that the political process is efficient. [11] Daniel Klein later wrote an article in the Eastern Economic Journal (spring 2001) also disputing Stigler’s thesis that economists’ persuasive power to improve public policy is negligible. After reading Dan’s paper, it was apparent that our ideas on this topic were similar and I sent him a copy of my own paper.

Shortly after, Dan arranged a session at the Southern Economics Association meetings that focused on the extent to which economists who do research on policy issues express judgment favoring reform in the direction of economic liberalization. The topics covered included licensing, rail transit, taxi deregulation, minimum wages and/or unions, and postal services, and agricultural economics. Coincidentally, Dan was in the process of initiating a new on-line journal – Economic Journal Watch – designed to serve as a forum for discourse about economic research and the economics profession.

Going Against the Grain

My EJW piece “Agricultural Economists and the State” is consistent with Rich Wilcke’s thesis that agricultural economists have tended to support government intervention in U.S. agriculture – a problem that was to be addressed by his ISMA dream, some 25 years earlier. The article supports the thesis that the mode of funding agricultural policy research in the Land Grant University–USDA complex makes it less likely that agricultural economists will “go against the grain” to support efforts to liberalize U.S. farm policy. My efforts to do so have relied to a considerable extent on insights from Austrian economics – insights that were acquired, as described above, independently of my formal graduate work in economics. These ideas enabled me to take a fresh approach in the analysis of U.S. farm policy and other government programs. This approach also enabled me to meet and interact with a distinguished group of individuals that would not have been possible had I followed the approach taken by most other agricultural economists.

Notes