Every once in a while, I get an e-mail from an undergraduate student asking where in Canada he or she could pursue a graduate degree in Austrian economics. While no economics department in Canada offers such a degree, there are students within "mainstream" departments who take the initiative to use the Austrian approach in their studies. Since I was one of those students, some of you may find it useful if I shared my experience. This letter is intended for all those interested in incorporating a great deal of Austrian economics into their master’s thesis or a doctoral dissertation while pursuing a graduate degree within a “mainstream” economics department.
First, let me say a few words of caution. Most of what I will say here are my subjective impressions based on what I thought was implied in certain situations and based on non-verbal cues. Although I consider these to have been extremely useful insights for me, I can’t guarantee either their objective truthfulness or general applicability.
Some of the main insights I gained through my studies are that, along with pursuing a formal degree in mainstream neoclassical economics, I was in the business of obtaining two more implicit and informal degrees: in Austrian economics and in communication.
The key here is to understand that if one wants to pursue Austrian economics in a predominantly non-Austrian environment, he or she needs to master the regular curriculum to the same level, if not better, than the other students. This is because, among most of the faculty, your interest in Austrian economics will be considered a liability. You need to earn some extra points so that the majority non-Austrian faculty are willing to swallow your Austrian tendencies. Of course, no one will say this openly, except, perhaps, your advisor to you when there is no one around. But, since I have never heard any of the non-Austrian faculty actually stating their preferences about my Austrian tendencies, this claim is one of those unprovable subjective impressions I mentioned in the opening.
In my view, the best move in the direction of persuading the non-Austrian faculty that you are a valuable asset to the department and a good master’s or doctoral candidate is to be good, if not excellent, at math. This was one of my selling points. However, I have to note that I was good at math not because I wanted to use it to buy a permission to do Austrian economics, but because I like math. However, since my math marks happened to be high, this insured me against being accused of flirting with Austrian economics to avoid math. I taught a math Camp course for the incoming masters and PhD students one year, and I was asked to teach it the next year too, but I had to refuse because I was focusing on preparing my dissertation defense.
However, like many Austrians, I think math should be used with extreme caution when expressing economic concepts. Mathematical language is highly metaphorical as an exposition device in economics. Textual logic is often a more accurate and persuasive means of conveying economic ideas. But, unlike many Austrians, I believe that math too can be a powerful communication technique if it is understood and applied appropriately. So, if there is a take home message here, it would be that one should not shun math just because he or she believes the mathematical language may not be the most appropriate for expressing economic concepts. Give it a chance and see what it does for you.
I gave math a chance and realized that one can use it to demonstrate some of the strengths of the Austrian insights. My main approach was to translate some of Hayek’s ideas about knowledge and Coase’s ideas about perfect competition into a mathematical language and then pinpoint places where, as a function of the translation process, I had to make heroically unrealistic assumptions. Then, I explained the logical consequences of those assumptions in the context of the Canadian agricultural markets. Eventually, I was able to convince my audience that there is something important we are missing if we ignore Hayek’s and Coase’s warnings about assuming too much.
When it comes to my remark that you will also be obtaining a degree in communication, this particularly refers to learning how to communicate with your advisory committee and how to persuade them that your ideas are worth pursuing. Most of them will be unfamiliar with the literature you are interested in. They will probably know something about Hayek, and maybe something about Mises, but most of them will likely consider Mises’s and Hayek’s works as a part of economic history. Their position will likely be that Mises’s and Hayek’s ideas are arcane, and that the contemporary mainstream neoclassical literature is far more sophisticated.
I struggled with this for a while until I found a solution that worked for me. What worked is that, along with the contemporary mainstream neoclassical literature, I referred to contemporary Austrian works, but without labeling them as Austrian. Then, I indicated that all of this contemporary literature stems from some earlier literature, and this is where I talked about Samuelson, Sraffa, Coase, Mises, Hayek, Menger and others, but I generally avoided labeling them as anything other than economists. This may echo Friedman’s idea that the only revelant kinds of economics are good economics and bad economics.
In the beginning, it didn’t do me any good to talk about the failure of the former USSR or the perverse incentives within the government. Somehow, this was a red flag that I was being an ideologue, and not an economist. The way I got around this is the famous frog in the pot approach. I would start with a concept or a theme that most of my colleagues were familiar with and generally agreed on. For example, I would use a situation where economists don’t know what the price of labor would be if minimum wage laws were abolished. Then, I would use small steps to show how the issue most economists were familiar with related to the problems of, say, the economic calculation and the incentive problems in socialism. In this case, minimum wage laws are making it impossible for all the willing workers and employers to express their subjective preferences through market exchanges. So, we can use Hayek’s insights about prices and knowledge to conclude that interventionism constrains the dissemination of information within society.
As I was moving toward the middle and the end of my degree, I realized that the main quality I needed was perseverance. And I needed more of it than “regular” students who already know that getting your degree is a matter of perseverance and attitude as much it is a matter of intellectual ability. There were moments when I felt I was talking to a wall and moments when I felt others are intentionally trying to misunderstand what I write and say. I decided not to make any decisions during such moments. Instead, I would find something else to do for a while. My wife is a great listener, so I would sometimes (and “sometimes” is probably a great understatement!) share my frustrations with her. She always made sure that I knew she had great faith in my ability to overcome those challenges. Eventually, all those challenges seemed small and simple.
I also realized that, whenever it seems that someone doesn’t understand my idea, it is my job to make those ideas more understandable. It is then implied that you have the utmost respect for those that don’t understand your position or disagree with you. With this respect comes the patience to invest all your energy in presenting your ideas in a way that those who disagree with you can appreciate the meaning and importance of those ideas. Thus, patience is a virtue, especially for graduate students with a strong interest in heterodox economics.
From all this, you can see that one needs a great deal of persistence and some “thick skin” to endure and overcome all these challenges. One might even ask: why do it if there are so many challenges? My answer is—because you love what you do, and because, by overcoming your challenges, you become a better person and a better economist.
Once you manage to persuade your advisory committee that your ideas are worth pursuing, and once you compile your first thesis draft, you are off to the races. I think they all appreciate that it is not easy to hold a minority position. So they will respect you for that. You will feel more and more of that respect as you progress towards the completion of your degree. As a reward, once you graduate, you will be a firmly grounded intellectual with a clear idea of your strengths and weaknesses as well as the strengths and weaknesses of different economic approaches