Part 2: Clarification Regarding Austrian Economics

Koch’s academic network is overwhelmingly made up of a fringe branch of economics known as Austrian economics. Put simply, the Austrian position is full anarcho-capitalism, abolishing the state by privatizing every function of government. The U.S. Austrian movement is fiercely divided into two branches.

One branch, centered in Virginia at George Mason University, takes a gradualist (though highly aggressive) approach to erode the state and achieve full anarcho-capitalism. This branch idolizes Austrian economist Friedrich von Hayek, and is advanced through the Institute for Humane Studies.

The other branch, centered in Alabama at Auburn University, takes a moral position that the state is inherently coercive and illegitimate in any form, advocating radical privatization, nullification, and succession. This branch is exemplified by the ideology of Ludwig Von Mises and Murray Rothbard. It is advanced through the Ludwig von Mises Institute.

The split between the two schools can be traced to Charles Koch himself.

In 1976 Murray Rothbard and Lew Rockwell founded the Center for Libertarian Studies with $65,000 from Charles Koch as an outgrowth of the Libertarian Scholars Conference.

In 1977, Rothbard and Charles Koch co-founded the Cato Institute, where Rothbard heavily shaped Koch’s political vision until they experienced a falling out in 1981, when Charles Koch ousted Rothbard from the CATO board.

In 1982, a spurned Rothbard and Rockwell founded the Ludwig von Mises Institute, which has described itself as “heir to the Center for Libertarian Studies.” It is here that many Rothbardians penned openly anti-Koch writings.

For many reasons, the Koch foundation and the Virginia Austrians will claim they have nothing to do with the Alabama Austrians, and vice versa. Nevertheless, the numbers speak for themselves. Charles Koch Foundation has continued to fund both schools of Austrian economics. This has included very many Mises Institute scholars, including the nation’s leading Rothbardians and members of the League of the South (a hate group founded in Austrian economics).

It can also be seen that Alabama Austrians have had a consistent presence within Koch’s Institute for Humane Studies, even while they were active members of the League of the South. In general the two schools are not that divided. See Mises Institute ties to the Charles Koch Foundation, George Mason University, and the Association for Private Enterprise Education above.

George Mason University professor Peter Boettke describes his position as recently as 2007:

As readers of this blog experienced in the recent past, there are differences between the approach to teaching, research and the promotion of Austrian economics in the contemporary academic world and public mind between those associated closely with the Mises Institute and those not as closely tied to the Mises Institute.  A lot of this discussion is counter-productive I would argue, but some of it goes to the very core of our enterprise. But that is not what I want to talk about today. I obviously have my disagreements with certain positions associated with the Mises Institute and they are on the public record. But today I want to stress why I spend my time trying to fight this battle within the Austrian ranks. In order to do that I have to explain why I think the Mises Institute is so vitally important to the Austrian/libertarian movement.(Boettke, 2007)