I’m no longer live blogging, judging it tacky to be typing on a laptop in a formal dining room at Archbishop Fonseca College, surrounded by dignitaries from Spain wearing glorious wool capes. So I took notes, and mainly I carry very strong memories of this evening, memories which begin the courtyard.
It seems like many photographs from Salamanca feature long hallways in corridors with vaulted ceilings and intricate carvings, creating fantastic lighting effects and giving the impression that anyone walking here is playing some ominous role in the history of human events. What you can’t tell from photos is that such corridors are all over town. It is not just one place. It seems like hundreds of places.
The Fonseca College courtyard is surrounded by two levels of these hallways, with a water well in the middle. I first made my way to the well, where I lifted the heavy cover and looked inside to see the bottom and observe that it connects to some kind of water system deep under the city. Then I had a vision of Les Miserable or a 1940s movie classic and it all became really spooky so I covered it up again and continued to observed the idyllic settings.
This was just before the servers brought out a seemingly endless supply of Spanish ham, each piece carefully cut, an earthly delight denied to American in the land of the free because of government knows it is not good for us.
We made our way to dinner and entered the magnificent dinning hall, a place with paintings everywhere and huge doorways that extend to balconies that are still solid after 500 plus years, and it occurred to me that someone could read aloud the Federal Register in this room and still come across as profound.
Dinner began with a food item like looked like nothing I had ever seen, but which turned out to be some pastry-wrapped, cream cheese crab treat laced with beet syrup, the kind of dish no American has ever eaten and that seemed to sum up the overwhelming exotica of the entire experience. All cares are gone. All fear is gone. All worries dissipate. And then you remember the mortality of it all: tomorrow, we leave.
This year’s Gary G. Schlarbaum award was present to Jesus Huerta de Soto for his lifetime achievement in the cause of liberty, and it was particularly appropriate for this man who has written the book that perfectly anticipated the current economic climate. His Money, Bank Credit, and Economic Cycles.
His lecture began with the question, what is Austrian economics? He said that the Austrian school is the economics of the future. It was a surprising way to begin a speech in a venue in which the past seemed so much larger than the present. We needed to be reminded of the Kierkegaarding reality: that the forward march of time is a law of history.
In de Soto’s view, time is on the side of the Austrian School and the reason has to do with the catastrophic inability of mainstream economics to anticipate any of the major economic trends of the last fifty years: the postwar recovery, the inflationary stagnation of the 1970s, the collapse of socialism in Europe and China, and, finally, and amazing and paradigm-shifting meltdown of 2008. Austrians, in contrast, were correct before and after each of these events.
The contrast truly matters precisely because mainstream economics has long rested its methodological credibility on its ability of mathematical models to predict the future. He recalled many conversations with economics all over the world over the past thirty years in which they admitted continual surprise at each of the major economics shifts, shifts that confirm the Austrian worldview and yet stupefy the modelers.
The difference is important because Austrians live in a world in which reality ends up conforming to theory at every turn. Mainstreamers live in a world in which their models are confounded by reality at every turn. This is what accounts for a comparative confidence and optimism on the part of Austrians.
He compared the meltdown of 2008 to the collapse of socialism in 1989. Whereas the socialist collapse represented a devastating indictment of state planning, the current crisis is an indictment of two pillars of the current monetary system: central banking and fractional reserve banking. He believes that both of these have been revealed as fraudulent and unstable at their very core.
He then turned to the methodological issues at the root of the mainstream vs. Austrian debate. Speaking as a mathematician himself, he knows its in applicability to the world of action and change. It is not possible to model change because in the attempt to account for it, the modeler has to presume precisely what is unknown: what choices will be made in uncertain future. For this reason, no mathematical model, no matter how complex, can ever be useful for describing economic forces at work.
During the major part of the last section of his speech, de Soto departed from his theoretical presentation to reflect on his life. He says that whenever he grows frustrated at professional problems or difficulties, he reflects on the lives of Mises and Hayek, and how they lived amidst extraordinary trial from the early part of the careers until the end. Mises in particular was shoved from place to place with declining a material and professional fortune at each step. By comparison, he said, he has been enormously privileged.
He offered some advice to Austrians to not attempt to upend the tradition and make major contributions with every paper. We need to defer to the apparatus that has been bequeathed to us and add to the edifice only where we can really do so in a substantive way. A certain humility is called for in what we do.
With some emotion in his voice, he thanked the Mises Institute for the award and looked forward to further cooperation between the Juan de Mariana Institute and the Mises Institute, and a bright future for the Misesian body of ideas.
As people walked back to their hotel rooms, there were all the usual regrets of not having bought enough mementos of Salamanca, but the shops were closed while the bars and restaurants were of course still open. It was near midnight, but in Spanish tradition, the night was still very young. The word “late” only applies when the sun begins to come up again. Perhaps that is a metaphor for the prospects for the Austrian School. It is very late in the day and the sun is beginning to rise for the ideas of liberty.
