Economics and martial arts? One might be tempted to think that those two things can’t have anything in common. But there are some parallels that we can trace. First of all, both are types of systematic knowledge. The former is the study of human action and interaction with goods and services and the latter is the study of the best way to physically overpower another man. Both are ideas developed throughout millennia subdivided in several different schools or styles. And in the middle of the 20th century both have matured into sophisticated schools of thought known as the Austrian School of Economics and Gracie Brazilian Jiu-jitsu. Let me begin with the Gracie Jiu-jitsu history.
Jiu-jitsu was created by Indian monks and spread over Asia reaching feudal Japan where it was practiced and developed by Samurai. After the Meiji period with the abolition of the Samurai, and the developments of Judo by Kano Jigoro, this martial art arrived Brazil in 1914, with Kano’s student, Conde Koma, who in 1917 taught the young Carlos Gracie his martial art. Carlos passed his knowledge on to his brothers and the Gracies began to practice and develop this martial art, giving rise to a new style called Brazilian or Gracie jiu-jitsu. It was his younger and weaker brother, Hélio, who created the most efficient improvements to jiu-jitsu. The Gracie brothers started to open jiu-jitsu gyms and, in order to prove their martial art superiority, began to challenge fighters of different styles, with great success. Hélio became a celebrity in Brazil and Gracie jiu-jitsu was recognized by many as the best and most unbeatable martial art.
In the beginning of the 1950s Hélio retired. During the late 1970s, Bruce Lee movies were a great hit, and Kung Fu and Karate practitioners came out to challenge the Gracie supremacy. It was time for Rolls Gracie, Carlos’s son, raised by Hélio, to take up the challenge. He easily vanquished the Karate masters and other Gracie jiu-jitsu fighters represented the Gracies in several subsequent challenges with an unbroken record of victory for Gracie jiu-jitsu. But even with this overwhelming superiority, Gracie jiu-jitsu wasn’t able to defeat one opponent: Hollywood. The great majority of the world’s public still believed that Kung Fu and other styles alike were the foremost martial arts. Globally, only a few were aware of Gracie jiu-jitsu.
Things changed in the early 1990s. Rorion Gracie had been living in California since the 1970’s, teaching and promoting the Gracie jiu-jitsu, and challenging and winning local fights. In 1993 he had an idea that would change the world of martial arts forever, and once and for all prove which style was the best. He created The Ultimate Fighting Championship, a tournament with no substantial differences from what the family had been doing in the past decades but one: it was to be broadcast on cable TV. The fighter chosen to represent Gracie Jiu-jitsu was Hélio’s son Royce. He won every fight, defeating great masters of different styles. But this time the whole world could see the Gracie family in action. From that day on, everyone knew that if they wanted to be a good fighter, they had to learn jiu-jitsu, or they would be defeated by a fighter that knew jiu-jitsu. It was not only Royce’s victory. It was the ultimate Gracie jiu-jitsu victory over all other styles.
Now let me turn to economic science. The origins of the Austrian Economics can be traced back to the Late Scholastics of the University of Salamanca in Spain, who discovered and explained many economic laws we consider to be standard concepts today. These teachings were further developed by intellectuals such as Cantillon, Turgot, Bastiat and Say until 1871, when Carl Menger, professor of economics at the University of Vienna, combined these ideas with the marginal utility theory and founded the Austrian School of Economics, with the publishing of Principles of Economics. The first adversary of Menger and the Austrian School was the Historical School, represented by Gustav von Schmoller and others. Menger faced and defeated them during an intellectual dispute called Methodenstreit during the 1890s. Menger had several students, but it was Eugen von Böhm-Bawerk who took the master’s lessons into new grounds, applying it to various subjects further developing the Austrian School. Böhm-Bawerk also engaged into intellectual battles, mainly with Marxists, and came out victorious refuting the socialist-communist exploitation theory.
Yet, it was only with a Böhm-Bawerk student that Austrian School would mature into an unbeatable style. Ludwig von Mises reconstructed economics on firm epistemological foundations, placing economics as a branch of a larger science – praxeology – giving to it the status of an axiomatic and logical deductive discipline. Mises began to improve the Austrian School in 1912, with the publication of The Theory of Money and Credit, and already in 1920 he overcome all socialist thinkers, demonstrating that socialism was impracticable. During all his life Mises had several intellectual disputes with all sorts of adversaries – socialists, Marxists, positivists, interventionists, and neoliberals – and he had a lot of students, who also engaged in these kinds of battles. Probably one of the most important battles was fought by a Mises student, Friedrich August von Hayek, against John Maynard Keynes.
During the 1930s Hayek was a professor at London School of Economics, and was the most influential Austrian economist on the Anglo-Saxon world, so he was the one to confront Keynes, who published his General Theory in 1936. Hayek studied under Mises, but before this he was already a disciple of Friedrich von Wieser and would remain a Wieserian for all his life. It was the inconsistencies of his Wieserian/Walrasian general equilibrium approach to economics that led him to stumble against Keynes. Keynes stated a totally flawed economic theory, and his theory endorsed government spending, inflation, and everything that politicians love to do, so without a solid refutation, the Keynesian Tsunami wiped out the economic world. In fact, the Misesian Austrian School of Economics was not fully developed until the 1940s, when Mises published Nationalökonomie (1940) and Human Action (1949). Only Mises’s students from the 1940s on would be truly Misesians, like Murray Rothbard, Hans Sennholz, Israel Kirzner, Ralph Raico and George Reisman. The Misesians continued engaging in intellectual battles with other schools of economic thought, and continued to defeat all. Rothbard was a distinguish fighter who improved Misesian Economics in many ways and faced all types of adversaries. Some of these advancements and disputes can be seen in publications like Man, Economy and State and Economic Controversies.
Despite all these victories, Misesian Austrian Economics is not the dominant “style” of economic science in the world. Misesian Economics is where Gracie Jiu-jitsu was 20 years ago – practiced by a small minority. We Austrians had great masters like Hélio and Rolls and nowadays we have a lot of great fighters, like Royce and Rickson, but it seems that we are lacking a Rorion. We are trying in many ways to alter the economic paradigm. Austrian economist Robert Murphy has been challenging the famous Keynesian Nobel laureate Paul Krugman for quite some time. Krugman has already debated live with other Austrian, Ron Paul, but it was just an informal debate in a short TV show (Paul vs Paul). During his two presidential races, Ron Paul promoted Austrian Economics unlike anyone before him, but he was unable to convert mainstream economists; Keynesianism continues to dominate academia and media.
The Gracies too strived for many decades without success, doing things like this 1988 seminar with Chuck Norris (where Norris tells the story when 75 years old Hélio Gracie put him to sleep) until they finally hit a significant audience with the UFC. Of course, economics will never be as popular as fighting, and the intellectual disputes will not be a blockbuster for the general public. But economics has its public and the economic zeitgeist is much more important to the daily lives of the masses than the dominance of any particular martial art.
Already an old man, Hélio Gracie was asked in an interview what a weak man is, to which he answered: “I am a weak man. I was born weak and I am going to die weak. I have defeated my adversaries only because I knew jiu-jitsu.” He fought all his life to prove the superiority of his style – and he did. The world came to know about this superiority of the Brazilian Gracie Jiu-jitsu only after Royce’s victories in the UFC. Mises also fought all his life to demonstrate what is valid economic science and to prove the superiority of the Misesian Austrian Economics – and he did. But few are aware of this fact. How to burst this intellectual bubble is the biggest challenge Austrians have in front of them.
