Salamancans and Austrians

In his researches into Hayek’s role in the decision to hold the 1981 conference of the Mont Pèlerin Society (MPS) in Pinochet’s Chile, Corey Robin discovered a 1979 letter from Hayek to another MPS member in which he enthusiastically – and, as it transpires, successfully – endorsed Madrid as a conference venue. 

Robin goes on to write:

For several years, Hayek had been growing increasingly excited about the possibility that “the basic principles of the theory of the competitive market were worked out by the Spanish scholastics of the 16th century.” For reasons still obscure to me, he seemed positively ecstatic about the notion that “economic liberalism was not designed by the Calvinists but by the Spanish jesuits.” (In his History of Economic Analysis, Schumpeter also had argued “that the very high level of Spanish sixteenth-century economics was due chiefly to the scholastic contributions.” But it didn’t seem to transport him in the way it did Hayek.)

Hayek insisted that the conference be shipped for a day 132 miles northwest of Madrid in order “to celebrate at Salamanca”—the university town where this specific branch of early modern natural law theory was formulated—”the Spanish origins of liberal economics.”

He got his way: the MPS members dutifully got into their buses and, like medieval penitents following their shepherd, made their pilgrimage to the birthplace of free-market economics

[My emphasis.]

As Robin notes, Schumpeter was also excited by this idea – as was Rothbard.  Schumpeter called the Late Scholastics “the first economists”.  Rothbard’s contention was that the Salamancans were yet more of the precursors to the Austrian School that he liked to find everywhere.  Even today, Austrians are into the idea of the Salamancans being their precursors.  

More generally, libertarians have a bit of a fetish for it.  Alejandro Chafeun, one-time Randian, member of the Mont Pelerin Society, and president of the Atlas Foundation (a free-market think tank in case you couldn’t guess), wrote a book on the subject called Faith and Liberty which Mises dot org thinks highly of.  I haven’t read Chafeun’s book, so I can’t comment on his conclusions, but I will say that I find the idea of modern economics being prefigured – to an extent – in the writings of Late Renaissance Catholic scholars perfectly plausible.  Modern economics is an expression of capitalism and capitalism grew in the womb of Early Modern Europe, of which the Catholic Church was still the main ideological producer for a long time.  Catholicism came to express nascent capitalism in its own way, much as did many pre-existing aspects of feudal Europe, even if Reformation ideas were also an expression of the rise of the new system.  The ways in which power structures and ideologies respond to underlying economic changes are complex and non-schematic.  Lutheranism arose partly from indignation at the sale of indulgences by the Church, itself an expression of the rising marketisation of feudal society.

It’s worth taking a moment here.  As far as I’m aware, the most concise expression of the best version of the Marxist view of the relation between the Reformation and the rise of capitalism was written by Chris Harman in his A People’s History of the World:

Historians have wasted enormous amounts of time arguing over the exact interrelation between capitalism and Protestantism. A whole school influenced by the sociologist (and German nationalist) Max Weber has argued that Protestant values produced capitalism, without explaining where the alleged Protestant ‘spirit’ came from.  Other schools have argued that there is no connection at all, since many early Protestants were not capitalists and the most entrenched Protestant regions in Germany included those of the ‘second serfdom’. 

Yet the connection between the two is very easy to see. The impact of technical change and new market relations between people within feudalism led to a ‘mixed society’—‘market feudalism’—in which there was an intertwining but also a clash between capitalist and feudal ways of acting and thinking. The superimposition of the structures of the market on the structures of feudalism led to the mass of people suffering from the defects of both. The ups and downs of the market repeatedly imperilled many people’s livelihoods; the feudal methods of agriculture still spreading across vast areas of eastern and southern Europe could not produce the yields necessary to feed the peasants as well as provide the luxuries of the lords and the armies of the monarchs.  An expanding superstructure of ruling class consumption was destabilising a base of peasant production—and as the 16th century progressed, society was increasingly driven to a new period of crisis in which it was torn between going forward and going backward.

Every class in society felt confused as a result, and every class looked to its old religious beliefs for reassurance, only to find the church itself beset by the confusion. People could only come to terms with this situation if they found ways to recast the ideas they had inherited from the old feudalism. Luther, Zwingli, Calvin, John Knox and the rest—and even Ignatius Loyola, who founded the Jesuits and spearheaded the Catholic Counter-Reformation—provided them with such ways.

The work of the Salamancan scholastics was, at least in part, motivated by a desire to respond to the challenges raised by Reformation ideas.  As such, it’s quite understandable that they might want to come to a new understanding of the new capitalistic realities of the changing world that was giving rise to such confusions as described above.  The Catholic Church was also, far from being a mere feudal enemy of capitalism in any simplistic way, itself a capitalist actor in the rising system – albeit one which essentially expressed vested interests which sometimes stood in the way of the expansions and changes it pushed towards.  But then, speaking of things being non-schematic, Protestantism came to ally itself with aristocratic and feudal power structures – i.e. the German princes after the challenge from below from insurgent peasants, who themselves used Reformation ideas to express their desire for change.  Such complexities are only a problem for a dogmatic and schematic Marxism which is not historical materialism as I know it.

But we stray from the point (though some this will come up again later).  It’s Rothbard’s specific interpretation of the idea of the Salamancans as proto-free-marketeers, and the stress the Austrian School in particular puts on it, that I want to briefly look at.  Luckily, other people have already done the heavy work for me.

Having read a thorough and judicious paper on this issue entitled ‘Was the School of Salamanca proto-Austrian?’ by Claudia Jefferies & Andy Denis at the Department of Economics, City University London, I can confidently say that, as usual, Rothbard is full of shit.

Jeffries and Denis conclude – very persuasively, for my money – that “the School of Salamanca cannot be considered to be proto-Austrian” because “it is inappropriate to approach the Salamancans with any modern school in mind as a standard against which they are to be measured – and the attempt to do so, reading 16th century writers through 20th century spectacles, tells us more about the latter than the former”.  

What’s more, according to Jeffries and Denis, “Rothbard’s interpretation is vitiated by a misconception of the specificity of the Austrian School; the immense Salamancan legacy for subsequent economists is a broad contribution, one for many schools, and not at all one specific to the Austrian standpoint.”  

They go on to find that 

Rothbard’s account of the one element of late Scholasticism which can be claimed as feeding into Austrianism, the tradition of natural law, is quite unpersuasive: contrary to Rothbard’s judgement, the natural law tradition, which was indeed a core component of Salamancan theory, and is today an important aspect of Austrian theory, represents, not an anticipation of the scientific outlook in the Salamancan writings, but a residue of religious thinking in the Austrian theorising.

Without getting in details, the debunking of Rothbard’s account also pours cold water on his idea of a continuity of subjectivist thought disastrously broken by Adam Smith et al (i.e. by the labour theory of value of the classical economists) which had to then be repaired by the heroic marginalists, including, of course, the Austrian co-founders.  (Rothbard’s notorious and scurrilous attack on Adam Smith, calling him a plagiarist, is surely also based on this view of him as a historical betrayer.)  More fundamentally, Jeffries and Denis challenge Rothbard’s understanding of the Salamancans, saying that there is “missing context” in his account.  It is actually, they say

difficult to label Spanish late Scholastic authors as to belonging to a particular doctrinal school, as they were recipients of multiple influences. …  As far as focusing on their statements in line with a subjective theory of value without referring to its moral context is also wrong. It is however not only the moral-philosophical context that is missing from Rothbard’s approach. Some of his statements reveal the absence of a proper economic-historical context in his treatment of late Scholastic sources.

Freed from pesky things like context, Rothbard simply ignores instances of Salamancan thinkers advocating ideas in line with a labour theory of value, or suggesting policies which would certainly be seen as illegitimate government interference in any recognisable ‘Austrian’ perspective.  Rothbard misinterprets Salamancans’ statements, making it sound as if they are talking about markets in general when a proper understanding of their approach – in its proper Early Modern context – makes it clear that they are being geographically and seasonally specific.  And so on.  Rothbard’s account is rife with this sort of thing.  Jeffries and Denis are writing a scholarly paper rather than a polemic, so their language is measured, but the gist is clear: Rothard’s account is ahistorical and simply inaccurate.  More, it reeks of ideological cherry-picking.

In his account of ‘natural law’ Rothbard again asserts a line of continuity, broken by Smith.  Yet, as Jeffries and Denis point out, much of Smith’s work is predicated on a ‘natural law’ theory.  But then, we should expect him to not see it where he doesn’t want to, because his conception of it is ahistorical and ideological, something which can be seen in his teleology.  According to Jeffries and Denis, Rothbard lays out

a timeless definition of natural law according to which the correct way to study something is according to its nature. Natural law is presented as a methodological principle for the positive study of phenomena, including human behaviour, with normative considerations set aside: “The concept of ‘good’ (and therefore of ‘bad’) is only relevant to living entities. Since stones or molecules have no goals or purposes, any idea of what might be ‘good’ for a molecule or stone would properly be considered bizarre.”  …  From here on, the notion of natural law remains the same throughout his study, with the writers considered awarded credit according to how faithfully they transmitted this unvarying doctrine to future generations. There is no development and no consideration of the meaning of the doctrine in different historical circumstances. Rather, each generation is successful to the extent that it strips away mistaken notions and expresses the core ideas in an ever more clear and adequate form. At the end stands the Austrian School, and all others are to be appraised in terms of their success or failure in preparing the way for Austrian thought.

This whiggish approach to history – the past is interpreted as steps on the road to today’s knowledge – is itself a concomitant of the natural law tradition. Natural law, contrary to Rothbard’s anachronistic interpretation, and whether of the Stoic or Catholic or Calvinistic variety, was a fundamentally religious doctrine in which positive and normative ideas where united.

They go on to make the important point that the

natural law approach… has the attractive consequence that it is legitimate to study the world and not just divine texts. But it has the less attractive consequence that the world is construed as embodying divine reason and divine purpose – erecting an apology for the status quo. If the world presents the appearance of imperfection, of sin and suffering, this is because we are only able to grasp it with the finite mind of man, rather than the infinite mind of God, who can see all the ultimate ramifications of things.

…

Adopting this standpoint immediately leads to a whiggish interpretation of history: the goal of history is what we see today, so the past is to be appraised as a process of approximation to today’s conditions.

Rothbard’s whole concept of politics, law, and morality is based on the C18th conception of ‘natural law’ held by Locke, which amounted – I think – to a moral justification of slavery and colonialism in the age of the rising bourgeois system.  He is simply reasoning backwards, first from the ideological needs of private property, and then from the needs of his ‘school’ for a lineage which goes a long way back. 

Jeffries and Denis pause to note that it

is interesting to note here the very favourable view that Hayek takes of the natural law tradition. Hayek… details how the idea of spontaneous order was maintained by theorists of ‘the law of nature’ – ie, natural law – from Greek times up to the present. He postulates a connection between freedom, natural law, and a belief in the agency of a benign deity: “There appears to have existed in all free countries a belief that a special providence watched over their affairs which turned their unsystematic efforts to their benefit”

Freedom, at least as conceived by Hayek.  Natural law.  Spontaneous order.  God and country.  It could hardly be more perfect a concoction for a reactionary – especially when you remember that ideas like ‘spontaneous order’ are far from peculiar to Hayek, and actually go way back in conservatism.  Burke, for instance, can be found musing on how order emerges from uncoordinated human action.  It is the essence of the (cruder) ideological commonplace of the market as a guarantor of freedom.  It is the essence of Hayek’s defence of liberal society against the evils of planning, i.e. the attempt by some institution higher than private property itself to co-ordinate, for some notional higher social good, what is done with the valuable resources of society.  It is the assumption that, in Pope’s words  from the Essay on Man “Whatever is, is right”; that the order which spontaneously arises (if we take that to be a valid description of the working of societies) is also a panglossian optimum which should be defended… leaving aside any question of how we separate out those aspects of the existing ‘spontaneous order’ we don’t like and pronounce them undesirable (i.e. can we not say that the interventionist state which has evolved is at least as much an instance of spontaneous order as, say, the market?).  It is the basis of the hysterical rejection of any authority other than property which underlies anarcho-capitalism.  It is the basis of all forms of libertarian anti-statism, even in the battiest and most vulgar forms.  And here’s Hayek, linking it up (favourably) with nation and supreme being.  Whether or not he himself believes in the supreme being in question, or comes from the country under discussion, is secondary.  The really committed and subtle reactionary can smile upon the reactionary impulse in his counterparts across the water.  It is the most natural thing in the world for them to rally around their nation, their iteration of spontaneous order, just as you do yours.  This turns up in Alt-Right ideology in the form of ‘omninationalism’.  But then, the view of Jesus and jingo as central to culture, and cultural separatism as desirable is, of course, also key to ‘paleolibertarianism’, the pseudo-philosophy eventually touted by Rothbard and Rockwell, a syncresis of the defence of private property with the embrace of traditional conservatism which is near-indistinguishable – except by its isolationism – from ideological fascism.  Once again we see the alt-Right’s family tree.

The irony, at least for Rothbard’s account, as Jeffries and Denis immediately point out, is that Adam Smith can be found agreeing.  Smithian laissez faire is also based on the religious idea of ‘natural law’, of the veneration of that which arises ‘naturally’.  As Jeffries and Denis sum up:

the reliance on what is natural against the products of human reason derives from a belief in the beneficence of the deity whose body nature is, and leads to an apologetic standpoint in which “partial ills” are interpreted as “universal goods”. It is certainly true that the Salamancans endorsed, developed and transmitted natural law ideas, and it is also true that the Austrian school embodies those ideas, perhaps in the most pure and extreme form of any school of thought today. But far from exemplifying a proto-scientific standpoint on the part of the Salamancans, this rather underlines a hangover of religious ideas within Austrian thought.

What a shock for all those ancaps and libertarians who are also voluble ‘sceptics’.

But what I really wanted to get to here was – however presumptuous this may be – offering my own answer to what puzzled Corey Robin about Hayek’s effervescent enthusiasm for the Salamancan school.  I quoted Robin to the effect that Hayek was excited about the idea that “economic liberalism was not designed by the Calvinists but by the Spanish jesuits”.  I suspect that Hayek was, for reasons he was almost certainly not conscious of, delighted to be able to flee from the Calvinists.  And I think that was because, at least on some level, in terms of his intellectual tradition, he was one.  And ironically, it’s to Corey Robin that we owe this insight, in his essay ‘Nietzsche’s Marginal Children’…