Peter, a possible reading of this paragraph suggests that Friedman also 
had little acquaintance with "what Mises understood to be the basic 
method used by sensible economic theorists until the early twentieth 
century," to use your words. I believe that this is true.

The state of the art in METHOD at that time was the method used to 
produce what has sometimes been called the marginal productivity theory 
of distribution or the Austrian theory of value and cost. Whatever 
method one might ascribe to Friedman, in my opinion, it gave no credence 
to this one.

Following Clark and Bohm Bawerk, the two economists who ultimately made 
efforts to articulate this method were Knight and Mises. Knight was the 
earliest, writing several papers in the teens and twenties of the 20th 
century. As Ross pointed out, he turned away from this project. An 
exception is his efforts to articulate the concept of capital (and, I 
would add parenthetically, socialism vs. capitalism). Mises took up this 
task in the twenties and thirties, his work culminating in HUMAN ACTION 
(1949 [1940]). In that work, he tried, unsuccessfully in my view, to 
elucidate this method. For those interested in this subject, however, 
Mises effort must be the starting point today.

In the meantime, the economics profession, influenced by the distinction 
drawn in theoretical welfare economics between "positive" and 
"normative," came to neglect not only the method but also the pre-early 
twentieth century nature and purpose of economics -- namely to present 
and defend judgments about whether this or that economic policy is in 
the rightly understood interests of the vast majority of people in the 
long run. Economics became what those unfamiliar with the earlier 
economics called a "positive science." The purpose of this "positive 
economics" is to build mathematical models that can be empirically 
tested. Its practitioners have almost totally abandoned the earlier 
project of elucidating the characteristics of market interaction on the 
basis of the reasoning that such interaction is the best way for the 
vast majority of people to achieve their personal aims.


On 5/9/2011 12:02 AM, Peter G. Klein wrote:
> It baffles me how otherwise intelligent people continue to repeat 
> Friedman's canard about Mises's alleged "intolerance," and Friedman's 
> uncomprehending characterization of Mises's "praxeological" method -- 
> what Mises understood to be the basic method used by sensible economic 
> theorists until the early twentieth century -- as holy writ. Mises's 
> former colleagues and students uniformly describe him as gentle, warm, 
> and extremely helpful professionally and personally, even toward those 
> with whom he disagreed strongly. (Mises was one of the Rockefeller 
> Foundation's main European contacts in the late 1920s and 1930s, and 
> worked hard to secure US positions for promising European economists, 
> regardless of their views.) Friedman of course barely knew Mises and 
> had little acquaintance with Mises's scientific writings. Why on earth 
> would we care what Friedman thought of Mises?



>
> As for Friedman the philosopher of science: I once heard a story (from 
> someone who was present) about a dinner party featuring the Friedmans 
> and Karl Popper. At some point the discussion turned toward Friedman's 
> 1953 paper and Friedman's methodological views more generally. After 
> the Friedmans left, Popper turned to the host, and said: "That Milton 
> Friedman . . . not very clever, is he?"
>
> Finally, I find it funny that Friedman thinks he helped rescue Hayek 
> from intolerance. It wasn't much of a rescue. Here's Hayek to Bill 
> Bartley in the mid-1980s: "Friedman has this magnificent expository 
> power. He is on most things, general market problems, sound. I want 
> him on my side. You know, one of the things I often have publicly said 
> is that one of the things I most regret is not having returned to a 
> criticism of Keynes's treatise, but it is as much true of not having 
> criticized Million's [Essays in] Positive Economics, which in a way is 
> quite as dangerous a book" (Hayek on Hayek, p. 145).
>
> Peter Klein
> University of Missouri
>
>
> ----- Original Message ----- From: "Robert Leeson" <[log in to unmask]>
> To: <[log in to unmask]>
> Sent: Sunday, May 08, 2011 8:17 AM
> Subject: Re: [SHOE] RVW -- Diamond on Emmett, ed., _The Elgar 
> Companion to the Chicago School of Economics _
>
>
>> With respect to the reason why the Economics Department at the 
>> University of Chicago refused to accept Hayek: Milton Friedman told 
>> Bruce Caldwell (2000) “My understanding is that this was because, at 
>> that stage, he really wasn’t doing any economics.” (There may also 
>> have been some resistance to outside pressure). It appears that the 
>> location doubts (which side of the Popperian demarcation line?) 
>> post-date Hayek's fifth floor location.
>>
>> Friedman (in print, at least) concluded that the Austrian business 
>> cycle model was dangerous "nonsense" in 1964, after Hayek left 
>> Chicago (Monetary Studies of the National Bureau, The National Bureau 
>> Enters Its 45th Year, 44th Annual Report, 7-25; Reprinted in 
>> Friedman, 1969, The Optimum Quantity of Money and Other Essays, 
>> Chicago: Aldine).
>>
>> In an interview with David Levy, Arnold Harberger (1999) observed “a 
>> great difference in focus between Hayek (the Austrians) and Chicago 
>> as a whole. I really respect and revere those guys. I am not one of 
>> them, but I think I once said that if somebody wants to approach 
>> economics as a religion, the Austrian approach is about as good as 
>> you can get.”
>>
>> Friedman also reflected on the “so-called Austrians, or von Misesians 
>> … Because their philosophy which admits no role whatsoever for 
>> empirical evidence—it’s entirely introspective—leads to an attitude 
>> of human intolerance. I think anybody who holds that methodological 
>> view either is to begin with, or ultimately becomes, an intolerant 
>> human being. And the reason is very simple. If you and I disagree 
>> about a proposition, the question is how do we resolve our 
>> difference? If we adopt a Misesian methodological point of view, the 
>> only way we can resolve our difference is by arguing with one 
>> another. I know it from what’s inside me, you know it from what’s 
>> inside you, and so you have to persuade me that I’m wrong, or I have 
>> to persuade you that I’m right. There is no other appeal. And so 
>> ultimately we have to get to fighting … that’s why I think that their 
>> praxeological philosophy leads to intolerance. You’ll notice that 
>> Mises himself was a highly intolerant person. Ayn Rand was a highly 
>> intolerant person. As he’s become older, Popper has become an 
>> intolerant person."
>>
>> Friedman believed that Chicago semi-rescued Hayek from intolerance: 
>> "Hayek is a very interesting case, because I think Chicago in 
>> particular had a sufficient influence on him so as to move him away 
>> and he is not nearly as intolerant as the other von Misesians. Same 
>> thing was true of Fritz Machlup, who was another disciple of von 
>> Mises, but neither of them were anything like as intolerant as von 
>> Mises himself. But this crew of people down at the Mises Institute 
>> [at Auburn University] … They’re just as intolerant a bunch as you 
>> can find. A coin has two sides. Von Mises’ greatness as an economist, 
>> his extraordinary influence on a wide range of followers, the 
>> hero-worship he attracted — all these derived from his inflexible 
>> honesty, with the “inflexible” element as important as the “honesty” 
>> element. But the other side of that coin was intransigence, even 
>> dogmatism, that bordered on intolerance for anyone who did not wholly 
>> agree with him."
>>
>> There is also the related issue of the association between the mental 
>> illness which afflicted that generation of Austrians and their 
>> intolerance (and in some instances hysteria). Economists are not 
>> trained to express a professional judgement on such matters. But it 
>> was a tragedy that Mises and Henry Simons (a fellow libertarian) were 
>> not apparently adequately diagnosed.  Hayek, of course, blamed his 
>> own lengthy illness on medical misdiagnosis.
>>
>> Does the self-appointed role of Defenders of Civilisation legitimise 
>> the argumentum ad hominem fallacy that some Austrians embrace (and 
>> which should be enough to exclude them from scientific discourse)?  
>> Does it also legitimise the expression of anger and intolerance which 
>> - according to Margrit Mises (1984, 36) - had nothing to do Defending 
>> Civilisation but was instead caused by mental illness?
>>
>> Robert Leeson
>>
>> ----- Original Message -----
>> From: "Steve Horwitz" <[log in to unmask]>
>> To: [log in to unmask]
>> Sent: Sunday, 8 May, 2011 5:53:12 AM
>> Subject: Re: [SHOE] RVW -- Diamond on Emmett, ed., _The Elgar 
>> Companion to the Chicago School of Economics _
>>
>>
>>
>>
>> To add to Robert’s point:  Hayek’s appointment at Chicago was to the 
>> Committee on Social Thought precisely because the Economics 
>> department didn’t wish to hire him, presumably because he was seen as 
>> insufficiently “scientific” for them. At least that’s the story.  
>> Whatever the reason, it certainly suggests, aside from the very 
>> important differences between Hayek’s approach and that of the 
>> Chicago School that can be gleaned from even a cursory look at 
>> Hayek’s work, the Chicagoans apparently didn’t consider him one of them.
>>
>>
>>
>> Steve Horwitz
>>
>>
>>
>>
>>
>> From: Societies for the History of Economics [mailto:[log in to unmask]] 
>> On Behalf Of Robert Nadeau
>> Sent: Saturday, May 07, 2011 12:21 PM
>> To: [log in to unmask]
>> Subject: Re: [SHOE] RVW -- Diamond on Emmett, ed., _The Elgar 
>> Companion to the Chicago School of Economics _
>>
>>
>>
>> One should not assume, as Prof. Diamond does, that F.A. Hayek was 
>> ever a formal member of the Chicago School of Economics.
>>
>> Robert Nadeau
>>
>>
>> Le 11-05-06 22:38, « Robert Leeson » < [log in to unmask] > a écrit :
>>
>> The words "more complete, measured, and rigorously developed 
>> synthesis" should not be applied to Overtveldt's error-ridden 
>> hagiography.
>>
>> Robert Leeson
>>
>> ----- Original Message -----
>> From: "Bradley R. Turner" < [log in to unmask] >
>> To: [log in to unmask]
>> Sent: Saturday, 7 May, 2011 8:35:18 AM
>> Subject: Re: [SHOE] RVW -- Diamond on Emmett, ed., _The Elgar 
>> Companion to the Chicago School of Economics _
>>
>> For a more complete, measured, and rigorously developed synthesis, 
>> see The Chicago School: How the University of Chicago Assembled the 
>> Thinkers who Revolutionized Economics and Business (2007), by Johan 
>> Van Overtveldt.
>>
>>
>> Friedman, on the cover, describes it as "Thorough and extraordinarily 
>> well informed."
>>
>>
>>
>> On Fri, May 6, 2011 at 7:17 PM, Humberto Barreto < 
>> [log in to unmask] > wrote:
>>
>>
>> ------ EH.NET BOOK REVIEW ------
>> Title: The Elgar Companion to the Chicago School of Economics
>>
>> Published by EH.NET (May 2011)
>>
>> Ross B. Emmett, editor, /The Elgar Companion to the Chicago School of
>> Economics/. Cheltenham, UK: Edward Elgar, 2010. xi + 350 pp. $200
>> (hardcover), ISBN: 978-1-84064-874-4
>>
>> Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of Economics,
>> University of Nebraska at Omaha.
>>
>> The Chicago School of economics has been described in a variety of 
>> ways.  In
>> the current volume, a useful description is given in the essay of Bruce
>> Kaufman who emphasizes “... a deep commitment to rigorous scholarship 
>> and
>> open academic debate, an uncompromising belief in the usefulness and 
>> insight
>> of neoclassical price theory, and a normative position that favors and
>> promotes economic liberalism and free markets”  (p. 133).
>>
>> The volume has been edited by Ross Emmett, a Michigan State historian of
>> economic thought whose previous research has focused on early Chicago
>> economist Frank Knight.  About two-thirds of the volume consists of 
>> fifteen
>> “Essays on the Chicago School” in Part 1.  The remaining third of the
>> volume, in Part 2, consists of nineteen brief profiles of “Some Chicago
>> Economists.”
>>
>> The only essay that attempts any kind of broad overview of the volume is
>> Emmett’s four-page introduction.  His essay briefly establishes the
>> historical context of the Chicago School and points us toward some of 
>> the
>> earlier literature in the history of economic thought that discusses the
>> Chicago School.  But it does not attempt to summarize the diverse 
>> messages
>> of the essays of the volume, let alone try to synthesize these 
>> messages into
>> any overarching conclusions.
>>
>> Synthesis would have been difficult, if not impossible, because of the
>> apparent absence of any consistent criteria for selection of the 
>> contents.
>> This volume appears to be opportunistic in the sense that the 
>> contributors
>> often were culled from those who attended conferences with the editor 
>> on the
>> Chicago School, and the editor has left the contributors considerable 
>> leeway
>> in the length, content and style of what they have contributed.  Emmett
>> openly admits (p. 3) that some important topics have been left out of 
>> the
>> “Essays” section of the volume.  But he does not identify the most
>> glaring omission:  the contributions of George Stigler and his 
>> colleagues,
>> such as Brozen, Demsetz and Peltzman, to industrial organization and the
>> economics of regulation.
>>
>> Most of the essays adopt a neutral, expository stance, reporting the 
>> main
>> research contributions of various Chicago scholars on various 
>> topics.  Some
>> of these essays are written by scholars with some connection to the 
>> Chicago
>> School, and some simply by scholars with an interest in the history of
>> economic thought.  Among the expository essays, economic historians will
>> especially appreciate David Mitch’s chronicle of Chicago’s contributions
>> to economic history, with some discussion of Earl Hamilton, and special
>> attention to Fogel and McCloskey; and Hugh Rockoff’s extensive 
>> account of
>> the genesis and findings of Friedman and Schwartz’s tour de force in /A
>> Monetary History of the United States/.
>>
>> Some of the other expository essays are fairly detailed accounts of 
>> aspects
>> of the Chicago School, e.g., Daniel Hammond’s thorough account of 
>> Friedman
>> and Stigler’s development of Chicago price theory; and Daniel Benjamin’s
>> account of the three most important papers by Armen Alchian. Others 
>> paint
>> with a broader brush, but provide useful overviews of their topics, 
>> e.g.,
>> Steven Medema’s account of the development of Chicago law and 
>> economics; H.
>> Spencer Banzhaf’s account of the development of Chicago welfare 
>> economics;
>> and Gordon Brady’s account of the Chicago School “roots” of the
>> Virginia School that was James Buchanan’s early intellectual home.
>>
>> Parts of Eric Schliesser’s essay are less expository and more 
>> tendentious
>> -- implying that Milton Friedman was indirectly responsible for the 
>> worst
>> that Pinochet did in Chile.  When Schliesser’s essay was earlier 
>> presented
>> to the American Economic Association, Deirdre McCloskey powerfully and
>> persuasively defended Friedman.  Part of McCloskey’s defense was her
>> report of a Chicago economics faculty meeting she attended, where 
>> Friedman
>> had successfully argued for turning down funding that had been 
>> offered to the
>> department from a repressive regime.  But in this volume, Schliesser’s
>> critique of Chicago is left unanswered.  The volume would have been 
>> better
>> if it had included both sides.
>>
>> Nineteen economists are included in the profiles of the “Some Chicago
>> Economists” part of the volume.  The basis for selecting the nineteen is
>> not obvious.  If we limit ourselves to economists who fit Kaufman’s
>> description of the Chicago School, then it is hard to understand the 
>> absence
>> of Nobel-Prize-winning Chicago economists Milton Friedman (yes, /Milton
>> Friedman/ is absent), Robert Lucas, James Heckman, James Buchanan, 
>> Robert
>> Mundell, Merton Miller and Robert Fogel.  And if we adopt a broader 
>> concept
>> of the Chicago School, as Emmett seems to do when he includes Paul 
>> Douglas
>> among his nineteen, then it is also hard to understand the absence of
>> Thorstein Veblen (an early editor of Chicago’s /Journal of Political
>> Economy/), and F.A. Hayek.
>>
>> The profiles that are included often have useful information. But 
>> much of
>> importance is omitted, sometimes due to the brevity of the profiles, and
>> sometimes due to the agendas of the profile authors. The four pages 
>> on George
>> Stigler, for instance, focus primarily on his biography, who he 
>> associated
>> with, and a selection of his political views; but give scant 
>> attention to his
>> wit, his erudition, and his contributions to research, especially in 
>> the area
>> of the history of economic thought.  And to make matters worse, the
>> bibliography to the profile neglects to reference key works that do 
>> focus
>> mainly on Stigler’s research.  (The Wikipedia entry on Stigler does a
>> better job.)
>>
>> But on the other hand, it was good to see Evelyn Forget’s profile of
>> Margaret Reid included in “Some Chicago Economists.”  When I was a
>> graduate student at Chicago, Reid had been long retired, but she still
>> regularly attended Becker’s workshop, and still pursued her 
>> research.  In
>> those days, graduate students would spend long hours at the computer 
>> center
>> with their decks of IBM punch cards, to wait their turn to run their
>> regressions on the mainframe.  And it did not entirely escape our 
>> attention
>> that Margaret Reid was there too, with her deck of cards, waiting her 
>> turn.
>> Her presence and her persistence taught us something about the values 
>> of the
>> Chicago School --something that Klamer and Colander would later 
>> reconfirm in
>> their interviews with graduate students in /The Making of an 
>> Economist/.  At
>> Chicago, economic research was not just some puzzle-solving game by 
>> which you
>> earned your living; not something you retired from; economics was a 
>> calling
>> that mattered.
>>
>> References:
>>
>> Friedman, Milton, and Anna Jacobson Schwartz. / A Monetary History of 
>> the
>> United States, 1867-1960/, NBER Studies in Business Cycles. Princeton:
>> Princeton University Press, 1963.
>>
>> Klamer, Arjo, and David Colander. / The Making of an Economist/.  
>> Boulder,
>> CO: Westview Press, 1990.
>>
>> Arthur M. Diamond Jr. received three graduate degrees from the 
>> University of
>> Chicago, and was a Post-Doctoral Fellow in economics at the 
>> University.  He
>> has recently published several papers related to Schumpeter’s process of
>> creative destruction and is at work on a book entitled /Openness to 
>> Creative
>> Destruction/. [log in to unmask] .
>>
>> Copyright (c) 2011 by EH.Net. All rights reserved. This work may be 
>> copied
>> for non-profit educational uses if proper credit is given to the 
>> author and
>> the list. For other permission, please contact the EH.Net Administrator
>> ( [log in to unmask] ). Published by EH.Net (May 2011). All EH.Net 
>> reviews
>> are archived at http://www.eh.net/BookReview .
>>
>> Geographic Location: North America
>> Subject: History of Economic Thought; Methodology
>> Time: 20th Century: Pre WWII, 20th Century: WWII and post-WWII
>>
>
>

-- 
Pat Gunning
Professor of Economics
Melbourne, Florida
http://www.nomadpress.com/gunning/welcome.htm