Economics in the hands of its masters is an expert critique of rule by expertise. And even among its masters, there are many differing visions of the role of economics. —Pete Boettke In my previous article, I explored the intellectual engagement with controversy on the part of great thinkers in economics from Ludwig von Mises to Frank Knight. In this piece, I explore the contributions of several Nobel laureates in economics, focusing on their Nobel addresses, in consideration of the question of the role of the economist in a free society.

Friedman and Stigler In 1946, two promising young economists, Milton Friedman and George Stigler, published a pamphlet for the Foundation for Economic Education critically examining housing policy entitled “Roofs or Ceilings.” They concluded their essay with the following: A final note to the reader—we should like to emphasize as strongly as we can that our objectives are the same as yours: the most equitable possible distribution of the available supply of housing and the speediest possible resumption of new construction. The rise in rents that would follow the removal of rent control is not a virtue in itself. We have no desire to pay higher rents, to see others forced to pay them, or to see landlords reap windfall profits. Yet we urge the removal of rent ceilings because, in our view, any other solution of the housing problem involves still worse evils. In framing their analysis in this way, Friedman and Stigler were following the same approach that Mises laid out. Treat ends as given, and critically analyze the effectiveness of chosen means to achieve those ends. But the reaction to Friedman and Stigler’s essay was telling. Intellectuals on the left either ignored or disregarded it, and intellectuals on the right condemned it as granting too much moral high ground to the egalitarian ethos. Both reactions illustrated the economist’s plight as discussed by Frank Knight in his AEA address—why is nonsense so attractive to intellectuals, rather than sense, in matters of public policy? This is especially damning when, as Mises noted in Human Action, that “economic history is a long record of government policies that failed because they were designed with a bold disregard for the laws of economics.” In other words, the stakes are high, and in the case of the housing policy being discussed by Friedman and Stigler, the consequences are dire and relatively visible. The reactions to this episode in the two scholars’ careers are instructive. Friedman would devote more of his efforts to engaging the public, becoming one of the leading public intellectuals of the 20th century as well as a superstar in the world of elite scientific economists. Stigler—the student of Knight—would interpret the lesson differently and seek to follow the scientific strictures that follow from the criticism of economics as unscientific. He also would become a superstar in the world of the scientific elite. But he was never the public intellectual that Milton Friedman became. As he writes in a letter to Friedman in December of 1948, “if a pure scientist—one believing only demonstrated things—is asked his opinion on policy, he must decline to answer—and listen to his intellectual inferiors give advice on policy. Hence the role of the pure scientist is terribly painful to assume in economics.” This becomes Stigler’s dictum; economists can either become preachers, or they can become economists, and he believes they will have a near impossible task of being both. Thus, the correct choice to make is clear for the scholar/scientist. The economist as scientist must remain silent even when nonsense is being peddled. Stigler may have taken this position one step too far, and in doing so lost the very means/ends analysis that is the stock in trade of economists as social critics. Insisting that one can productively infer intentions from outcomes changes the analyst’s stance as the law of unintended consequences is pushed aside, and inefficiency in the choice of means with respect to ends is denied. Whatever is, it is postulated, must be efficient because if it wasn’t, than things would already be different. So this means arguing over policy choices is arguing over values even when we pretend it isn’t. And in doing so, this means we are preaching, not analyzing. “Which then is to be preferred—a dialogue among preachers, or a deep discussion among students of civilization over the liberal principles of justice and the good society?” Which then is to be preferred—a dialogue among preachers, or a deep discussion among students of civilization over the liberal principles of justice and the good society? To hark back to Knight, the intellectual agenda in the second half of the 20th century could be summarized as the effort to elaborate a new liberalism for the post-war era. Civilization had just stared down its impending demise in the 1930-1950 period with the Great Depression and World War II, and three things seemed necessary to breathe life into a new and renewed liberalism worthy of that name. First, it was vital to cultivate an appreciation for economic principles and the operation of a free market economy, as well as their limitations as guides to understanding.. The economic way of thinking had tobe practiced and taught effectively, and that begins with teaching price theory, and exposing popular fallacies. Secondly, a democratic people needed to come to recognize not just the benefits, but also the limitations of political solutions to social problems. Intelligence in democratic action can result only through open and critical dialogue—democracy is essentially government by discussion—and thus the potential for fraudulent speech and political salesmanship must be recognized as a threat to the free society, and to the acceptance of the exploratory nature of all social action. What Knight, and later James Buchanan would stress as the “relatively absolute absolute” is an essential component to any discourse about freedom and reform within a democratic society. Truth seeking in science is foundational to the enterprise, but the assertion of truth claims in politics are the path toward tyranny, and must be guarded against constantly. Finally, according to Knight, a free society requires free and responsible individuals willing to shoulder the burden of living and thinking, so a renewed liberalism must be accompanied by an independent conception of the ethics of freedom. Knight’s conundrum, as he put it, was that it was unclear that our human nature would be adaptable and resilient enough to live up to the challenge that liberation from the oppression of authoritarian rule demands.