There is an excellent article by Corey Robin in the May 27 issue of The Nation on the roots of Austrian School economics in Menger and Hayek, and how it differs from the utilitarian philosophy of the English marginalists like Jevons. It helps clarify for me some of the puzzles about the differences between Austrian and Chicago economics, and the turn in American conservatism toward the Austrian view. Chicago-style economists believe in efficiency, and hence in equal opportunity. They are therefore unlikely to oppose the estate tax, and for a long time it was not an issue for conservatives. Hayek and other Austrians, on the other hand, did oppose the estate tax, because for them the heroic visionary, the entrepreneur or artist, is the figure to be encouraged and rewarded, the figure whom the economy is designed to serve. Hayek, Schumpeter and other Austrians believed that such a person is likely to come from an established aristocracy, not the common workers. This perspective has its roots in the thinking of another Austrian, Nietzsche. It is also reminiscent of the novels of Ayn Rand, which are enjoying a new popularity in this country.
In the U.S., the conservatives have become very adept at de-emphasizing such differences in philosophy and outlook, for the sake of achieving political victories. However, Robin's piece makes it clear that there are some very important issues here. They are not only essential to understanding the recent history of the conservative movement in the U.S., but also understanding where it might be trying to take us. It is not a utilitarian vision in the Chicago mode, but neither is it truly libertarian. In this new Austrian vision, conservative economics is turning away from the goals of equality of opportunity, of prosperity that is broadly shared, and of a democratic polity in which all are invited to participate, regardless of wealth or class.