What Sort of Analytical Contribution Is the Austrian Theory of Interventionist Dynamics, and How Helpful Can It Be?

     

The discussion so far has touched on a variety of issues related to the Austrian Theory of Interventionist Dynamics (ATID). Sandy Ikeda and each of the discussants have raised questions about the theory as originally formulated by Ludwig von Mises and later amended and extended by Ikeda and others. Perhaps the major question that has arisen again and again pertains to the explanatory power of the theory (if indeed it is a theory, properly speaking) in application to specific historical instances where it has been or might have been applied.

The Misesian Paradox, as Ikeda calls it, recognizes that interventionism, though “unsuitable” and “impossible” in a Misesian sense, has always been and remains the only sustainable (or, if not sustainable, then repeatedly reconstructed) “system” in practice, and I have maintained that indeed it is the gravity well into which most countries’ politico-economic systems have already been sucked and into which the remaining countries’ systems will probably be sucked sooner or later.

The ATID has at its core a sort of impossibility theorem: the proposition that intervention cannot “work” in the sense of attaining the intervenors’ ostensible goals and ultimately must lead either to complete socialism or to complete abandonment of the interventions and reversion to a full-fledged free-market politico-economic order.

Yet, apart from the theorem’s apparent failure to be confirmed in practice, a critical difficulty pervades all attempts to formulate a more detailed and successful theorem because the institutional arrangements to which such a theorem would be applied are themselves so amorphous. As Ikeda aptly says, there is no theory of intervention because, as both Mises and F. A. Hayek observed, the interventions as a whole are simply chaotic. Intervenors do not aim at constructing an edifice with a definite shape and dimensions. They simply intervene here, then there, and then somewhere else, in utter disregard of the second-, third-, and higher order repercussions of each of their immediate actions and in equal disregard of the extent to which each of the interventions works at cross purposes with others.

In order for us to theorize about a system, there must be a system to be theorized about, and interventionism in practice gives rise not a system of any sort, but to a complete mess. It seems unlikely therefore that any theory of interventionism can get us very far. In his extraordinarily careful writing in this area, Ikeda has modestly formulated only a set of pattern predictions. Yet even these, as shown by the foregoing commentaries, may be challenged on various grounds.

Perhaps, then, the best that we can do in this area is to carry out the most thorough thymological research we can, informed by the ATID, to be sure, yet for the most part simply scrutinizing the history of specific instances of intervention in the light of all that we can learn about the social, economic, ideological, political, and other factors that may reasonably be linked to the observed sequence of events. From this sort of historical work it will be hard – perhaps impossible -- to generalize about interventionism in general. Nonetheless, given that the object of our studies is little more than a chaotic mess, this approach may be the best one we can take.