«Besley for inviting me, Professor Philip Booth and the Institute of Economic Affairs for allowing me to also use this as an opportunity to introduce ...»
In the foreword to the first edition of his book «Socialism, Economic Calculation and Entrepreneurship», Professor Jesús Huerta de Soto states: «The enthusiasm and inexhaustible support offered at all times by Luis Reig along with the practice of preparing for, attending, and participating in the weekly sessions of this seminar throughout the 1970s, afforded me not only an extraordinary and invaluable intellectual experience during my formative stage as an economist, but also the conviction that the paradigm of the Austrian school alone offered an opportunity to answer the questions and remedy the weaknesses inherent in other alternative paradigms, which, like Keynesian economics and the Chicago school, were deceptively attractive to me at first».
* * * Professor Jesús Huerta de Soto’s education reveals a common feature, specific to «Austrian economists» – the initiation in all the great accomplishments of human knowledge, the development of the capacity to judge ideas and facts in a rigorous and argumentative manner and the availability to participate in the competition of free ideas, giving the opponents the presumption of good intellectual faith and the right to be wrong.
The professional education articulates and builds itself upon this foundation of mind cultivation, development of criticism and intellectual style – which could also be seen as liberal education.
Practicing a profession with competence and good results does not exclude a wide intellectual horizon; on the contrary, it is an essential condition to it.
Professor Jesús Huerta de Soto earned his Bachelor and Master Degrees in Economics and Entrepreneurial Sciences from the Complutense University of Madrid in November 1978 and his Master Degree in Law from the same academic institution in September 1978. The same year he got his degree in actuarial
NOTICIASscience from the same university in Madrid. In 1980, being recommended by Friedrich von Hayek and having obtained a scholarship from the Bank of Spain, he enrolled in a graduate studies programme at Stanford University, where he earned his MBA in 1983. The period of time spent at the famous Californian university gave him the opportunity to live another profound intellectual experience – the meeting with Murray Rothbard, one of the outstanding students of Ludwig von Mises and, probably, one of the few polyvalent and erudite economists of the 20 th century. While at Stanford, he studied the «Austrian School of Economics» thoroughly, with a special emphasis on the «Austrian» theories of the capital and market process.
Back in Spain, he was awarded the «Rey Juan Carlos International Award for Economics» in 1983, for his works on private pension plans and the privatization of the Spanish social security system.
Professor Gustavo Villapalos Salas from the Complutense University acknowledged the exceptional intellectual capacity and the excellent professional training of the young «Austrian»
and invited him to the Department of Political Economy and Public Finance within the Faculty of Law. It was there that Professor Huerta de Soto started his promising academic career. In December 1984 he earned his PhD in Law from the Complutense University with the thesis «Planes de pensiones privadas». Then, in 1992, earned his PhD in Economics Sciences from the same university, defending the thesis called «La polémica sobre el cálculo económico socialista».
In October 1988, he became full titular professor of Political Economy at the Faculty of Law, Complutense University. Starting with October 2000, he has been a full professor («catedrático») of the Political Economy Department within the Faculty of Social Sciences and Law, Rey Juan Carlos University.
Professor Huerta de Soto’s teaching activity is remarkable due to the quality of his courses and the demanding requirements he claims from his students (numerous and diverse readings, not only about Economy and definitely not only about «Austrian» economic thought). In the process of educating economists, Professor Huerta de Soto seems to be convinced of Wilhelm Röpke’s idea: «you cannot learn any economics until you have learned all of economics», just as he seems to have applied the professional Hayekian credo 344 NOTICIAS to his own education and academic career, according to which no one can be a good economist if s/he remains just an economist.
Professor Huerta de Soto’s teaching activity is particularly characterised by its different innovative nature; the method, structure and content of his «Introduction to Political Economy»
course are inspired from the tradition of The Austrian School of Economics and especially from Ludwig von Mises’s remarkable work «Human Action».
This way, the perseverant and dedicated efforts of a brilliant intellectual have managed to suggest an alternative to the dominant economic paradigm!
In order to reach this achievement, Professor Huerta de Soto did not settle for being only a custodian and guide in the museum of rare objects of human economic knowledge; on the contrary, he chose to act and think creatively.
* * * Professor Jesús Huerta de Soto is an illustrious continuator and promoter of the Austrian School thought, as well as a talented a praiseworthy researcher and observer of the present social processes, to which he applies the principle of the methodological individualism and the multidisciplinary approach, obtaining extraordinary results.
What defines his entire research activity so far is the coalescence of three complementary but different levels of examining the social reality: theoretical, historical – evolutionary and ethical.
Many years ago, Professor Huerta de Soto expressed his conviction that «science and ethics are simply two sides of the same coin, and a consistent order exists in the world, in which the conclusions reached in different fields, scientific, historical-evolutionary and ethical invariably tend to converge».
Maybe this intellectual conviction is not a new one, especially if we remember the words of Rabelais, the French Renaissance representative who, during a different period of excessive scientism, said that «science without conscience is the death of the soul». But a consistent and coherent multidisciplinary analysis to the study of the social sciences was applied by very few economists who
NOTICIASbelonged to the Austrian School, if we are to judge by their vision, ideas and research methods. Beside Hayek, Rothbard and Kirzner, only Professor Huerta de Soto can claim this title of spiritual noblesse.
The fact that the Spanish economist is the most consistent promoter of this threefold method of analysis is particularly remarkable.
In his article «The Ethics of Capitalism», published in «Journal of Markets & Morality 2», n.º 2 (Fall 1999), pp. 150-163, he pointed out, with scientific accuracy and factual evidence, that there is a strong connection between economic science (essentially preoccupied with the maximum efficiency of resource allocation) and social ethics (traditionally preoccupied with justice, revealing, in its essential form, the right of the individual who exercised the human action to appropriate its results. Professor Huerta de Soto’s need to establish the consubstantiality of the economic and juridical efficiency did not solely consist of a simple epistemological attempt or a methodological experiment, but of a much more profound economic insight - the founding of the «theory of liberty» or of freemarket theory, not only on the basis of efficiency criteria (such as the neoclassical paradigm), which can be used for other types of economic systems, but also of ethical ones. Otherwise stated, as Professor Huerta de Soto argued, the development of the ethical
groundwork of the theory of liberty, is necessary due to:
1. the «social engineering» failure, especially the consequentialist one, derived from the neoclassical paradigm of «welfare economics»;
2. the insufficiency of the «Austrian theoretical analysis» of the market process, based on the entrepreneurial capacity, for the justification of the market economy;
3. the moral necessity that should guide human action;
4. the need of institutional order, based on moral grounds, meant to help people in their aim of following what they consider to be the right and just path.
and justice, far from being a trade-off, appear to be two sides of the same coin».
We should definitely point out that the terms of efficiency and justice used here by the Spanish economist, have different
meanings than those used in present-day mainstream economics:
efficiency is defined, from a dynamic point of view, as the capacity to exert entrepreneurship freely, which leads to the creation of new aims and measures and the coordination of the free market process by voluntary cooperation; equally, justice does not refer to equitable redistribution of the results that have not been produced or «social justice», but to the appropriation of the results of the free human action (or, in «Austrian Economics» terms, of the entrepreneurial creativity).
In a few words, we have tried to present the vision and epistemology of the «engaged spectator» we consider Professor Huerta de Soto to be, in the terms used by R. Aron. These two elements are to be found in all his studies and books.
The list of articles, studies, chapters in collective volumes and books published by Professor Huerta de Soto is impressive.
He started his prodigious and polyvalent research and publishing activity at the beginning of the 80’s. His over 200 articles and studies were published in scientific magazines from Spain (e.g. Revista de Economía, Revista de Economía Aplicada, Revista de Economía Política, Procesos de Mercado), Italy (e.g. Il Politico: Rivista Italiana di Scienze Politiche), Belgium (Journal for the New Europe), Great Britain (e.g. Economic Affaires), USA (e.g. Journal of Markets & Morality, The Quarterly Journal of Austrian Economics, The Journal of Libertarian Studies, The Review of Austrian Economics etc.).
Some of Professor Huerta de Soto’s books were very well received by the Spanish and international academic environment and even by the economists who do not share the vision and ideas of The Austrian School. This explains the initial translation into English of four of his books and the subsequent translation into Arabic, Chinese, French, Italian, German, Dutch, Czech, Portuguese, Russian etc. To a certain extent, these four books represent Professor Huerta de Soto’s major research directions and the fields of his scientific contributions. What follows is neither a chronological
NOTICIASsequence, nor an order of importance of his research activities, as his activity of searching the truth about economy and society is right now in its period of full dynamism; it also promises to bring other important contributions to the competition of economic ideas and especially to the development of the economic science.
Consequently, the only criterion is the sequence of the reception of his works that were translated into English, or more precisely, the impact that they had on the academic community and the publications in the field of economics. On the basis of this inappropriate, but sequential criterion, the following important
directions of research stand out:
1. Monetary, banking and economic cycles theory. This direction is illustrated by a true «magnum opus» published in Spanish, «Dinero, Crédito Bancario y Ciclos Económicos», in 1998. The first English edition was published in 2006, with the title «Money, Bank Credit and Economic Cycles» by Ludwig von Mises Institute Auburn-USA (2nd edition 2009).
According to the experts, this is the most comprehensive and consistent study on currency and economic cycles that was ever published by the «Austrian economists» and not only. Leaving aside the extraordinary efforts of a thorough documentation, the work presents an exhaustive theory of the causes that lead to financial instability and of what seems to be a fatality of the capitalist economy – the cyclicity or irregular recurrence of the boom and recession phases. Particularly interesting is the fact that the author does not start from
assumptions or hypothetical models, but from the detailed investigation of the European legal traditions and their repeated violation over the last two millennia, by means of a discretionary monetary policy and abusive banking practice. The excursion in the history of economics and in the sequence of the numerous economic ideas is completed, naturally, by the integration of the Misesian approach of currency and credit, which is rationalist or utilitarian, the Rothbardian approach of monetary policy and banking process, based on ethical criteria, and the entrepreneurial approach initiated by Kirzner.
The Keynesian macroeconomics and monetarist macroeconomics are criticised from this complex multidisciplinary perspective, 348 NOTICIAS and Professor Huerta de Soto recommends solutions for the reform of fractional reserve banking, which is inherently instable from a financial point of view and periodically generates the discoordination of the real economic structure and the systematic error of the entrepreneurial function.
It is very interesting to notice the fact that the explanations given for the economic crisis and cycles by the «Austrian economists» start to be more and more taken into account by the economists belonging to the dominant paradigm.
It is enough to mention here what The Economist stated in a number published in September 2002: «The recent business cycles in both America and Japan displayed many Austrian features».
The same magazine, which by no means serves the Austrian School of Economics, published the following in its edition of July 14th, 2006: «The words of Ludwig von Mises, an Austrian economist of the early 20 th century, nicely sum up the illusion: «it may sometimes be expedient for a man to heat the stove with his furniture. But he should not delude himself by believing that he has discovered a wonderful new method of heating his premises».