Some Thoughts on Rieger and the Austrians

A partial review of Joerg Rieger's No Rising Tide

By Matt Hisrich

In preparation for the 2011 Willson Lectures at ESR I tracked down and have been reading a copy of Joerg Rieger’s book No Rising Tide: Theology, Economics, and the Future. I have been interested in the ideas of liberation theology since my days at ESR, where I wrestled with the work of Gustavo Gutiérrez. Whereas Gutiérrez and others such as Leonardo Boff represent what could be deemed the “first generation” of liberation theologians, Rieger and Jung Mo Sung are examples of a resurgence of activity around the core ideas of liberation theology – an intriguing development all on its own.

Aside from a general interest in matters of theology, part of my interest in liberation theology generally has to do with its explicit effort to connect economic concepts to faith. Having a background in economics and public policy before coming to ESR and continuing to seek out and address the intersections of these disciplines during and since I cannot help but be drawn to the work of Rieger and others engaged in similar work. What is of particular interest to me in the work of both Rieger and Sung, however, are their comments regarding the Austrian School of Economics. I first became acquainted with the ideas of the Austrian School in high school and it was these ideas that led me to study economics in undergrad and explore the overlaps with theology in seminary.

Now, I should preface all of the thoughts I am about to share with a number of caveats:

1) While I have come across Rieger’s work in several different contexts I have not completed a thorough analysis of his whole body of research and therefore these comments are limited to the contents of No Rising Tide alone;

2) I think both the general principles of liberation theology and how those are employed within the work of specific theologians and in specific texts such as No Rising Tide merit a much broader consideration but I will attempt to limit my comments here to Rieger’s discussion of the Austrian School only;

3) I am sympathetic to his critique of empire and have benefitted from spending time with his book; but

4) Just as I have found a theological home in Quakerism, I have found an economic home in the Austrian School, and these positions necessarily inform my understanding and color my analysis; and, finally

5) I am neither a professional economist nor a professional theologian and so I enter into this discussion knowing that I may well be in over my head.

So, what can be said about Rieger’s discussion of the Austrian School in No Rising Tide? In short, while his presentation of the Austrian School is important to the overall structure of his argument (as with Sung’s in Desire, Market and Religion), it nonetheless requires a fundamental distortion of the ideas of the Austrian School that unfortunately weakens his argument and reveals a lack of familiarity with important concepts in economic thought that are essential to Rieger’s project of critiquingfree-market economics.

Here is why:

- Rieger sets up an “us v. them” dynamic in attacking what he defines as mainstream economics and praising what he defines as heterodox economics – from institutionalism to Marxism. According to his interpretation, every school that he sees as questioning markets is heterodox and therefore offers something positive while any school that he sees as generally supporting markets – from Austrian to Chicago – is mainstream and therefore problematic. This creates two problems for Rieger. First, it puts him in an awkward position with regard to Keynesian economics (which I would argue holds far more sway in contemporary economic thought and public policy than he seems to feel it does). This is because Keynesians essentially seek to use the tools of state intervention to save capitalism from itself because left to its own devices it will destroy itself, and Keynesian economics and neoclassical economics have in many regards merged. Is such a position one that supports or questions markets? The ambiguity is clear in Rieger’s comments. Second, it forces him to conflate schools of thought that are not nearly as compatible as he would seem to suggest – namely the neoclassical and Austrian Schools, the latter of which is generally considered a heterodox school outside of Rieger’s analysis.

- At this point, it would be fair to ask why Rieger (and Sung) include a discussion of the relatively small Austrian School at all. This is an important point. Much of what Rieger criticizes with regard to empire and market has a lot more to do with a mercantilist hybrid of state and business interests, not with truly free markets (the same could also be said of more popular theologians such as John Dominic Crossan).  But whether Rieger fails to understand this distinction or chooses to ignore it for the sake of his argument, what he appears to want to critique in the book is free markets and not mercantilism. Unfortunately, schools of economic thought that advocate for genuinely free-market positions are few and far between. To accomplish this goal he must employ the Austrians for the sake of rhetorical power alone, using their words as a stand-in for what he wishes genuinely mainstream neoclassical economists would actually have said.

- It is possible that Rieger’s understanding of the Austrian School lacks sufficient depth to fully comprehend the distinction, for it is clear that he draws from only one economist from the school (Friedrich Hayek) to represent the whole, and he even goes so far as to use Capitalism for Beginners as a source for one of his Hayek quotes. Setting aside developments in the school since the era of Hayek, that one can bring in a discussion of the Austrian School without even mentioning its central figure, Ludwig von Mises, is telling. Just to provide one example of how Mises might have informed Rieger’s analysis, here is a quote from No Rising Tide: “A deregulated economy has been allowed to produce an imperial bubble where the stock market, the housing market, and the lending sector built forms of power that were more and more disconnected from real values and real life;” and one from Mises’s Human Action, “Nothing harmed the cause of liberalism more than the almost regular return of feverish booms and of the dramatic breakdown of bull markets followed by lingering slumps. Public opinion has become convinced that such happenings are inevitable in the unhampered market economy. People did not conceive that what they lamented was the necessary outcome of policies directed toward a lowering of the rate of interest by means of credit expansion. They stubbornly kept to these policies and tried in vain to fight their undesired consequences by more and more government interference.” Nonetheless, even working with Hayek alone it should become clear that the system Rieger seeks to attack as a tragically deregulated market bears little resemblance to what Hayek understands as a market free from state intervention. As Hayek commented in 1935, “[I]t is a fallacy to suppose capitalism as it exists today is the alternative. We are certainly as far from capitalism in its pure form as we are from any system of central planning. The world of today is just interventionist chaos."

To close, I do think that liberation theology adds to the richness of the theological landscape and should not be ignored as such. Nonetheless, as a proponent of this view Rieger would be more convincing if he displayed a greater depth of economic knowledge. In particular, if he chooses to single out particular schools for criticism, it would behoove him to devote significant attention to the origins and contributions of those schools if he seeks to level effective critiques. Austrian economists have contributed much to the study of how war, oppression, and poverty are connected to naïve or intentional use of state power for supposedly positive ends. That Rieger finds it necessary to ignore these contributions in order to advance his thesis ought to be of concern to anyone seeking to think through how economies can or should function in light of ethical standards and Christian faith. If readers are interested in a critique of Austrian economics from a faith perspective, I would recommend Charles McDaniel’s God & Money: The Moral Challenge of Capitalism. While I don’t agree with his conclusions, it is clear the McDaniel spent considerable time trying to understand and confront the core ideas of the school.

Having spent some time with Rieger’s written work, I am looking forward to the chance to hear him in person at ESR this April. I have no doubt it will be an interesting discussion!

Matt Hisrich is the Ministerial Advocate for Indiana Yearly Meeting. He lives in Richmond, Indiana, with his wife and two daughters, and is a member of First Friends Meeting there. Matt is a graduate of Hillsdale College in Michigan and ESR, where he received his MDiv in teaching and theology. Prior to enrolling in seminary, he worked with non-profit public policy organizations in Indiana, Kansas, and Ohio.