Editor Note: Jack High, retired from a professorship in economics at George Mason University, came to specialize in political economy, particularly business lobbying (rent-seeking) for special government favor. In this regard, he edited Regulation: Economic Theory and History (University of Michigan Press: 1991) and wrote (with Clayton Coppin) The Politics of Purity (University of Michigan Press: 1999). This interview discusses this interest given the resurgence of themes relating to political capitalism , contra-capitalism, and corporate cronyism, important themes at MasterResource.
Part I: Discovering, Teaching Market-Process Economics
Q. Jack, just to (re)introduce you to readers, tell us a bit about how you became an academic economist and came to embrace Austrian School’ or ‘market process’ economics.
A. In the late 1960s I read two books, Economics in One Lesson by Henry Hazlitt and Capitalism the Unknown Ideal by Ayn Rand, that piqued my interest in economics. I started taking economics classes at the University of Utah and eventually decided to major in economics rather than mathematics. There was no instruction in Austrian economics, but I began to read Ludwig von Mises and Murray Rothbard on my own, though the works were over my head. The University offered excellent courses in economic history and I took undergraduate and graduate courses in history. I also spent a lot of time in the math department and got my first teaching job as a calculus instructor.
Q. So it was just a hobby … What then happened to create a vocation?
A. My senior year I wrote to Henry Hazlitt, telling him of my interest in Austrian economics and asking him where I could study these ideas. He recommended Virginia Tech, NYU, Chicago, and UCLA as good places to learn economics, though he said they were not particularly Austrian.
I applied to Chicago and Virginia Tech and chose Virginia Tech because they offered money. James Buchanan and Gordon Tullock both taught there at the time. I did not have them as teachers, but I did get a full dose of Public Choice economics through the weekly seminars and from more advanced graduate students. As at Utah, no Austrian economists were assigned reading in any of the courses, but I found a copy of Menger’s Principles, which was then hard to find, at a used bookstore in Blacksburg.
I started this book and couldn’t put it down. To this day, I consider it one of the great books of economic theory. The history of economic ideas was required at Tech and I took a full year, including a course on Adam Smith taught by Thomas Borcherding. I read The Theory of Moral Sentiments and The Wealth of Nations, both of which I loved. I also took a price theory class from Winston Bush, who at the time was researching anarchism. This was the first time I had come across the idea of society without government. The idea seemed impractical to me at the time, though I later had second thoughts.
Q. But this was just the beginning of your graduate studies.
A. Yes. Although Blacksburg was an exciting intellectual environment with some excellent students (Randall Holcombe was among them), I didn’t like it there. So I moved to Los Angeles, took a year off from graduate school, and worked as a printer. I entered UCLA as a graduate student in 1974.
Many prominent economists taught at UCLA in those years—Armen Alchian, William Allen, Jack Hirshleifer, Harold Demsetz, Axel Leijonhuifvud, Robert Clower, George Hilton. The school was known for being free-market and many libertarian students were drawn there.
I enjoyed the community of budding libertarian scholars. Rich Fink, Tom Hazlett, David Henderson, Joe Kalt, Fernando Linares, Tom Nagle, John Sell, Bob Topel, and Harry Watson were among my classmates. All went on to successful careers in business or academia.
Outside the UCLA circle, Los Angeles was also home to many libertarians. I met Nathaniel and Barbara Branden, Roger Callahan, Roy Childs, David Gordon, Wendy McElroy, and George Smith, all of whom influenced my thinking, especially George and Wendy, with whom I became close friends.
Q. Was there much interest in Austrian School economics at UCLA?
A. Austrianism was not part of the curriculum at UCLA. Those of us interested in Austrian writers formed study groups to read and discuss them. George Smith organized the first group to study Mises’ Theory of Money and Credit. The study groups were a great way to learn difficult books.
Q. Then came another cross-country academic experience….
A. In 1976 I took a year off from UCLA to study at NYU, where Israel Kirzner and Ludwig Lachmann were teaching. Israel had raised money to support Austrian students. Richard Ebeling, Don Lavoie, and Rich Fink (who had transferred from UCLA) were graduate students. Mario Rizzo had just joined the faculty and Stephen Littlechild visited for a time.
Walter Grinder had just started the Center for Libertarian Studies, and Leonard Liggio, Walter Block, and Roy Childs were involved with the Center. Murray Rothbard was teaching at Brooklyn Polytechnic. I formed a study group that worked its way through Mises’ Human Action and Hayek’s Collectivist Economic Planning.
For me, it was a great year for learning. When I returned to UCLA in in 1977, I started calling myself an Austrian economist for the first time; I finally felt like I knew enough to deserve the title.
Q. And you found a home at George Mason University in Fairfax, Virginia as part of the rebirth of Austrian economics.
A. Yes. While a graduate student at NYU, Rich Fink had started the Market Process Center at Rutgers, Newark. In 1979 or 1980 he moved the Center to George Mason to join Karen Vaughn. Rich recruited Don Lavoie and I to join the Center and the faculty in 1981. At the time, I had no idea how successful the Center and George Mason would become. Mason did not confer a doctoral degree in economics in 1981, but the State of Virginia had just approved one. I volunteered to serve on the curriculum committee for the PhD; I wanted to make sure that courses in Austrian economics were part of the curriculum.
In the first meeting of the committee, there was naturally opposition to this idea; Austrian economics stood well outside the mainstream of economics, even of free-market economics. I made the argument that including Austrian economics as part of the curriculum would help us to recruit students. After I made my argument, Howard Block, a respected full professor and the most senior member of the committee, said, “Absolutely. Our program should play to our strengths.” That did it; Austrian economics was part of the PHD curriculum. The strategy worked. We were always able to recruit excellent students.
Q. That was a start, but how did the Austrian program grow to where it is today?
A. The Center and the University got a big boost in 1984, when the Public Choice Center moved to Mason. I was not part of that process. Karen Vaughn was instrumental in enticing Buchanan and Tullock to Mason, and it fit George Johnson’s vision.
Q. George Johnson?
A. George Johnson was the university president who took over GMU when it was a small, local college and built it into an internationally recognized university. He did it by focusing the meager resources of the university on three areas—public policy, information technology, and the arts. He was thrilled to add the Public Choice Center to the University, and two years later, Buchanan won the Nobel Prize in economics to benefit us all.
I should mention also that Jim, Gordon Tullock, Bob Tollison and the rest of the Public Choice faculty fully supported the Austrian economics program. It was a pleasure working with them and they materially aided the advancement of Austrian economics.
Q. While at Mason, you became interested in history and institutions, which led to an interest in business and business regulation. How did that come about?
A. My main interest in graduate school was economic theory. My dissertation, which was published as Maximizing, Action, and Market Adjustment in 1986 was a comparison of general equilibrium theory, search theory and Austrian economic theory in their treatments of price formation. It’s a nerdy book, but I learned a lot about how Austrian economics fit into the general scheme of economic theory.
The book is dated now because I didn’t consider game theory, which has become much more important now than it was in the 1970s. Along with price theory, I studied industrial organization at UCLA with Harold Demsetz, who was a gifted teacher and an original thinker. From those courses I developed an interest in antitrust and regulatory policies and began research in those areas early in my career.
Q. And then came empirical, real-world study of Institutions….
A. My entry into historical research was serendipitous. A year or two after his arrival at GMU, Don Lavoie started seriously studying hermeneutics. He and an able group of graduate students were exploring the implications of hermeneutics for economics.
Their research was stirring controversy not only among other Austrian economists, but within the economics department at George Mason. Since one of my goals was to maintain mutual respect among Austrians and other members of the department, I met with Don and his students to explore ways that we could make their hermeneutical research program more understandable and more compatible with the existing research in the department.
One of the principles of hermeneutics is to study social life up close, to see human action through the eyes of those involved in social activity. We decided that historical studies, which rely on original source material, would constitute valuable research and make hermeneutics more understandable and acceptable. So, we started a Workshop in Austrian Empirical Studies, which would use Austrian economics to interpret historical events.
Q. How did you approach that? It was a really new area for a theory-driven bunch, although the theory was real-world-oriented.
A. All of us were fortunate to have a long-time friend of mine, Nick Coppin, lead the workshop. Nick was a trained historian and he introduced us to the wealth of documentary materials available in Washington—the Library of Congress, the National Archives, the trade associations. Learning how to locate and exploit documentary evidence was an education for me, and I think for everyone who participated in the Workshop.
For the inaugural workshop, everyone had to write a paper using primary source material. The workshop was influential in teaching Austrian students at George Mason how to do historical research. Most of the dissertations written under Don and me contained theory and history.
Part II: From GMU to Harvard Business School
Q. In the early 1990s, you took up residence at the Graduate School of Business Administration at Harvard University. How did you get from George Mason to Harvard Business School?
A. For the first Empirical Workshop, Nick Coppin and I teamed up to write a paper on the role of the whiskey industry in the passage of the Food and Drugs Act of 1906. We submitted the paper to Business History Review, which is edited at and published by the Harvard Business School. The Review had already published articles on business regulation and we thought they might be interested. We received positive referee reports and our article was accepted.
After the publication of our article, Nick and I organized a conference on regulation whose theme was the theory and history of business regulation. There was a lot of interesting research on both the theory and history of regulation, but much of it was separated; economists were not paying a lot of attention to history and the historians were not paying a lot of attention to economic theory.
There were exceptions; Tom McCraw, a Pulitzer prize-winning historian (Prophets of Regulation) was steeped in both theory and history, but most economists and historians were not. The conference was a success. Both Jim Buchanan and Bob Tollison attended, as did Dick Vietor from the Harvard Business School.
Dick was one of the outstanding historians of business regulation at Harvard, and I think he found it interesting that a group of economists was interested in the history of regulation. It was through him that I became aware of the business history group at the Harvard Business School.
When I discovered that the Business School offered a year-long fellowship to study business history there, I applied and was accepted. A year later I was offered a visiting professorship, whose duties included teaching in the MBA program and editing Business History Review.
Q. Who were the most interesting professors to you and their areas of interest?
A. Well, Alfred Chandler, of course. I had read his The Visible Hand: The Managerial Revolution in American Business while a graduate student at UCLA and was captivated by the work, because it gave primacy to business organization, a subject on which two of my teachers, Armen Alchian and Harold Demsetz, had written.
Chandler’s work also emphasized innovation; here you could see entrepreneurship, which was given so much theoretical importance by Austrian economists, in action. The effects of entrepreneurship are palpable in Chandler.
Chandler’s books, Strategy and Structure: Chapters in the History of the Industrial Enterprise, The Visible Hand, and Scale and Scope: The Dynamics of Industrial Capitalism gave me an appreciation for business organization, for the tremendous increase in efficiency and output that improved business organization produces, that I never got from economic theory.
Chandler had retired by the time I got to Harvard, but he was actively engaged in research and attended the business history seminars, so he was an influential presence at the School. The active teachers and researchers in business history during my years there were Tom McCraw, Dick Vietor, and Richard Tedlow.
McCraw and Vietor were studying economic regulation, so naturally I absorbed their work. McCraw also had a keen interest in the work of Joseph Schumpeter, and eventually wrote an excellent study of him. Schumpeter’s distinctive contribution to economics, of course, was the theory of innovation and growth, and I began to study these subjects and later published in this area.
Richard Tedlow had recently published New and Improved: The Story of Mass Marketing in America, a history of marketing, and through his work I came to realize the vital importance of marketing to business success. In fact, I became so interested that I studied the subject and taught a marketing course when I returned to George Mason.
Q. This was fertile ground for Austrian economics ….
A. Through my interest in marketing I learned to appreciate the importance that Mises attached to it. He regarded the industrial revolution as not merely a revolution in production, which is how the revolution is usually presented, but also as a revolution in marketing, of production aimed at a new market, the working class.
I should add that McCraw, Vietor, and Tedlow were not only impressive scholars, they were also outstanding teachers. At the Harvard Business School, most teaching is done by the case method, and they were masters of the art. I learned a great deal about teaching from them and became a competent case teacher when I returned to Mason.
Q. Let’s talk about the business history tradition at Harvard. I know from my own research that some professors there, most notably Henrietta Larson, formed a nonprofit to commission business histories of companies, mostly in oil. Was that still active when you arrived at HBS?
A. History was an important part of the Harvard Business School from the beginning. The first dean was Edwin Gay, an economic historian. A. S. Dewing, who wrote on the history of corporations, and Arthur Cole, another prominent economic historian, were later members of the faculty.
The historian who really focused on business enterprise was a Canadian historian, N. S. B. Gras. He was hired by the Harvard Business School in the mid-1920s and was instrumental in developing business history.
Gras soon brought in Henrietta Larson to strengthen business history at the School, and they created the commission to study Standard Oil and other oil companies. Part of the impetus for that work was to develop a study of successful management practices that could be taught to business students at Harvard.
Q. Were such business histories still alive at HBS?
A. The Business History Foundation no longer existed by the time I got to Harvard, but from their work, company histories became an important part of business history. I don’t mean hagiographic histories that companies sometimes use to promote themselves, but histories that analyze business practice and fit businesses into the wider economic and social events of their times. In my view, it is a kind of historical research that is under-represented, especially as compared to political histories.
Q. Tell us about your work at Harvard?
A. I continued my work on the history of the Pure Food and Drugs Act. I also began to look into the work of American economists during the rise of big business. I discovered that large business organizations substantially influenced the theoretical work of economists.
For example, the theory of competition became much more sophisticated; economists realized that competition among large firms affected product quality, distribution methods, plant location, innovation, and firm size, as well as price.
This more sophisticated analysis of competition was lost to later generations of economists as the theory of “perfect” competition came to dominate the profession. I later published an article on the influence of big business on economic theory in Business History Review. I also developed an interest in economic growth while I was there.
I taught a first-year course called “Business, Government, and the International Economy,” which focused mainly on macro-economic policies and economic performance. As preparation for that course, I read Angus Maddison’s Dynamic Forces in Capitalist Development, which presents a wealth of information on economic growth.
I continued to teach a version of that course when I returned to George Mason, and so continued also to study economic growth, including growth accounting. I eventually concluded, in an article I wrote some years later, that “total factor productivity,” which is an unexplained residual in growth accounting, was largely attributable to entrepreneurship. It is a way of measuring the effects of Schumpeter’s business innovators.
Q. Business/government relations has been of great interest to classical liberals, inspiring such terms as “rent-seeking’ and ‘Bootlegger-and-Baptist’ lobbying for tax carve-outs, regulatory preference, and public monies. Did the HBS historians see this as commonplace—or were they were wed to the romantic, reformer view of government intervention into the market economy?
A. They were certainly not ‘romantic’ about regulation. Vietor especially documented the use of regulation as a competitive weapon in the business arsenal, the “strategic use of public policy,” as historian Donna Wood called it. But they also did not think that the economic “capture” theory of regulation was all-inclusive. They pointed to airline deregulation, which was opposed by the industry, as an important episode that did not fit the capture theory.
And they did not look at businesses, even in the same industry, as a monolithic interest group the way economists sometimes did. On the whole, I would say that they thought that the interest group theory of regulation was an important correction to the public interest view, but that neither theory, in isolation or in tandem, was broad enough to explain the history of regulation.
Q. Your own research also pointed toward a different species of self-interest by the regulator.
A. In The Politics of Purity, Nick Coppin and I discovered that government officials were an independent influence on regulatory policy. Harvey Wiley, the father of food and drug regulation in America, was not captured by the industry nor did he mainly serve the public interest. He was a government official who was an innovator, who used regulation to build his bureau, expand his influence, and further his career. Our study of food regulation integrated public choice theory with Austrian economics.
Part II tomorrow will continue with Professor High’s work and findings in business history scholarship.