COURSE SYLLABUS

(elective, 2018/2019, Faculty of Economics, Corvinus University of Budapest)

1. Number of hours per semester (Lecture + seminar + practical course + other): 0+2+0+0

2. Credits: 3

3. Fall/Spring term: Fall

4. Language: English

5. Prerequisites: –

6. Course type: elective (Faculty of Economics)

7. Department/Institution: Department of Public Policy and Management

8. Course leader: Károly MIKE, karoly.mike@uni-corvinus.hu

9. Course description:

Ever since Adam Smith’s Wealth of Nations, the core question of economics has been how a very large number of people can coordinate their activities to satisfy their mutual needs and desires for a better life. How is it possible that people’s activities driven by their self-interest and guided by very limited knowledge of social processes do not lead to chaos? How can social order emerge and survive without a strong hand of central authority? Coordinating the activities of a small group (e.g. a family) is difficult enough. So how can it be done for millions of people?

Furthermore, as Adam Smith observed people’s activities within such a social order can actually lead to a vast enrichment of society. And this happens without people’s conscious efforts to bring about this enrichment. How is this possible? How can a social order – to a large extent, spontaneously – lead to a flourishing civilization?

These fundamental questions become especially pertinent during times of dramatic social changes and in periods of civilisational collapse. The end of the 19^th century and the first half of the 20^th century was a historical era of such changes in Central Europe, the region once dominated by the Austro-Hungarian Empire. In any case, several of the leading economists and social scientists were preoccupied by the fundaments of social order and civilization, as argued recently by Dekker (2016). Prompted by the circumstances, they made lasting theoretical contributions to social sciences, which can also help us understand our world today.

The most famous circle of social scientists is the Austrian School of Economics, whose members include Carl Menger, Eugen Böhm-Bawerk, Ludwig Mises and Friedrich A. Hayek. While the course is centered around their work, a few great scholars who explored related ideas are discussed, too. They include the philosopher Michael Polanyi, the legal scholars Eugen Ehrlich and Georges Gurvitch, the art historian Ernst Gombrich, and the psychologist Sigmund Freud. The goal is not to give an exhaustive review of the era’s intellectual life but discuss the central ideas developed.

10. Course requirements during the semester:

Reading weekly assignments. Participation in class discussion. Writing an essay.

11. Examination requirements:

Oral exam: oral defense of essay + checking knowledge of course material discussed during semester.

12. Assessment, grading:

Grade based on a joint evaluation of written essay and oral exam.

13. Readings:

General literature for the course:

Ehrlich, Eugene – Klaus A. Ziegert. (2017) Fundamental Principles of the Sociology of Law. Routledge.

Erwin Dekker (2016). The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered. New York: Cambridge University Press.

Gombrich, Ernst H. (1968) Style. In D.Sills (ed.), International Encyclopedia of the Social Sciences,

Gurvitch, Georges (1947). Sociology of Law. London: Kegan Paul, Trench, Tubner.

Hayek, Friedrich A. (1960). The Constitution of Liberty. Chicago: University of Chicago Press.

Hayek, Friedrich A. (1972). The Road to Serfdom. Chicago: University of Chicago Press.

Hayek, Friedrich A. (1982). Law, Legislation and Liberty. London: Routledge and Kegan Paul.

London: Macmillan. vol. 15 pp. 352–361,

Menger, Carl. (1871/2004) Principles of Economics, Mises Institute.

Menger, Carl. (1895/2009) Invetsigations into the Method of Social Sciences. Mises Institute.

Mises, Ludwig von (1932/1981) Socialism. Liberty Fund.

Mises, Ludwig von. (1949) Human Action. A Treatise on Economics. London: William Hodge

Polanyi, Michael and Harry Prosch. (1944/1976). Meaning. Chicago: University of Chicago

Polanyi, Michael. (1998 [1951]). The Logic of Liberty, Indianapolis: Liberty Fund.

Recommended readings: See under each topic.

14. Course professor (s)/ lecturer(s)

Károly MIKE

15. Aims, objectives and description of the course:

Topics discussed during the semester (Compulsary readings marked by *):

Sept 12. Introduction

Sept 19. The methods of social inquiry: Are there universal social laws or are they historically conditional? (the great methodological debate or ‘Methodensteit’)

*Menger, Carl (1895/2009): Investigations into the Method of Social Sciences. Auburn: Mises Institute. Book 1, Chapter 1, 2, and 3.

Louzek, Marek (2011): The Battle of Methods in Economics. The Classical Methodenstriet – Menger vs. Schmoller. American Journal of Economics and Sociology 70 (2): 439–463.

Bostaph, Samuel (2013): Methodenstreit. In Kaldis, B. (ed.), Encyclopedia of Philosophy and the Social Sciences. Los Angeles etc: Sage. 603-604.

Eicholz, Hans L. (2017): Ludwig M. Lachmann: Last Member of the German Historical School. Journal of Contextual Economics 137 (3): 227-260.

Sept 26. 2. The nature of wealth: Does economic value consist in things produced, the human efforts or subjective evaluations? (the theory of subjective value)

*Menger, Carl. (1871/2004): Principles of Economics. Auburn: Mises Institute. Chapter III. The Theory of Value. 114 up to page 152.

Hayek, Friedrich A. (1978): The Place of Menger’s Grundsaetze in the History of Economic thought. In: New Studies in Philosophy, Economics and the History of Ideas. London: Routledge and Kegan Paul. 270–282.

Bohm-Bawerk, Eugen (1894/95): The Ultimate Standard of Value. Annals of the American Academy of Political and Social Science volume 5, 149-208 (trans. C.W. Macfarlane). http://www.generation-online.org/c/fcvalue1.htm

Oct 3. The fundaments of society: What are the fundamental forms of social interaction that hold a society together? (the logic of coercion and exchange)

*Mises, Ludwig von 1932/1981): Socialism. Indianapolis: Liberty Fund. Chapter 1. Ownership. 27–44

*Menger, Carl (1871/2004): Principles of Economics. Auburn: Mises Institute. Chapter IV. The Theory of Exchange. Part I. The Foundations of Exchange. 175-180.

Bastiat, Fréderic (1850/2007): The Law. Auburn: Mises Institute. https://mises.org/sites/default/files/thelaw.pdf

Hayek, Friedrich A. (1960): The Constitution of Liberty. Chicago: University of Chicago Press. Chapter 10. Law, Commands, and Order.

Oct 10. Coordination among strangers: How are the individual plans of millions of people coordinated without central direction? (the logics of price mechanism, the use of knowledge in society, scientific vs dispersed knowledge)

*Hayek, Friedrich A. (1945): The Use of Knowledge in Society. American Economic Review 35 (4): 519–530.

Hayek, Friedrich A. (1978): Competition as a Discovery Procedure. In: New Studies in Philosophy, Economics and the History of Ideas. London: Routledge and Kegan Paul. 179–190.

Mises, Ludwig von (1932/1981): Chapter 5. The nature of economic activity. In: Socialism. Indianapolis: Liberty Fund. 95–109.

Hayek, Friedrich A. (1972): Socialist Calculation I: The Nature and History of the Problem. In: Individualism and Economic Order. Chicago: Gateway. 119–147.

Oct 17. Types of social order: What types of social order exist? How can an order be maintained without central direction? (cosmos and taxis; extended order of exchange vs central planning; polycentric order)

*Hayek, Friedrich A. (1973/2013): Cosmos and Taxis. In: Law. Legislation, Liberty. London. Abingdon: Routledge. 34–52.

Polanyi, Michael (1951/1998): The Span of Central Direction. In: The Logic of Liberty. Indianapolis: Liberty Fund. 136–169.

Oct 24. Orders of intellectual life: What is the relationship between the generation of cultural ideas and the generation of wealth? In what ways are market orders and intellectual orders similar and different? (theory of intellectual orders; arts, sciences and professions)

*Polanyi, Michael (1951/1998): The Manageability of Social Tasks. In: The Logic of Liberty. Indianapolis: Liberty Fund. 189-246.

Gombrich, Ernst H. (1968) Style. In D.Sills (ed.), International Encyclopedia of the Social Sciences.

Burckhardt, Jacob (1905/1979): The Three Powers. In: Reflections on History. London: Allen & Unwin. 33–73.

Oct 31. Mid-semester break.

Nov 7. Origin of rules: Where do the rules of social order come from? To what extent can they be designed consciously? To what extent do they evolve spontaneously? (design vs evolution of social rules; unintended consequences; freedom and tradition)

*Hayek, Friedrich A. (1960): Freedom, Reason, and Tradition. In: The Constitution of Liberty. Chicago: University of Chicago Press. 54-70.

Menger, Carl (1871/2004): Principles of Economics. Auburn: Mises Institute. Chapter VIII. part 1. The Nature and Origin of Money, 257–261.

Hayek, Friedrich A. (1967): The Results of Human Action but not of Human Design. In: Studies in Philosophy, Politics and Economics. London: Routledge and Kegan Paul. 96-105.

Nov 14. 8. Law as an ongoing process: What is law? How is law able to provide a stable framework for a hugely complex and dynamic society? (law as an instrument of the state vs law as a semi-spontaneous social process; the ‘living law’)

*Ehrlich, Eugene – Klaus A. Ziegert. (2017) Fundamental Principles of the Sociology of Law. Routledge. Chapters 2, 3, and 7.

Gurvitch, Georges (1947). Introduction. In: Sociology of Law. London: Kegan Paul, Trench, Tubner.

Hayek, Friedrich A. (1973/2013): The Changing Concept of Law. In: Law. Legislation, Liberty. London. Abingdon: Routledge. 69-89.

Nov 21. 9. Democratic politics and social order – Is mass democracy compatible with a social order supporting markets and cultural freedom? How can democracy be made compatible? (majority rule vs the rule of law)

*Hayek, Friedrich A. (1979/2013): Majority Opinion an Contemporary Democracy. In: Law. Legislation, Liberty. London. Abingdon: Routledge. 345-362.

Polanyi, Michael (1951/1998): Self-Government of Science. In: The Logic of Liberty. Indianapolis: Liberty Fund. 59-82.

Nov 28. 10. The intellectual roots of totalitarian politics – Is political centralization compatible with democracy and a rule of law? Why ‘do the worst get on top’? (the pretense of knowledge and the “fatal conceit” of social planning)

*Hayek, Friedrich A. (1944/1976): The Road to Serfdom. Chicago, London: University of Chicago Press. V. Planning and Democracy; X. Why the Worst Get on Top

Mises, Ludwig von (1932/1981): Part IV. Socialism as a Moral Imperative. In: Socialism. Indianapolis: Liberty Fund. 355–409.

Polanyi, Michael (1951/1998): Perils of Inconsistency. In: The Logic of Liberty. Indianapolis: Liberty Fund. 115–135.

Dec 5. 11. Psychological precariousness of civilization – What are the psychic challenges of spontaneous orders? Can people bear them? (the ‘atavistic’ experience of small groups; longing for security; disciplining of instincts)

*Freud, Sigmund (1930/1946): Civilisation and Its Discontents. London: Hogarth Press.

Erwin Dekker (2016). Instincts, Civilization and Communities. In: The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered. New York: Cambridge University Press. 91-108.

Dec 12. The role of ultimate convictions – Is there a meaning in social life? How can we know? What are the reasonable convictions upon which a defense of civilization can be based? (the relationship between intellectual faith and rationality; the intellectual precommitments that underlie the preservation of a social order)

*Polanyi, Michael and Harry Prosch (1944/1975): Meaning. Chicago: University of Chicago. 182-216.

Erwin Dekker (2016). Therapeutic Nihilism or the Humility of the Student. In: The Viennese Students of Civilization: The Meaning and Context of Austrian Economics Reconsidered. New York: Cambridge University Press. 109-130.

16. Course schedule:

See Neptun.

17. Learning outcomes:

- Knowledge of the discussed scholars’ concepts and theories of social order and civilization.

- Better understanding of modern economic and social processes.

- Ability to read and interpret classical works of social sciences.

- Skills pertaining to do independent scholarly research in economics and social sciences.

- Acquaintance with intellectual traditions in Central Europe.

18. Student assignments:

Independent essay.