BY CHRIS CLANCY
Here’s a story which I find both interesting and inspirational.
It is about a French economist called Pascal Salin.
On the face of it, the most striking thing about Salin is that he made it to the top of his profession at a very young age.
Full professor by the time he was only twenty-seven.
To those lucky enough to have avoided a career in academia, let me just explain this was one hell of an achievement. Not too different from, say, making it to the board of a multi-national company before hitting thirty — and doing it purely on merit.
Three years later, in 1969, he was nominated to the University of Paris.
For the next ten years his career flourished — onwards and upwards — both at home and abroad.
“In the 1970s, among other functions, he was the host for various national radio and TV shows, as well as a consultant for the Harvard Institute for International Development.” Jorg Guido Hulsmann (and unattributed quotes below).
Yet in spite of this success he admits to having been dogged throughout by a sense that something in his understanding of economics was missing. Something crucial which he felt was needed in order to pull everything together and bring some kind of much needed coherence to his chosen subject.
And eventually, more by luck than judgement it seems, he happened across this ‘something’.
“In the late 1970s he returned from a trip to the United States and told his friends: ‘Finally I have understood what economics is all about’. He had discovered Austrian economics. He had just met the author of a book calling for the Denationalization of Money.”
And, as a result of this ‘chance’ meeting:
“He began to read Mises and Rothbard and other Austrians. He began to understand that these contemporary authors had modernized and radicalized the approach of Say, Bastiat, and other 19th-century French économistes.”
These newfound insights would set him off at a tangent from what was then the socialist orthodoxy in France – and still is.
So just what was it about Austrian economics that would make someone like Salin say to his friends — twenty years into a high-flying and successful career — that all of a sudden he finally understood what economics was about?
What a strange thing for someone to say — an acknowledged ‘expert’ such as he — about his own subject?
Just what had he hit upon which had been missing?
“For many years I had been an Austrian economist without knowing it. But when I did discover Austrian economics, I was amazed, because economics appeared as it ought to be: not as a patchwork of partial theories, of different fields of thought without any link between them, but as a logical process of thought founded on realistic assumptions about individual action.” Pascal Salin.
What he refers to here is something called the subjective theory of value, as developed by Carl Menger in the second half of the nineteenth century. This was the missing piece in Salin’s jigsaw and once found, in his words, “economics became coherent”. What it did was to provide the philosophical backdrop for a conclusion he had already reached many years before discovering Austrian economics.
He just didn’t have a hook to hang it on.
Which is to say:
“[T]hat you cannot understand the workings of a society without referring to individual behavior.” Pascal Salin.
Menger provided the hook — and then what remained unresolved came together for Salin.
Get to grips with the above concept and you go to the very root of Austrian economics.
For most people, including yours truly, it takes time for things to mesh together and for a light to suddenly come on.
But when it happens it’s a magic learning moment.
Just as it must have been for Pascal Salin – all those years ago – when first he sat down and spoke with F A Hayek.
Chris Clancy is a Contributing Editor with The Moral Liberal. His essays and articles on economics and other things are widely published on the internet. Formerly he was employed for a number of years as associate professor of financial accounting at Zhongnan University of Economics and Law in Wuhan City, Hubei Province. He then left China for two years during which he wrote a book about his time there – Cut Loose at 50 – a must-read for anyone thinking about living and working in China. He has now returned to China where he teaches economics with the prestigious Dipont organization
Email him at [email protected]