Thoughts from a lecture

At the beginning of this summer I was invited to give a lecture on Friedrich Hayek at the Institute for Market Economics in Bulgaria. I was surprised and exhilarated by the size and the composition of the audience as well as the high quality discussion at the end.

In addition to a few journalists and professionals, the institute's library was full of undergraduate students from several universities in Sofia. They had sacrificed an evening in the midst of their final exams to learn why even the most decent politicians are tempted to follow the most rotten theories. The students had come even though none of them was old enough to remember the fall of the Berlin Wall. None of their professors had made the event mandatory. No one was going to get "extra credit" for attendance. The organizers did not advertise any "free" refreshments. In short, there was none of the usual sticks and carrots associated with guest lectures at American colleges. These young men and women of Eastern Europe had come eager to figure out why so many policies and regulations designed with the best of intentions turn out to be either wasteful or counterproductive.

As soon as I presented a short summary of the Austrian explanation for economic busts (such as the one behind the financial crisis of 2008), I was hammered with provocative questions from all directions. The discussion that ensued clearly revealed that the next generation of the Bulgarian intelligentsia views economic ideas and political practice through much more cynical eyes than their American peers. The exhibited mistrust toward all forms of state interventionism was combined with high levels of skepticism toward concepts promoted by classical liberals like myself. There seemed to be a consensus that government planners and bureaucratic busybodies cannot engineer prosperity. Yet the audience was hesitant to accept as a viable alternative the spontaneous order resulting from voluntary interactions of free individuals.

Later that evening I kept thinking how such lack of trust in both state and market institutions gives credence to an idea popularized by Hayek's ideological archrival. Next week I'd like to discuss with WORLDmag.com readers how John Maynard Keynes, though tragically wrong in his economic analysis, might have accidentally struck gold by focusing on the psychology of the investor.