David R. Henderson  

Frank Knight's Case for Communism

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Do you really want to include ... A Knight Tale...

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When I posted on Frank Knight's case for Communism the other day, I also put it on up on Facebook and had some people wondering about context. Those of us who are fans of Frank Knight don't think of him as a Communist. Milton Friedman and James Buchanan, to name two well-known economists, credit Knight for much of what they learned when they studied in the Ph.D. economics program at the University of Chicago: Friedman well before WWII and Buchanan after.

First, it probably goes without saying, but I should say it anyway. There is no way that Frank Knight believed in Communism. Second, the hard part, then, is to explain why he gave the talk he gave. My own view, having read about him over the years, is that he saw how idiotic the policy debate had become and had a moment, or maybe a few months or a few years, of despair. In researching this post, I came across a 2009 article by Harvard historian Angus Burgin. It's titled "The Radical Conservatism of Frank H. Knight," and is published in Modern Intellectual History, 6, 3, pp. 513-538.

Burgin, to his credit, takes Knight's 1932 talk seriously. He doesn't fall into the trap of thinking that Knight was really advocating Communism, but he dismisses, I think correctly, Rose Friedman's view, expressed in Two Lucky People, that the lectures [there were apparently more than one] were "tongue-in-cheek." Much of the lecture I quoted was tongue-in-cheek, but that term is too glib. I really do think, based on reading about the man, that he was in despair. Rose points out though, in her account of the episode, "When asked some years later for permission to publish the lectures [there were more than one], Knight is said to have responded, 'I wish I could unpublish them.'"

I can't do justice here to Burgin's highly nuanced article. I recommend that you read it yourself and draw your own conclusions.

By the way, in rereading Rose Friedman's reminiscences of Knight, I particularly liked these two:

A Catholic priest doing graduate work in economics registered for Knight's course one quarter. His presence in clerical garb was doubtless an irritation to Knight. After two weeks or so in the course, the priest politely complained to the chairman of the department, "I registered for a course in the History of Economic Thought, not one in [sic] the misdeeds of the Catholic Church," and asked for, and received, a refund of the fee he had paid for the course.

My favorite verb in that story is "received."

And the other Rose Friedman comment I liked:

We have often remarked that two-thirds of his students never got anything from him, and the rest never got anything out of two-thirds of his remarks, but that the remaining one-third of one-third was well worth the price of admission. To this day we find ourselves often prefacing a comment, "as Frank Knight would say."

Postscript: Within the next day or two, once I figure out how to post a picture that I can't seem to rotate 90 degrees, I will tell a story about a former student that relates to Frank Knight. Teaser: the picture is of me wearing something that Frank Knight is wearing in the picture above.


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COMMENTS (8 to date)
R Schadler writes:

Had the pleasure of a one on one reading course with Ed Banfield for year when he was briefly at Penn in the 1970s. He was a big fan of Knight and came under his influence while as a graduate student at Chicago. Banfield emphasized the time in explaining Knight's views on communism, just after the market crash, the Depression, FDR in full sway. Ironic pessimism might be a better description than "tongue-in-cheek."
Knight seemed exceptional in finding ways to get others to think differently than how they had before. He does seem to have been anti-Catholic his entire adult life, but almost certainly never even close to being pro-Communist.
FWIW: Though neither had "schools" emerge around them, Knight and Schumpeter seem to rank among the top economic thinkers in the 20th century for their insights and range of thinking.

Charlie writes:

Hi David,

On a windows machine, one option is to open the picture in microsoft paint, choose "rotate" in the task bar and save as a new picture.

David R. Henderson writes:

@R Schadler,
Thanks.
@Charlie,
Not Windows, but regular reader Mike Hammock solved it for me. Look for the post tomorrow or Thursday. Thanks.

Andrew_FL writes:

Knight's an interesting figure. In methodology he had more in common w/ the Austrians than the rest of Chicago would come to have, but in his conclusions, especially with regard to capital theory, he diverged strongly. His approach to capital in particular is largely responsible for the sharply different views between Chicago and the Austrians on the business cycle.

There's a video somewhere of Hayek being interviewed by Armen Alchian and the topic of Knight's capital theory comes up. They both enjoy a good laugh over a joke about Knight advising the government during WWII that it does not matter whether they bomb trains or factories since, in the long run, it's all the same capital.

Hazel Meade writes:

Maybe it was something more like Knight attempting to take an "ideological turing test" to see if he could model communist thought processes.

David Henderson writes:

@Andrew_FL,
There's a video somewhere of Hayek being interviewed by Armen Alchian and the topic of Knight's capital theory comes up. They both enjoy a good laugh over a joke about Knight advising the government during WWII that it does not matter whether they bomb trains or factories since, in the long run, it's all the same capital.
Interesting. Presumably they laughed because they both realized that that’s absurd because wars are fought in the short run and the capital has already taken form?
@Hazel Meade,
Maybe it was something more like Knight attempting to take an "ideological turing test" to see if he could model communist thought processes.
There’s possibly a little truth in that. My take on him from reading a lot of his essays decades ago is that he liked experimenting with ideas. That might explain the Rose Friedman line about 1/3 of 1/3.

Ross Emmett writes:

David: Good use of a great article, by Burgin. I wrote Angus to congratulate him on the article and tell him that I wish I had written it! It was that good.

A few comments about Knight, the article, and that time:

1) George Stigler would not allow publication of "The Case for Communism" for a long time. He took the "tongue-in-cheek" version a bit further and thought people would not understand it was a joke. But the essay does include something that appears almost nowhere else in Knight's work -- his sociology of talk. Given the Ostrom interest in "cheap talk" and the commons, Knight's argument would be better understood today that it was back in the 1930s. [Irony: Haithi Trust simply digitized the version of the lectures that Knight did have printed and distributed, under the title The Dilemma of Liberalism (Ann Arbor: Edwards Brothers, 1932), so not the lectures are available to almost everyone.]

2) For my take on Hayek and Knight and capital theory, see the online version (in an old frames technology that I used to allow hyperlinking across parts of the stories) of an essay I wrote called "'What is Truth' in Capital Theory?"

3) Knight published another version of the lecture in The Christian Century, entitled "Can We Vote Ourselves Out of the Fix We are In?" that captures much of the spirit of the lecture without the Communism part added in.

Knight wrote many laments on the end of liberalism during the mid-1930s. My bibliography of his work lists numerous lectures done in places like the Univ of Toronto, Cambridge, Chicago, and elsewhere. All share the same themes, but don't play to the audience in the same way.

His correspondence with Hayek at this time is also quite interesting. See my essay called "Knight's challenge (to Hayek): Spontaneous order is not enough for governing a liberal society". In Liberalism, Conservatism, and Hayek's Idea of Spontaneous Order (pp. 67-86). Palgrave Macmillan, 2007).

Andrew_FL writes:

@David Henderson-"Presumably they laughed because they both realized that that’s absurd because wars are fought in the short run and the capital has already taken form?"

From context it's clear they reject the "Crusonia Plant" model of capital outright.

@Ross Emmett-The link to your essay is broken, but I'd love to read it. Do you have a working one?

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