“I Feel Like Mises in Socialist Vienna.” Heroic Scholar Daniel Lahoud Is Promoting The Austrian School in Venezuela
He has single-handedly introduced hundreds of Venezuelan students to the […]
He has single-handedly introduced hundreds of Venezuelan students to the ideas of Mises and Hayek
Interview by Federico N. Fernández *
I met Daniel Lahoud in Rosario (Argentina) in 2008. He had submitted a very interesting paper to the International Conference I organize every two years – “The Austrian School of Economics in the 21st Century.” From then on he had participated in every Austrian Conference with the exception of 2014. That year the economic situation in Venezuela was so awful that he could not make it. Unfortunately, it is not that things have improved since but both in 2016 and 2018 the Red Liberal de América Latina (Relial) has granted him a scholarship to attend the conference.
Dr. Lahoud was born in 1959 in Venezuela and he has a Lebanese backgorund on his father’s side. He posses an economic degree, a Masters in Economics and History, and a Doctorate of History. He is currently taking a second Doctorate in Economics. He has worked as an economist at the Central Bank and in the private sector. He was also an entrepreneur.
Since 1988 he has been a professor at the Universidad Católica Andrés Bello Catholic University (UCAB), and starting in 2008 at the Universidad Central de Venezuela (UCV).
Recently on Twitter Dr. Lahoud posted a very beautiful picture of himself and his Austrian Economics students. That picture originated the interview that follows. It is a small token of appreciation to a heroic scholar who is promoting the ideas of the Austrian School of Economics in one of the harshest environments. And he is doing it both effectively and courageously.
Federico N. Fernández – How did you start with your Austrian Economics Program in Caracas?
Daniel Lahoud – Today in Venezuela there is not much work for an economist like me, who is devoted to the financial sector and to be an advisor to companies. So I spend a lot of my time teaching at the University and doing research for classes. I have always been a professor of finance and slowly I have ventured into economic history and the history of economic thought.
Since 2008 with the deepening of the socialist model in Venezuela, I decided to offer and Introduction to the Austrian School of Economicsas an elective subject both at the Universidad Católica Andrés Bello (UCAB) and at the Universidad Central de Venezuela (UCV).
FF – What can you tell us about those universities?
DL – It is worth mentioning that the UCAB is originally a Keynesian university and the UCV since the mid-twentieth century has been a Marxist university, and although the core of the curriculum has that ideology, the trend towards Keynesian thinking is growing more and more.
The most curious thing is that at UCAB, which is private, the subject is offered every semester, but it is hold sporadically. While at UCV, which is a university supported by public money, the subject is held every semester. Students are more motivated, it seems.
I have heard that they believe the subject will enrich their views. “Enrol,” they say, “because you are going to hear things that are never told anywhere else in the career plan, and will have different explanations to the problems you see in other subjects.”
FF – How many students have you reached?
DL – At UCV it has been held without interruptions for 8 semesters and has been attended by more than 300 students. In the UCAB, it has been held less, and 80 students have participated.
FF – And what do you teach in regular courses?
DL – In all my subjects I make explanations that involve Austrian knowledge. For example in Financial Economics I explain the importance of the entrepreneur in the company and in the economy, and I always refer them to the cycle theory of the Austrian School.
In History of Economic Thought at UCAB, I also emphasize on the theory of value. The subject is taught during the 6thsemester but for the students is usually the first time they are introduced to this notion. My course ranges from the Scholastics to 20th Century authors, so I touch topics related to the Austrian School of Economics, and use for example Murray Rothbard’s and Mark Skoussen’s books.
The Mises Venezuela organizes a celebration every year about Mises’ thought in September and they always invite me, so I give a talk about some aspect of Mises and Praxeology.
FF – How is it like to promote libertarian ideas in Venezuela?
DL – Venezuela is a complex country. In the early 20thcentury we had a long dictatorship, which everyone calls liberal… In reality, it was very akin to Positivism and Historicism. This was followed by military governments that included a lot of economic intervention. However, again, many analysts call these experiences as “liberal and pro-capitalist.”
Since then, we have had civilian governments elected, dictatorships by coup d’etat,and dictatorships by election. In any case, all of them have always been governments with an ideology of economic intervention, therefore socialist. Many Venezuelans are fed up with all these interventionism/socialism. For that reason today it is very easy to talk about freedom in my classes and in some public places.
I believe people in general want to hear and students in particular want to hear about liberty and free markets. But Venezuela, as we all know, is not a free country. So spreading the message can be difficult.
For example, until last year I was regularly invited to speak on a TV channel. But they stopped doing so when I said the first measure to be taken in order to solve our economic crisis should be to liberate the exchange rate. On the other hand, there are radio programs to which they invite me and allow me to say those things that are forbidden in certain TV channels.
FF – Is there a strong Austrian tradition in your country?
DL – In Venezuela there is no Austrian tradition. There have been people with a liberal vocation. Perhaps the first Austrian was Henrique Pérez Dupuy (1881-1974), who was also a member of the Mont Pelerin Society. He wrote many articles in which he disseminated Austrian ideas. But he was a lonely banker who was not given much attention.
Today, it is still a matter of individuals. I could mention Oscar Torrealba, Willians Ruiz, Guillermo Rodríguez, Rafael Avila, Hugo Bravo, and myself, of course. We are -in a very disperse manner- trying to spread Austrian School of Economics in Venezuela.
Nevertheless, there are currently few people in Venezuela who are a interested in Austrian ideas. But I believe our ideas are growing and slowly becoming more popular and we will see this growth in the next generation. That is my hope.
FF – And how did you find the Austrian School of Economics?
DL – That is a long story. I graduated as an economist in 1987 and was trained as a Keynesian. What is more, my first job away outside my family business (my dad was an entrepreneur and technically my first boss) was in the Central Bank. I was even a supporter of a social democratic party (called Acción Democrática).
But the failure of governments since 1983 made me search tirelessly for new answers. First I looked for them at the Chicago School and I was somewhat disappointed. This led me to find answers in history. So I decided to study that discipline.
Since I am an economist at heart, I devoted myself to economic history and for my doctorate I decided to study the thinking of Henrique Pérez Dupuy. I found surprising the level of affinity between what I thought economics should be and what this man wrote. There is a bibliography of 15 books which gather the articles he published in the Venezuelan press.
Thanks to Pérez Dupuy I became acquainted with Ludwing von Mises and Friedrich von Hayek. Wilhelm Röpke was also quoted by Pérez Dupuy. So at one point I bought Human Action, by Mises. When I started reading it I felt a deep affinity with the book and discovered that I had naturally come to that way of understanding the economy.
In the beginning of the 21stcentury, I found the Mises Institute website. There was a Test called How Austrian Are You?I took the test and the answer I received by mail was fabulous. According to Mises Institute I was 96% Austrian and 4% Monetarist. I was not Keynesian anymore and I finally understood why I had such a problematic relationship with my colleagues at the university.
Today I take it, but I still keep studying and trying to learn more and more about the Austrian School. I want to transmit this knowledge to my students, and maybe form a group of people interested in these topics.
FF – How does the Austrian School relate to your History background?
DL – I feel like Mises in socialist Vienna (after the Great War and) before Nazism. I have known the reality of the failure of socialism in my own flesh. And as I live in Venezuela, I want to show that this is an absolute failure always and everywhere. Socialism, whatever form may take, only brings economic destruction and worsening of the conditions of humans life.
We must insist that all the governments we have had, regardless of whether they are civilian or military, whether they are left or right, have had as a common sign that they have not allowed economic freedom and that is why Venezuela is in this terrible crisis.
The Austrian School is the school of economic thought with the most explanatory power.That is why I have come to the awareness that I am a tropical Austrian.
FF – What are the key insights of Austrian Economics for Latin America?
DL – Latin America as a whole is victim the same disease as Venezuela. Venezuela has the most bloated state and public sector, that is why is the one who suffers the most. But this should be a lesson for the rest of the Latin American countries.
The solution to this disease should be to reduce the size of governments, reduce public spending and taxes, and minimize the degree of economic intervention.
Before 1973 our government did not own any companies and Venezuela grew 6.5 per cent year-on-year. In contrast, between 1974 and 1998 we experimented with democratic socialism and brought GDP growth to 1.9 per cent year-on-year. Since 1999 we are experimenting with scientific socialism and the rhythm is 0.0 per cent or negative.
Venezuela was never a country of economic freedoms. But when we had less public spending, we grew more. I show that to my students with the hope that they will reconsider and think about what we have done with our country.
Besides public spending and the size of the state, the most important thing is to maintain property rights and create a justice system that provides trust. Limiting regulations and legislation is also a must.
FF – Venezuela seems to be a case of Anti-Austrian Economics…
DL – Venezuela is on the contrary path to Austrian ideas and the result is atrocious. We seem to have forgotten that, between 1940 and 1973, with a partially private central bank which did not have an active monetary policy, an oil industry in the hands of transnational corporations that exploited the resource and paid taxes and royalties, a relatively small size government government, and fiscal discipline the result was that growth of 6.5% year-on-year that I indicated before.
Since 1974, on the contrary, we have been consistent with socialism in its different forms. At the beginning with a Keynesian approach. Now with something similar to the USSR and Cuba.
A true breaking point was the second presidency of Carlos Andrés Pérez (1989-1993). This is because he promised to privatize and solve the fiscal problem. But the privatizations did not come and, on top of that, public spending grew and a fiscal reform which raised taxes was implemented. Nonetheless, this sort of policies are labelled as “neoliberal.”
That is why it comes as no surprise that today one never hears about reduction in public spending or taxes. On the contrary, technocrats and politicians want to maintain the current level of spending and just raise taxes to get more revenue… as if that would not affect the development and accumulation of wealth!
FF – Before we wrap up, tell us a few words about another great Venezuelan – Carlos Rangel.
DL – In Venezuela we all have a socialist past. I was a social democrat and something similar happened with Carlos Rangel.
He was a social democrat and evolved due to reading the liberals. Thus, he arrived to the conclusion that Venezuela and Latin America was doing badly. He reached his conclusion in the 70s, precisely when Venezuela was mutating because of the Keynesian experiment.
His words were not understood. There is a famous anecdote to show this. As Rangel was trying to hold a lecture at the Central University, there were huge demonstrations and riots outside. Someone even threw a gas grenade to force people to abandon the auditorium.
Rangel identified many of the errors that I referred to throughout this interview. Unfortunately, his life ended abruptly, when he probably had much to offer. His intellectual production was thus limited to two books. Namely, Del buen salvaje al buen revolucionario and El Tercermundismo. Both are sociological analysis of the Latin American reality and specifically of the Venezuelan one.
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.