January 11, 2016 Reading Time: 10 minutes

These are likely the most difficult lines that I have had to write in a very long time, if not ever. Juan Carlos Cachanosky, my dad, passed prematurely on December 31st, 2015, at the young age of 62.

Frank Sinatra was probably his favorite singer, and his version of “May Way” was probably his favorite song. He certainly did live his life his way. He died at peace doing what he loved most: engaged in economics and helping to spread the ideas of classical liberalism. For him to work on the afternoon of the last day of the year was the most natural thing to do. He left behind that which most people strive to obtain: a loving family that will miss him dearly, more friends than one could count, and international academic recognition, despite not being known for his “academic journal papers.”

He did it, indeed, his way.

Surely, my personal experience with him was different that that of most. I am not only his son, I am also an economist with an academic career. For me, it is impossible to separate the two. But now, I would rather focus on my personal experience (introspection maybe?) than on his professional life, which others might be better able to summarize. I want to remember him by reflecting, maybe for the first time, how much he influenced me throughout some of the key points of my life. I will forever cherish the warm memories I have with him. From playing video games together on our first Commodore 64 (mid 80s version of a PC), to our morning walks along Pinamar’s beach, alone or sometimes with my siblings, where I would ask him all sort of questions (economics, history, philosophy, physics, etc.) Those morning walks were my favorite part of my days and remain as one of my most cherished memories of our time together.

How much I would love to have one last walk with him.

My first contact with economics was, of course, through him– but not without some initial mistakes on my part. In elementary school (as I was told by my mom, I think,) we were asked what our dads did for work. When my turn arrived, I said that “My dad is a communist” (making my teacher’s face go pale before quietly moving on). In Spanish, communist and economist sound similar enough for a younger version of myself to get confused. I know now, that if dad didn’t kick me out of the house when he found out, his patience was indeed almost unlimited. When I started high school I wanted to become an astronomer due to an astronomy book that my mom gave me for my birthday. Years later, I passed that book to my sister, who actually started astronomy and then moved to physics. By mid-high school I shifted my interest from astronomy to physics after reading different physics books from my dad’s bookshelf (George Gamow is who I remember most.) Then I could do a specialization in astronomy (astrophysics) if I felt inclined to (I now realize my sister might be living my parallel life. I gave her a few economics books too, but apparently I don’t have my dad’s magic powers). I wanted to understand how this huge universe of which we are an insignificant point in space is possible and can work by itself (I cannot say that I was ever a religious person). But in mid high school we were required to write a short essay on a controversial topic: an essay that would be open to debate in class. I saw that as an opportunity to explore some economics: that thing that dad does for a living makes him so well respected by the people around him! I chose to write about why building new machines does not increase unemployment. I couldn’t pin down by myself why that might be the case.

Two things happened. First, he walked me through the value added process of production with more capital or higher technology step-by-step to the point that a young 14-year-old kid would say “duh!” (I actually think it might have been on a napkin.) The conclusion that machines do not produce unemployment did not surprise me– I was expecting that already. But the strength of an argument that did not require too much (any?) empiric evidence had an effect that left a strong impression on a mind that was used to thinking about empiric problems of physics. How do you show something that cannot be shown and still be convincing? I don’t know, and now never will, if he realized that in retrospect that that 20-minute talk produced the most important inflection point in my life. It wasn’t the explanation; it was how it was explained. I’m not surprised of all the positive comments we have been receiving the last few days of him as a professor. There was no lecture by him I would attend were I wouldn’t learn something new, even if it was on a topic I’ve heard him lecture before.

The second thing that a happened is that he gave me four books to read. If I recall the order correctly (1) a cartoon-type book by Luis Pazos, the title of which I cannot remember, (2) Hazlitt’s Economics in One Lesson, (3) Hayek’s Individualism and Economic Order and (4) Mises’s Planning for Freedom. After these readings there was no question on my mind. It doesn’t matter how hard physics and astronomy might be, economics deals with unintended consequences of living things that do not react to the law of nature. In my mind economics became the really hard (difficult) science (from some time I entertained the idea of doing both careers, economics and physics, but this delusion didn’t last long.) Dad never asked me or pushed to follow one path or the other, he wanted me to do whatever I wanted; I’m sure he was happy when I finally told him I wanted to be an economist too in one of our summer morning walks along the beach. I just couldn’t take my mind out of it, and I still can’t. To paraphrase his friend Peter Boettke, dad lived and transpired economics. During my remaining years at high school I read everything I could from his bookshelf. As you can imagine, it was a lot of Hazlitt, Hayek, Mises, Friedman, etc. But mostly, I’ve read and re-read, and then re-read again, everything that he wrote. For me he was THE economist and I wanted to be able to think as clearly as he did. Even today I feel I’m influence by his way of thinking when I write an op-ed or work on research papers.

As I said, I was always curious why an economic argument that deals with living things instead of empirical regularity can be so strong. That “a priori thing” my dad would talk about led me in my last year in high school to work on “rewriting” in my own way (to the best of my ability as a young high school student) Popper’s Conjectures and Refutations. This put me in contact with Mario Silar and opened a still healthy appetite for epistemological problems of economics. This epistemological appetite led me to work with one of my dad’s closest friends, who I now also consider a good close friend as well, Gabriel Zanotti. Gabriel was my master’s advisor at ESEADE, where dad spent so many years teaching economics and principles of classical liberalism. Recently Gabriel and I wrote a paper together on the implications of Machlup’s reading of Mises’ epistemology (as wonkish as it gets!) I consider this, now in the Journal of the History of Economic Thought, as one of my best papers so far.

As I was about to finish high school, in one of his so many international trips where he had a connection in New York he went all the way to FEE (The Foundation for Economic Education) to buy a copy of Mises’ Human Action which he gave me as an end of high-school gift. I read it for the first time that summer before starting college. While I had an intuition and general understanding of the a priori in economics, this was the first time I’ve read about praxeology by Mises and I don’t know if I could have gone through those pages without having first read Popper, which wouldn’t have occurred without the impact of the machine-unemployment napkin-long argument. I say for the first time because I was so impressed by Human Action that I read it every summer, even after finishing my college degree. I’ve read this book only six times. I say only because after I asked dad, he told me that he thought he had read it around 9 times (but who’s counting, right?). It seems I still have some catching up to do… Needless to say, this is my most cherished piece on my bookshelf.

There’s a joke that I once heard, I cannot remember from whom, that goes: “An Austrian economist doesn’t let anybody, even his best friend, borrow his guitar, his girlfriend, or his copy of Human Action.” I don’t have a guitar; I play the piano. I’m single (who knows, hopefully not for long). But I sure as hell won’t be lending my copy of Human Action any time soon.

This personal detour is not accidental. All these readings and interactions with my dad led me to start my economics career, also at the Pontificia Universidad Católica Argentina (UCA), as an Austrian economist first (Menger, Bohm-Bawerk, Mises, Hayek, Kirzner), and only then as a trained mainstrem economist. For better or for worse, this has always affected how I think about economic problems, what questions to ask, and how to answer them.

There are four papers from my dad that merit, I think, special mention. All of them published in Libertas. This journal was discontinued a few years ago and he was still trying to bring it back to life the same day he left this world. The last email I received from him was addressed to a “club of academic libertarians” discussing the feasibility of using Libertas as the title of a new journal:

1-. Mathematical Economics vs Economic Science I & II

The title is no accidental. This paper is the outcome of his doctoral dissertation under the direction of Hans Sennholz (himself a doctoral student of Mises). I still know of no answers to some of the arguments he puts forward in this work. I also don’t know of an English written text that presents similar arguments to his. Hopefully I’ll find the time to continue this line of work at some point in my career. The doctoral committee, I should add, was composed of mathematicians as well. When dad defended his dissertation I was only one, or maybe two, years old and stayed at home with mom. The defense took place at Grove City. Pete Boettke can share colorful recollections of the defense as he was himself there and dad’s was the first doctoral dissertation he observed. I’ve heard his colorful recollection before, it’s worth listening to.

2-. Theories of Value and Price I & II

This is the best reference I know about history of thought with respect to theories of value and price. It is because of these papers that every time I hear anyone say “labor theory of value” I feel the urge to scream. Classic economists, from Smith to J. S. Mill did not have a labor theory of value, they had a cost-theory of price. The cost part is not even just labor and, of course, price is not value. For the classics, value was subjective, they just didn’t have a theory about it and that’s why their price theory was immerse in a circular reasoning (which they knew about). If you don’t believe me, be a scholar and read the classics yourself first hand. Or read dad’s papers on this subject. I also learned about marginal theory of value from these papers, and it is because of these papers that every time I teach with a textbook that uses the famous food or water example to explain marginal theory I can’t resist the need to explain why such examples are actually wrong (yes, most economic textbooks get marginal theory of value wrong– no surprise about dad’s skepticism on mathematical economics). I can’t deal with the idea of a student of mine that does not properly understand what marginal theory is about (the value of similar goods satisfying different needs, not different goods satisfying the same need: i.e. number of glasses of water to satisfy a unique need, being thirsty).

3-. The Great Depression

This is also my first reference for the Great Depression. If there were an English version of this paper, it would certainly be an assigned reading in my macro courses. I’ve learned many things from this paper. One lesson I always remember is that there is no such thing as fixing the price of gold or an international system of fixed exchange rates under a gold standard. This explanation is flavored with his unique and self-reliant irony. If it weren’t for this paper I would had a very hard time understanding some of the monetary literature like Larry White’s and George Selgin’s free banking studies, which was my first research topic when I first started to write academic papers. It was my good friend Adrian Ravier who first pushed me into these topics, but it was dad who got me ready to deal with them.

4-. Value Based Management

This is one of his last papers (1999), and also one that seems to have gone somewhat unnoticed. In this piece, he applies finance to economic analysis; think of micro vs finance and macro vs finance, not of financial economics. Being his son I couldn’t resist everything he wrote and I read this piece just as I did all the others. This paper left a seed in my head for many years: apply finance to economics (not economics to finance). If economics wants to deal with real world problems, the assumptions we use have to simplify the real world without changing the problem to be solved in the process (Hayek’s point in The Use of Knowledge in Society). Conventional micro simplifies but also modifies the problem to be solved. Finance, however, is how entrepreneurs actually make decisions. During a discussion about the rational expectations critique of the Austrian Business Cycle Theory (ABCT) with Pete Leeson, when he was visiting Suffolk University in Boston, where I was a doctoral student under the supervision of Ben Powell, this paper came to my head and I used its line of reasoning to answer Leeson’s criticism of the ABCT. Soon after (a few days actually) I wrote a rebuttal to the RE critique of the ABCT using EVA(R) as the financial framework (now in The Review of Austrian Economics.) It was this paper that also put me in contact for the first time with Anthony Evans in the U.K., with whom I interact from time to time. In this paper I cite dad as the only academic besides myself to show an application similar to mine (though it was actually his application.) Now this finance application to capital theory is my largest research project, one I am still working on with Peter Lewin throughout the course of seven papers to date. At the moment of reading his work I couldn’t fathom that this would become, so far from home, a research project more than 10 years later. I’m only sorry that he didn’t live long enough to see how far this project has evolved. [Spoiler for Peter Lewin: The seed has transformed into a book structure in my head and this is something that I still need to discuss with him]. In some sense, I cannot help feeling I’m carrying out what was his original idea. I wish he would have had more time on his busy schedule to read my papers with Pete to give us his comments.

I was not, of course, a typical student of his. I also was not his typical colleague. I only worked briefly at his online real-time education firm, CMT Group, after quitting Reuters and before moving to the U.S. to become one of Ben Powell students. But his passion for economics and teaching was as alive as ever, up to the very end.

My father was a humble, ever smiling, and eternally optimistic man. He was a Professor at various universities in Argentina and throughout Latin America. He departs this world with grateful students and friendly colleagues across the globe. He died too young and full of a brilliant energy that will now go unused, but I know we will share a morning walk along the beach in another life. Then, I will tell him all that I have done since that first napkin-scrawled lesson when I was only 14 years old.

Nicolás Cachanosky

Nicolas Cachanosky

Nicolás Cachanosky is an Assistant Professor of Economics at Metropolitan State University of Denver. With research interests in monetary economics and macroeconomics, much of his recent work has focused on incorporating aspects of financial duration into traditional business cycle models. He has published articles in scholarly journals, including the Quarterly Review of Economics and Finance, Review of Financial Economics, and Journal of Institutional Economics. He is co-editor of the journal Libertas: Segunda Época. His popular works have appeared in La Nación (Argentina), Infobae (Argentina), and Altavoz (Peru).

Cachanosky earned his M.S. and Ph.D. in Economics at Suffolk University, his M.A. in Economics and Political Sciences at Escuela Superior de Economía y Administración de Empresas, and his Licentiate in Economics at Pontificia Universidad Católica Argentina.

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