Much of my recent work deals with the theory and practice of entrepreneurship, and I have often referred to an “entrepreneurship research bubble,” characterized by a huge increase in research funding, faculty positions, courses, centers, degree programs, books, articles, etc. Indeed, the academic field of entrepreneurship has exploded in the last decade (see pp. 23-24 of the new book for some stats). While this is certainly good for students and scholars of entrepreneurship, it also has the predictable effect of attracting marginal projects, activities, and researchers to the field, many of which will likely not survive the inevitable shakeout. Of course, the field as a whole will probably be much stronger after the crisis, liquidation, and restructuring (and I sure hope to be one of the survivors!). More generally, Austrian-style business cycles exist in the world of ideas as well as the world of goods.
I was reminded of all this when reading some Rothbardian remarks from 1983 on the state of the libertarian movement. Murray was deeply concerned about the influence of outside funding, and how its rapid infusion, and sudden withdrawal, was distorting the movement’s intellectual structure of production:
[T]he libertarian movement has experienced all the syndromes of an “Austrian” business cycle in the real world. A massive and sudden infusion of funds in 1977-80 led to an artificial lengthening of the structure of production, an overinvestment in new and expanded institutions. Unknown nerds were plucked from obscurity, vaulted into positions of prominence and power, and given hundreds of thousands, even millions of dollars, to play with. After the hubris came the inevitable disillusion and drastic contraction, with the attendant painful liquidation of people and institutions that we see in every panic depression phase of the cycle. That liquidation is now taking place, unfortunately dragging many estimable people and organizations down with it.