Austrian School Of Economics: Your Guide To Join

The Austrian School of Economics is a heterodox school of economic thought that was founded in 1871 with the publication of Carl Menger's Principles of Economics. The school is based on the idea that economic analysis is universally applicable and that the appropriate unit of analysis is human choice, with choices being determined by individual subjective preferences. Today, the school has spread its influence worldwide, especially in the English-speaking world, and continues to evolve through the input of various economists. For those interested in joining this school of thought, there are several options available. One can consider pursuing a degree in economics with a focus on Austrian Economics, with institutions such as George Mason University, NC State, and Hampden-Sydney College offering relevant courses and forums. Additionally, organizations like the Mises Institute promote teaching and research in the Austrian School and provide research fellowships for graduate students and post-docs interested in this field.

The Austrian School's approach to economic theory

The Austrian School of Economics is a heterodox school of economic thought that was founded in 1871 in Vienna, Austria-Hungary, with the publication of Carl Menger's book, "Principles of Economics". Menger, along with William Stanley Jevons and Leon Walras, developed the marginalist revolution in economic analysis, arguing that economic analysis is universally applicable and that the appropriate unit of analysis is man and his choices. These choices, according to Menger, are determined by individual subjective preferences and the margin on which decisions are made, which is known as marginalism. Menger's work became one of the pillars of the marginalist revolution and introduced the subjectivist approach in economics, which holds that economic values of goods and services are subjective in nature.

The Austrian School uses the logic of a priori thinking to discover economic laws of universal application, while other mainstream schools of economics rely on data and mathematical models. This approach is based on the concept of methodological individualism, which asserts that social phenomena result primarily from the motivations, actions, and self-interest of individuals. Austrian theorists believe that economic theory should be derived exclusively from basic principles of human action. They also contributed to the development of the subjective theory of value, marginalism in price theory, and the formulation of the economic calculation problem.

The Austrian School has produced many notable economists, including Ludwig von Mises, who applied the theory of marginal utility to money in his book "Theory of Money and Credit" (1912), and Friedrich Hayek, who shared the 1974 Nobel Memorial Prize in Economic Sciences. In the 20th century, economists associated with the Austrian School were primarily located at the London School of Economics, New York University, Auburn University, and George Mason University.

The history of the Austrian School

The Austrian School of Economics is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self-interest. Austrian-school theorists hold that economic theory should be exclusively derived from basic principles of human action. The Austrian School is known for its unique approach to economics, favouring "thought experiments" and a priori thinking over complex formulas and mathematical models.

The Austrian School was founded in 1871 in Vienna with the publication of Carl Menger's "Principles of Economics". Menger, along with William Stanley Jevons and Leon Walras, developed the marginalist revolution in economic analysis. Menger argued that economic analysis is universally applicable and that the appropriate unit of analysis is man and his choices. These choices, he wrote, are determined by individual subjective preferences and the margin on which decisions are made. The logic of choice, he believed, is the essential building block to the development of a universally valid economic theory. The Austrian School was methodologically opposed to the Historical School, in a dispute known as the Methodenstreit or "methodology quarrel". The Historical School, which dominated economic thinking in German-language countries, argued that economic science is incapable of generating universal principles and that scientific research should instead focus on historical narratives.

In the late 19th century, the Austrian School defended the role of theory in economics as distinct from the study or compilation of historical circumstance during the "Methodenstreit". This dispute gave rise to the name "Austrian School", coined by Gustav von Schmoller, a leader of the Historical School, in an attempt to characterise the Austrian School as outcast and provincial. The first wave of the Austrian School included Carl Menger, Eugen von Böhm-Bawerk, and Friedrich von Wieser, with later contributions from Ludwig von Mises, Friedrich Hayek, Fritz Machlup, and others.

In the 1930s and 1940s, the Austrian School moved to Britain and the United States, with scholars associated with this approach primarily located at the London School of Economics and New York University. During this time, the school began to incorporate knowledge from outside sources, but the core principles remained the same. In the 1970s, the Austrian School experienced a revival of sorts, with renewed interest in the work of Hayek after he shared the 1974 Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal. This led to the development of literature on free banking in the 1970s and 1980s by Hayek, Lawrence White, George Selgin, and others. Despite this renewed interest, Austrian economics was largely disregarded or derided by mainstream economists in the mid-20th century due to its rejection of model building and mathematical and statistical methods.

Influential figures of the Austrian School

The Austrian School of Economics is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self-interest. The school originated in 1871 in Vienna with the work of Carl Menger, who is considered the founder of the Austrian School. Menger's book, "Principles of Economics", published in 1871, became one of the pillars of the marginalist revolution, explaining that the economic values of goods and services are subjective in nature.

Over the years, the Austrian School has evolved through the contributions of various influential economists. Here are some of the most notable figures associated with the Austrian School of Economics:

Carl Menger (1840-1921):

Considered the founder of the Austrian School, Carl Menger was an Austrian economist whose work laid the foundation for the school's key concepts. His book, "Principles of Economics" (1871), introduced the idea of subjective value theory and marginalism, arguing that the value of goods and services is determined by individual preferences rather than intrinsic factors.

Eugen von Böhm-Bawerk (1851-1914):

A contemporary of Menger and a fellow founding member of the Austrian School, Eugen von Böhm-Bawerk made significant contributions to economic theory, particularly in the areas of capital, interest, and value. He also served as the Austrian Minister of Finance and was influential in shaping economic policy in Austria during the late 19th and early 20th centuries.

Friedrich August von Hayek (1899-1992):

Hayek is one of the most well-known figures associated with the Austrian School. He shared the 1974 Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal, which brought renewed interest to the Austrian School. Hayek's work was influential in reviving laissez-faire thought in the 20th century, and he is known for his contributions to the theory of knowledge and economic calculation.

Ludwig von Mises (1881-1973):

Mises was a prominent economist and one of the leading figures of the Austrian School in the 20th century. He applied the theory of marginal utility to money in his book, "The Theory of Money and Credit" (1912). Mises also founded the Geneva School of Economics and Management, which later became part of the University of Geneva.

Israel Kirzner:

Along with Ludwig Lachmann, Kirzner's work at New York University in the late 20th century contributed to the rising reputation of the Austrian School during that time. Kirzner is known for his contributions to the theory of entrepreneurship and his interpretation of Austrian economics.

Other influential figures associated with the Austrian School include Friedrich von Wieser, Ludwig Lachmann, Murray Rothbard, Hans-Hermann Hoppe, Joseph Salerno, and many others. The Austrian School has a rich history and continues to influence economic thought and policy today.

The Austrian School's influence on modern economics

The Austrian School of Economics, founded by Carl Menger in 1871 with the publication of his book, 'Principles of Economics', has had a significant influence on modern economic thought. Menger's work introduced the concept of methodological individualism, which asserts that social phenomena arise primarily from the motivations, actions, and self-interest of individuals. This school of thought promotes the idea that economic theory should be derived solely from the fundamental principles of human action.

One of the Austrian School's most notable contributions is its role in the marginalist revolution of the 1870s, alongside William Stanley Jevons and Leon Walras. Menger's work advanced the theory of marginal utility, suggesting that the value of goods and services is subjective and that their economic value diminishes as their quantity increases. This theory has had a profound impact on modern economics, influencing our understanding of supply and demand, inflation, and the operation of foreign exchange rates.

Another key aspect of the Austrian School's influence is its emphasis on a priori thinking and "thought experiments". Unlike mainstream schools of economics that rely heavily on data and mathematical models, the Austrian School believes in discovering economic laws of universal application through logical deduction and individual reflection. This approach has provided unique insights into various economic issues and continues to shape the way economists approach and conceptualise economic problems.

The Austrian School also introduced the concept of political individualism, which posits that full economic freedom is necessary to secure political and moral liberty. This idea has had a significant impact on economic policy-making, particularly regarding the role of government intervention in the economy. While some Austrian economists, like Friedrich Hayek, accept a substantial part of neoclassical methodology and government intervention, others, like Ludwig von Mises, regard neoclassical methodology as inherently flawed and advocate for minimal government interference in markets.

The Austrian School's influence can be seen in the work of modern economists, who continue to build upon and debate its fundamental teachings. Notable universities associated with the Austrian School include George Mason University, NC State University, and Grove City College. Despite some criticism and disagreement within the field of economics, the Austrian School's legacy persists and continues to shape economic thinking worldwide.

How to study the Austrian School at university

The Austrian School of Economics is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivations and actions of individuals along with their self-interest. Austrian-school theorists hold that economic theory should be derived exclusively from basic principles of human action.

The Austrian School of Economics was founded in 1871 by Carl Menger, with the publication of his book, "Principles of Economics". Other prominent names associated with the Austrian School include Ludwig von Mises, Eugen von Bohm-Bawerk, Friedrich Hayek, and many others. The school has evolved over the years, incorporating knowledge from outside sources while retaining its core principles.

If you are interested in studying the Austrian School of Economics at the university level, there are a few things you can do:

• Look for universities that offer economics programs with a focus on the Austrian School: Some universities that have been mentioned in this regard include George Mason University, Loyola University in New Orleans, Hampden-Sydney College, and Grove City College. You can also consider the London School of Economics and New York University, which were primary locations for scholars associated with the Austrian School in the 1930s and 1940s.
• Participate in extracurricular activities and student groups: Join or start an Austrian Economics Forum or a Mises Book Club at your university to engage with like-minded students and scholars.
• Pursue research opportunities: Consider research fellowships and other research opportunities at organizations like the Mises Institute, which is dedicated to promoting teaching and research in the Austrian School of Economics.
• Read and learn independently: Even if your university does not offer a specific program on the Austrian School, you can still major in economics and read about the Austrian School in your free time. Additionally, you can attend lectures and seminars conducted by prominent scholars and institutes associated with the Austrian School.
• Consider graduate studies: If you intend to pursue graduate studies, you can look for universities and scholars who align with the Austrian School for your master's or PhD program. This will allow you to specialize in the Austrian School and conduct in-depth research.

By following these steps, you can gain a strong understanding of the Austrian School of Economics during your university studies.

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