Austrian School of Economics
The Austrian School of Economics is a broad range of economic thought that emphasizes the importance of individual human action and free markets in economic decision-making. With origins in late 19th century Vienna, it has since grown into a well-known portion of modern economic philosophy and has been followed and improved upon by successful business thinkers. The Austrian school uses logic of a priori thinking to discover economic laws of universal application, whereas other mainstream schools of economics make use of data and mathematical models. Austrian economists are particularly critical of central planning and government intervention, arguing that these distortions lead to inefficiencies and economic instability. Other than Carl Menger, the Austrian school also includes names like Ludwig von Mises, Eugen von Bohm-Bawerk, and F.A. Hayek.
NOTABLE AUSTRIAN ECONOMISTS
Ludwig von Mises.
He is one of the most influential figures in the Austrian School. His work The Theory of Money and Credit provided a comprehensive analysis of the role of money in the economy and the impact of monetary policy on economic affairs.
Hayek argued that excessive government intervention in the economy can lead to a loss of individual freedom and ultimately, totalitarianism.
Carl Menger.
The Austrian school traced its roots from the late 19th century Austria and from the work of Carl Menger’s Principles of Economics.
Eugen von Bohm-Bawerk.
His work developed theories of production, interest, and capital. He also developed these theories in part to support his wide-ranging critiques of Marxist economic theories.
KEY ARGUMENTS
Emphasis on individual freedom.
Austrian economists argue that economic decisions should be made by individuals rather than by the government or any other central authority.
Importance of the market.
They argue that the market is highly efficient and can allocate resources much more effectively than any central authority.
Private property rights.
They argue that private property provides incentives for individuals to invest, innovate, and create wealth.
Critique of interventionism.
Austrian economists are critical of government intervention in the economy, such as through regulation, subsidies, or the creation of money.
Role of money and interest rates.
They argue that monetary policy can have a significant impact on the economy, and that artificially low interest rates can lead to market distortions and economic bubbles.
Importance of entrepreneurship.
They argue that entrepreneurs play a critical role in creating new products, services, and technologies, and that their efforts are essential for driving economic growth and innovation.