[Home]Austrian School

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A school of economic thought founded in 1871 with the publication of Carl Menger's [Principles of Economics]?. Austrian economics is currently closely associated with advocacy of unregulated capitalism and extreme laissez faire views. Austrians view entrepreneurship as the driving force in economic development, see private property as essential to the efficient use of resources, and often think government interference in market processes to be counterproductive. The school originated in Vienna and owes its name to members of the [Historical School]? of economics who derisively called it the "Austrian School" to emphasize its departure from mainstream German thought.

Menger was closely followed by contributions from [Eugen von Böhm-Bawerk]? and [Friedrich von Wieser]?. Austrian economists developed a sense of themselves as a school distinct from neoclassical economics during the [economic calculation debate]?, with [Ludwig von Mises]? and Friedrich von Hayek representing the Austrian position. The school was no longer centered in Austria after Hitler came to power. Austrian economics was ill-thought of by most economists after World War II. Its reputation has lately risen with work by students of Israel Kirnzer and Ludwig Lachmann.

Carl Menger was one of a group of economists founding neoclassical economics in the 1870s. Neoclassical economists reject classical cost of production theories. Instead they explain value by subjective preferences of individuals. Supply and demand are explained by aggregating over the decisions of individuals, following the precepts of methodological individualism and marginal arguments, which compare the costs and benefits for incremental changes. Contemporary neo-Austrian economists claim to adopt Economic subjectivism more consistently than any other school of economics and reject many neoclassical formalisms. For example, while neoclassical economics formalizes the economy as an equilibrium system, Austrian economists emphasize it's dynamic, perpetually dis-equilibriated, nature.

Some contributions of Austrian economists:

Major Austrian Economists

Other related economists:

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Last edited December 14, 2001 11:43 pm by Jhanley (diff)
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