Wirth symposium: The Austrian School of Economics and the migration of tradition

The Review of Austrian Economics -     

Ludwig von Mises and the Austrian School of Economics

Conclusions The Austrian tradition is identified by an built upon praxeology—the application of deductive reasoning to the irrefutable fact of human action. This method is the red thread that runs from Menger to B?hm-Bawerk to Mises to Murray Rothbard and the modern practitioners of Austrian economics. Working within this tradition, economists have produced a great edifice of irrefutable, universally applicable economic theory. They have shown how the free market advances mankind in its struggle against scarcity and why socialism cannot do so. They have taught us that we must choose one of these two social arrangements, since no system exists between them. We must make our selection and advance, by education and persuasion, either capitalism or socialism. Let us choose wisely.     

Boettke,The Austrian School and the Reclamation of Reality in Modern Economics

In a series of recent papers, the prominent Austrian economist Peter Boettke has criticised orthodox economics for its lack of realism. This paper situates Boettkes critique in the context provided by recent developments in the methodology of economics, most notably critical realism. While there is a good deal of common ground between Boettkes approach and critical realism, the latter also helps to reveal some of the limitations of the variant of Austrian economics to which Boettke subscribes. Suggestions are made as to how critical realists and Austrians such as Boettke might move forward together in developing a more realistic, relevant and fruitful approach to economic analysis.     

The Development of Austrian Economics: Revisiting the Neoclassical Divide

Recent developments in Austrian-market-process economics are discussed, and, despite the continuing difficulties of communicating with mainstream economics, some causes for optimism are discerned. Looking to a useful future for Austrian economics will require that further empirical work in applying its insights be done. The question of placing the burden of proof in policy discussions is examined.     

The Property System in Austrian Economics: Ronald Coase's Contribution

This paper argues that contrary to Roy Cordato's claim, Ronald Coase's work on the problem of social cost is an important contribution to Austrian economics. Coase identified a criterion that can be used to establish initial legal rights to control actions that have external effects. In other words, he discovered a criterion that, in some cases, can be directly applied to help establish a property system when there is none. The criterion also helps a government adapt, or maintain, a property system in light of continuing changes that are characteristic of the entrepreneur economy. Cordato's anti-state ethical economics, which he used to criticize Coase, is a deviation from the century-old tradition of Austrian economics. Menger, Mises and Hayek saw economics as a body of logical knowledge that is value free. In addition they recognized a role for government in defining legal rights and in maintaining the property system in light of changing conditions. Accordingly, it is wrong to invoke Austrian economics, properly understood, to criticize this aspect of Coase's work. In this paper, I argue that Cordato has followed a deviant and troubling path by trying to construct an Austrian economics based on ethics, that he has failed to understand that a changeable property system is a prerequisite for the market economy, and that he has correspondingly failed to recognize Coase's contribution to the problem of how to maintain the property system in light of continuing change.     

Austrian Economics and Game Theory: A Stocktaking and an Evaluation

I discuss the merits and drawbacks of game theory in economics from the perspective of Austrian economics. I begin by arguing that Austrians have neglected game theory at their peril, and then suggest that game theoretic reasoning could be one way of modelling key Austrian insights. However, admittedly some aspects of game theory don't square easily with Austrian economics. Moreover, a major stumbling block for an Austrian acceptance of game theory may lie in the traditional Austrian resistance to formal methods.     

On Rationality,Ideal Types and Economics: Alfred Schüutz and the Austrian School

A comparison is made of the views on economic theory and method of the Austrian philosopher and sociologist Alfred Schütz (1899–1959) and those of his mentor, the Austrian economist Ludwig von Mises (1881–1973). Schütz basically agreed with the fundamental parts of the Austrian program, but he also had disagreements with Mises on the epistemological character of the core assumptions, on the formulation and status of the rationality principle, and on the use of ideal types in economic analysis. In several of these aspects Schütz had important points of value not only for the use of ideal types in economic modeling, but also within political science and sociology. In the end, however, there is more which unites than separates Schütz and Mises.     

The Economics of School Quality

Abstract. Recent national concerns about student performance on PISA tests and similar assessments appear warranted because of the direct relationship between student cognitive skills and both individual earnings and national growth. The evidence on the impacts of school quality indicates very large economic effects. Available research shows, however, that improving school quality is difficult and not closely related to spending levels. One approach supported by research is improving teacher quality, which can yield sizable gains in student performance. Instituting appropriate policies to alter the teacher force will necessarily take significant time.     

Left luggage: finding the relevant context of Austrian Economics

Recently a number of scholars, including Tony Judt and Corey Robin, have attempted to discredit Austrian economics by emphasizing the (cultural) distance between the context in which the Austrians made their contributions and our current society. This article argues that the cultural and social context is indeed relevant for how we understand the contribution of the Austrians, but that the critics fundamentally misunderstand or misrepresent the Austrian and Habsburg context. It is argued that the relevant context, particularly for the interwar contributions of Mises, Schumpeter, Hayek and Popper is the despair about the breakdown of their civilization, which includes the rise of mass political movements such as socialism and fascism. It is only against this background that we can understand the intent of their work, and the problems which they sought to address. It is further argued, in contrast with earlier work which has tended to emphasize the philosophical and methodological context in which they operated, that this cultural and social context is at least as relevant to understand the meaning of their work.     

Extending Austrian Economics toward Psychology: Rules in Loan Decisions

The proponents of the Austrian school of economics, like economists in general, often take a negative view of incorporating psychological assumptions in the main body of economic theory. Still they regularly make use of such assumptions while applying the theory. The paper argues for a cautious use of the findings of psychology from the very start of economic reasoning. The examples employed to illustrate the argument are from the loan decision process of a banker.     

The Microfoundations of Austrian Economics through a New Classical Theoretical Lens

This paper is an attempt to contribute to the microfoundations debate by discussing the distinctive methodological characteristics of the Austrian school, and how they relate to different conceptions of equilibrium and general equilibrium models. Further, we shall focus on one specific branch of the Austrian school (those who see markets as exhibiting equilibrating tendencies) and one specific branch of neoclassical economics (the New Classical School) to highlight some hitherto overlooked points of tangency. Indeed, we shall use the monetary theories of Hayek and Lucas to argue that the limitations of New Classical models may lead to Austrian solutions.     

The Cambridge School of Keynesian Economics

There have been strong ties between the Cambridge Journal ofEconomics (CJE) and the Cambridge School of Keynesian Economics,from the very beginning. In this paper, the author investigatesthe environment that saw the birth of the CJE at Cambridge (UK),in 1977, and the relationship that linked it to the direct pupilsof Keynes. A critical question is explicitly examined: why didn'tthe ‘Keynesian revolution’ succeed in becoming apermanent winning paradigm? Some behavioural mistakes of themembers of the Keynesian School may explain this lack of success,but only to a certain extent. In any case, there were and therestill are remedies too. But what we are inheriting is a uniqueset of analytical building blocks (the paper lists eight ofthem) that makes this School of economics a viable (and in somedirections definitely superior) alternative to mainstream economics.Admittedly, there is some important work still to be done. Thepaper highlights the need for a two-stage approach, addressingpure theory and extensive institutional analysis. It is arguedthat a combination of the two would strengthen the coherenceof the theoretical foundations, and at the same time would providea fruitful extension of economic analysis to empirical, institutionaland economic dynamics investigations.     

Information and Knowledge: Austrian Economics in Search of its Uniqueness

The Austrian School of Economics since WWII has increasingly claimed a unique position within the scientific community of economists. This paper argues that the most persuasive way to make this claim to uniqueness is to focus on the distinction scholars in the Austrian tradition place between information and knowledge in their work. In other words, it is the epistemic-cognitive turn that the Austrian school took in the wake of the socialist calculation debate that separates the school from other branches of neo-classicism within economic science that constitutes its best case for analytical uniqueness.     

战争的经济学视角考察

现代的战争已远远脱离了单纯的军事目的 ,更多的受眼前和长远的经济利益驱使。由于在各国经济发展战略中 ,重要资源配置及相应的价格变动对经济发展有重大影响 ,因此 ,以一定的成本换取重要资源配置权力及相应的有利于本国经济发展的资源定价权力 ,并为长远经济利益的获取奠定条件 ,成为一些国家用战争来解决问题的出发点。     

An Austrian view of expectations and business cycles

Austrian economists have contributed several important concepts to business cycle theory including: inter-temporal coordination of production and consumption, heterogeneous specificity of capital, non-neutrality of money, and the capital structure of production. Noticeably lacking, however, is a clear theory of expectations. Recent Austrian responses to rational expectations critiques—such as positing a prisoner’s dilemma, heterogeneous entrepreneurs, and adverse selection—try to fill this gap. But much work remains to be done developing an Austrian theory of expectations, one where they are endogenous to the market process and market institutions. This paper explores how people adapt their expectations to changing market phenomena based upon their perceived costs and benefits of doing so. It then applies endogenous expectations to the 2008 financial crisis.