What Is Austrian Economics?

Week 1 of the Mises Institute’s Home Study Course in Austrian Economics includes one audio lecture and brief readings from three books. I had already listened to or read all of this material in the past, so it was relatively easy to get through it this week on top of my Great Books reading.

  1. Mises and the Foundation of Austrian Economics” by Jörg Guido Hülsmann: This lecture kicked off the 2003 edition of Mises University, a one-week crash course in Austrian economics hosted each summer by the Mises Institute. Hülsmann is the leading authority on the life of Ludwig von Mises, having written the definitive scholarly biography of the man, Mises: Last Knight of Liberalism (reviewed here). This lecture is an engaging and even entertaining survey of the history of the Austrian school from the late 19th century to the present day, with a special focus on Karl Menger, Eugen von Böhm-Bawerk, and Mises. Hülsmann strongly urges anyone interested in the field to read Mises’s four great treatises: The Theory of Money and Credit (1912), Socialism (1922), Human Action (1949), and Theory and History (1957). I’m happy to say that I have read parts of each of these; however, I have never read any one of them in its entirety. That’s one of the reasons I am embarking on this project of reading!
  2. Introduction of Randall Holcombe, ed., 15 Great Austrian Economists: Of the Week 1 readings, this selection was the most helpful in giving the reader an historical perspective on the differences (primarily methodological) between Austrian and mainstream economics. Holcombe very satisfactorily describes the conditions that led to the Austrians’ “years in the wilderness” and their resurgence in the late 20th century. Probably the greatest vindication of the Austrian view was the ultimate failure of socialism in Eastern Europe, something the Austrians had foreseen as far back as 1919, contrary to the predictions of the mainstream.
  3. Introduction to and Appendix A of Gene Callahan, Economics for Real People: It’s obvious from the start that Callahan’s goal is to attempt to communicate economic concepts in a breezy style that will keep the attention of 21st-century readers. I don’t require that method of presentation personally, but I know it’s needed in certain contexts. The introduction essentially makes the case briefly that Austrian economics is truer to life than the graphs and charts of mainstream economists. The appendix is an historical survey that devotes about a paragraph to each major Austrian thinker of the past 200 years.
  4. Introduction to Thomas Taylor, An Introduction to Austrian Economics: This book is much slimmer than the other two, and much older (1980); apparently it was intended as a supplement to standard textbooks in economics survey courses. Its inclusion here seems a bit redundant, but I imagine its status as an old warhorse in the battle for communicating Austrian ideas means that it’s to be accorded some respect. The introduction stresses the Austrian insistence on methodological individualism (only individuals act, not collectives) and the inappropriateness of reliance on mathematics in economic analysis.

About Dr. J

I am Professor of Humanities at Faulkner University, where I chair the Department of Humanities and direct online M.A. and Ph.D. programs based on the Great Books of Western Civilization. I am also Associate Editor of the Journal of Faith and the Academy and a member of the faculty at Liberty Classroom.
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2 Responses to What Is Austrian Economics?

  1. Pingback: The Biblical Foundations of Economics | The Western Tradition

  2. I read Socialism and Human Action in their entirety, but that doesn’t mean I understood them well. They are examples of what Dr. Adler calls books that are over your head, books that are worth repeated readings because they will elevate you to greater understanding.

    Sociaism expounds on Mises’ earlier paper “Economic Calculation on the Socialist Commonwealth”. The gist of the argument from what i could remember is that a system of private property and the price system entails profit and loss. Profit and loss is the signal by which you know if you’re using resources well or not. Under socialism, you do away with that and you’re groping in the dark. The usual criticism of communism/socialism is that it’s good in theory but bad in practice. Mises made a bolder claim: That not only is it bad in practice, it’s absurd in theory thus IMPOSSIBLE.

    It’s interesting that a verse in Paul’s epistle where I learned in childhood as a proof text against socialism was actually used in Mises’ day as material as the Bible’s supposed stance against capitalism! ‘That he who doesn’t work, he should not eat/be fed.’ One could interpret this as a verse against the welfare state, but this was used back in the day as reason against monetary interest.

    I’m bothered though by Mises’ use of Malthus as one of his premises against socialism. (While I haven’t read Malthus’ essay at the moment, it seems to be wrong. I’l research this later.) For Mises, socialist visions of his day dreamed of doing away with the constraints by the Law of Population.

    As for Human Action, it seems the more background someone has from the great ideas of the western civilization, the better. One obvious would be Kant and his categories. Kant influenced Mises in his categories of human action.

    Another would be Epicureanism. When I read the revised/3rd ed of Human Action, I had no idea about what Epicureanism is. I only learned about the Action Axiom, that humans act. That means and ends are chosen because they believe a certain action gives them utility or in Epicurean terms pleasure.

    I’ve seen reading Lucretious’ De Rerum Natura on and off since the beginning of 2015. Ever since, I’ve been fascinated by Epicureanism and how that influenced Thomas Jefferson and how ‘the pursuit of happiness’ phrase from the Declaration of independence had Epicurean roots. Also the following essay.

    Perhaps, if I try to read Human Action now armed with knowledge of Epicureanism, I’ll be able to derived greater understanding and pleasure (pun intended) than in my previous readings. (Reading Kant will come later.)

    I think the most accessible introduction to Austrian Economics is Bob Murphy’s Letter to the Young Economist.

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