The present paper probes the relation between the metaphysics of human freedom and the Rothbardian branch of Austrian economics. It transpires that Rothbard and his followers embrace metaphysical libertarianism, which holds that free will is incompatible with determinism and that the thesis of determinism is false as pertaining to human action. However, as we demonstrate, their economics with its reliance on value scales requires for its tenability compatibilist freedom. Moreover, we attempt to show that the notion of (...) value scales (or preferences) postulated by them implies that value scales are determinative of choices people make. We contend that it is for this reason that the said Austrians should jettison their metaphysical libertarianism. (shrink)

First published in 1986 and reprinted in 2010 in the Routledge Revivals series, this book presents the first detailed confrontation between the Austrian school of economics and Austrian philosophy, especially the philosophy of the Brentano school. It contains a study of the roots of Austrian economics in the liberal political theory of the nineteenth-century Hapsburg empire, and a study of the relations between the general theory of value underlying Austrian economics and the new (...) economic approach to human behaviour propounded by Gary Becker and others in Chicago. In addition, it considers the connections between Austrian methodology and contemporary debates in the philosophy of the social sciences. (shrink)

Austrian economics starts out from the thesis that the objects of economic science differ from those of the natural sciences because of the centrality of the economic agent. This allows a certain a priori or essentialistic aspect to economic science of a sort which parallels the a priori dimension of psychology defended by Brentano and his student Edmund Husserl. We outline these parallels, and show how the theory of a priori dependence relations outlined in Husserl’s Logical Investigations can (...) throw light on the Austrian account of entrepreneurship. (shrink)

Current debates between behavioural and orthodox economists indicate that the role and epistemological status of first principles is a particularly pressing problem in economics. As an alleged paragon of extreme apriorism, the methodology of Austrian economics in Mises’ tradition is often dismissed as untenable in the light of modern philosophy. In particular, the defence of the so-called fundamental axiom of praxeology—“Man acts.”—by means of pure intuition is almost unanimously rejected. However, in recently resurfacing debates, the extremeness of (...) Mises’ epistemological position has been called into question. Rather than directly engaging in these exegetical discussions, this paper aims to substantiate the possibility and plausibility of conventionalist defences of praxeology per se. The proposed shift includes settling for an analytic fundamental axiom and acknowledging the prima facie tenability of other research programs than praxeology. Since conventionalist praxeology is only moderately aprioristic, mainstream economists and philosophers might be more likely to engage in fruitful discussions with those Austrian scholars who elaborate pragmatic arguments for praxeology instead of invoking pure intuition. (shrink)

This 1994 book examines the development of the ideas of the new Austrian school from its beginnings in Vienna in the 1870s to the present. It focuses primarily in showing how the coherent theme that emerges from the thought of Carl Menger, Ludwig von Mises, Friedrich Hayek, Ludwig Lachman, Israel Kirzner and a variety of new younger Austrians is an examination of the implications of time and ignorance for economic theory.

This article discusses the challenges raised by the inclusion of evolutionary elements in the theories of Carl Menger, Joseph Schumpeter, and Friedrich Hayek. Each adopted an idiosyncratic position in terms of method of inquiry, focus, and general message. The breadth of the topics and phenomena they cover testifies to the great variety of interpretations and potential uses of evolutionary concepts in economics. Menger, who made no reference to Darwin’s theory, advanced an “organic” view of the emergence of social institutions. (...) Schumpeter elaborated an original theory of industrial development based on the recurrent emergence and dissemination of innovations. Hayek adopted the biological notion of group selection and made it the central element in his theory of cultural evolution and the rise of the free market. The chapter concludes with a preliminary evaluation of the possible role that evolutionary theorizing might play in the future development of Austrian economics. (shrink)

This paper sustains that reappraising Austrian economics in the light of Aristotelian ideas is not only possible but also fruitful. First, the paper draws a sketch of the essential features of Austrian economics. Next, it argues about the necessity for a thorough analysis of the notion of freedom, and it analyzes Mises's conception. Next, the paper exposes Aristotle's social, epistemological and economic thought related to Austrian main traits. An account of how the exercise of Aristotelian (...) virtues may be synergic with economic coordination and a sketch of the consequences of the proposal on the teaching of economics are then provided. Finally, the conclusion shortly sums up the content and relevance of Aristotle's contribution. (shrink)

From the perspective of a realist philosophy of social science, the recent explosion of criticisms of mainstream economics, including reinvigorated Austrian criticism, provides what seems like a rich opportunity to join what are too often disjoined disciplinary interests and inquirers, and also to extend the arguments not only as regards the realist theory of social science, but also as regards the implications of this approach for economics. I begin with a minimum sketch of key features of realist (...) philosophy of science as I understand it. The central difference turns on the role and nature of explanation and of theory, between what is frequently termed ‘deductivism’, and on an alternative in which explanation requires the articulation of a causal mechanism, for example, the mechanism provided by molecular chemistry that gives us an understanding of oxidation. I take the position that in social science, explanation requires social causal mechanisms. I consider the Austrian contribution from this point of view and conclude with some hints regarding how the foregoing bears on our understanding of capitalism and socialism. (shrink)

Fascinating and thought-provoking, this book shows how the methodology of Austrian economics can be justified and strengthened by grounding it in the philosophy of Wittgenstein. Frege and Wittgenstein argued that whatever counts as thought must embody logical principles. Their arguments also support the conclusion that whatever constitutes action must embody economic principles. In this incisive text, the author shows that this confirms the claims of Austrian economists such as Mises and Hayek that the laws of economics (...) are a priori rather than empirical  . (shrink)

As the transaction cost theory of the firm was taking shape in the 1970s, another important movement in economics was emerging: a revival of the ‘Austrian’ tradition in economic theory associated with such economists as Ludwig von Mises and F. A. Hayek . As Oliver Williamson has pointed out, Austrian economics is among the diverse sources for transaction cost economics. In particular, Williamson frequently cites Hayek , particularly Hayek’s emphasis on adaptation as a key problem (...) of economic organisation . Following Williamson’s lead, a reference to Hayek’s ‘The Use of Knowledge in Society’ has become almost mandatory in discussions of economic organisation . However, there are many other potential links between Austrian and transaction cost economics that have not been explored closely and exploited.This article argues that characteristically Austrian ideas about property, entrepreneurship, economic calculation, tacit knowledge, and the temporal structure of capital have important implications for theories of economic organisation, transaction cost economics in particular. Austrian economists have not, however, devoted substantial attention to the theory of the firm, preferring to focus on business-cycle theory, welfare economics, political economy, comparative economic systems, and other areas. Until recently the theory of the firm was an almost completely neglected area in Austrian economics, but over the last decade, a small Austrian literature on the firm has emerged. While these works cover a wide variety of theoretical and applied topics, their authors share the view that Austrian insights have something to offer students of firm organisation. (shrink)

Fascinating and thought-provoking, this book shows how the methodology of Austrian economics can be justified and strengthened by grounding it in the philosophy of Wittgenstein. Frege and Wittgenstein argued that whatever counts as thought must embody logical principles. Their arguments also support the conclusion that whatever constitutes action must embody economic principles. In this incisive text, the author shows that this confirms the claims of Austrian economists such as Mises and Hayek that the laws of economics (...) are a priori rather than empirical. (shrink)

In the field of economic policy, recommendations by members of the Austrian school of economics are opposed to the popular demands and statements made by most priests and other religious authorities. On the other hand, in the field of theory, the methodological individualism of the Austrians allows an easier dialogue with religious traditions respectful of free will. The influential writings of Mateo Liberatore, S.J. and Oswald von Nell-Breuning S.J, can help foster the dialogue between economists that promote market (...) based solutions and Judeo-Christian moral-philosophers. Part of Liberatore and Nell-Breunings analysis shows a good understanding of economics. But other aspects of their work also reveal misconceptions, and a radical difference in how they use and understand certain termsDans le champ de la politique économique, les recommandations des membres de l’école de l’économie Autrichienne sont opposées aux exigences populaires et aux affirmations faites par nombre de prêtres et autres autorités religieuses. D’un autre côté, dans le champ de la théorie, l’individualisme méthodo-logique des Autrichiens permet un dialogue plus souple avec les traditions religieuses respectueuses de la libre volonté. Les écrits influents du Père Mateo Liberatore et du Père Oswald von Nell-Breuning peuvent promouvoir le dialogue entre les économistes qui sont partisans des solutions marchandes et les philosophes de la morale Judéo-Chrétienne. Une partie des analyses de Liberatore et de Nell-Breuning montre une bonne compréhension de la science économique. Mais d’autres aspects de leur travail révèlent cependant des idées fausses, et une différence radicale dans la manière dont ils utilisent et comprennent certains termes. (shrink)

In this paper I will analyze and criticize Linsbichler’s recent proposition to interpret the fundamental axiom of Praxeology as analytic. I will first describe Linsbichler’s problem situation. I will then describe and criticize Linsbichler’s proposed solution to his problem; namely his interpretation of the fundamental axiom as analytic. I will argue that this idea does not fully utilize critical potentials that are available to improve the fundamental axiom. I will propose an alternative interpretation which I call the ‘critical interpretation’ that (...) conserves the progressive aspects of Linsbichler’s proposal while eliminating undesirable ones. (shrink)

Carl Menger’s Principles of Economics published in 1871 is usually regarded as the founding document of the Austrian School of economics. Many of the School’s prominent representatives, including Friedrich Wieser, Eugen Böhm-Bawerk, Ludwig Mises, Hans Mayer, Friedrich August Hayek, Fritz Machlup, Oskar Morgenstern, and Gottfried Haberler, as well as Israel Kirzner, Ludwig Lachmann, Murray Rothbard, and Don Lavoie, advanced and modified Menger’s research program in sometimes conflicting ways. Yet, some characteristics of the Austrian School remain (nearly) (...) consensual from its foundation through to contemporary neo-Austrian economists. In eight sections, we will briefly discuss some of the philosophical and methodological characteristics of Austrian economics: Austrian action theory and interpretative understanding, a relatively thoroughgoing subjectivism, methodological individualism, ontological individualism, apriorism, essentialism, an often overstated rejection of formal methods, and alertness to economic semantics. (shrink)

A deep theme of Austrian economics has been that of spontaneous order or selforganization of the economy. The origin of this theme dates to the putative founder of the Austrian School, Carl Menger, with his theory of the spontaneous emergence of money for transactions purposes in primitive economies being archetypal example (Menger, 1892). Menger drew this approach from the Scottish Enlightenment figures David Hume, Adam Ferguson, and Adam Smith, with the latter’s Wealth of Nations (1776) particularly important. (...) The most important developer of this idea within the tradition after Menger was F.A. Hayek (1948), who would identify this self-organization phenomenon with emergence, later expanding upon this into the broader concept of complexity (Hayek, 1952, 1967). Caldwell (2004) argues that this became an increasingly important focus of Hayek’s thought in the later years of his life. Among those examining this development in more detail besides Caldwell have been Koppl (2006, 2009), Rosser (2010a),1 and Lewis (2010). This essay will consider more thoroughly the relationship between the concepts of emergence and complexity and the roles that they have played in Austrian economics as well as more broadly in philosophy and science. An important point is that both of these concepts do not possess precise meanings; they are “terms of art” within philosophy. However, while closely linked through the general idea of a whole being “greater than.. (shrink)

Carl Menger’s Principles of Economics, published in 1871, is usually regarded as the founding document of the Austrian School of economics. Many of the School’s prominent representatives, including Friedrich Wieser, Eugen Böhm-Bawerk, Ludwig Mises, Hans Mayer, Friedrich August Hayek, Fritz Machlup, Oskar Morgenstern, and Gottfried Haberler, as well as Israel Kirzner, Ludwig Lachmann, Murray Rothbard, Don Lavoie, and Peter Boettke, advanced and modified Menger’s research program in sometimes conflicting ways. Yet, some characteristics of the Austrian School (...) remain (nearly) consensual from its foundation through to contemporary neo-Austrian economists. In eight sections, we will briefly discuss some of the philosophical and methodological characteristics of Austrian economics: Austrian action theory and interpretative understanding, a relatively thoroughgoing subjectivism, methodological individualism, ontological individualism, apriorism, essentialism, an often overstated rejection of formal methods, and alertness to economic semantics. (shrink)

Much recent work on the intellectual background of Austrian economics reveals an unfortunate lack of awareness of the distinct nature of the Austrian contribution to philosophy, from which the Austrian economists drew many of their ideas. The present essay offers a sketch of this contribution, contrasting Austrian philosophy especially with the modes of philosophy dominant in Germany. This makes it possible to throw new light on the relations on Mises, Kant and the Vienna circle, and (...) it allows us also to establish the extent to which Austrian economics might properly be seen as being allied to the German hermeneutic tradition of Dilthey, Gadamer, et al. The essay concludes with a criticism of the hermeneutic relativism recently canvassed by some Austrian economists, concentrating especially on the work of Don Lavoie, whose writing are treated as symptomatic of a wider and somewhat regrettable trend. (shrink)

The Austrian School of Economics is an intellectual tradition in economics and political economy dating back to Carl Menger in the late-19th century. Menger stressed the subjective nature of value in the individual decision calculus. Individual choices are indeed made on the margin, but the evaluations of rank ordering of ends sought in the act of choice are subjective to individual chooser. For Menger, the economic calculus was about scarce means being deployed to pursue an individual's highest (...) valued ends. The act of choice is guided by subjective assessments of the individual, and is open ended as the individual is constantly discovering what ends to pursue, and learning the most effective way to use the means available to satisfy those ends. This school of economic thinking spread outside of Austria to the rest of Europe and the United States in the early-20th century and continued to develop and gain followers, establishing itself as a major stream of heterodox economics. The Oxford Handbook of Austrian Economics provides an overview of this school and its theories. The various contributions discussed in this book all reflect a tension between the Austrian School's orthodox argumentative structure and its addressing of a heterodox problem situations. The Austrian economists from the founders to today seek to derive the invisible hand theorem from the rational choice postulate via institutional analysis in a persistent and consistent manner. Scholars and students working in the field of History of Economic Thought, those following heterodox approaches, and those both familiar with the Austrian School or looking to learn more will find much to learn in this comprehensive volume. (shrink)

Mainstream economics has been accused of excessive mathematization, whereas the rejection of mathematical and other formal methods is often cited as a crucial trait of Austrian economics. Based on a systematic discussion of potential benefits and drawbacks of formalization, this paper corroborates legitimate concerns that predominant types of mathematization induce a shift of attention away from the key concepts of Austrian economics. Taking this shift to the extreme, predominant modes of mathematization tend to accompany a (...) detachment from ‘reality’ incompatible with Austrian pleas for realisticness. Contrary to popular prejudice however, the most prominent representatives of the Austrian School including Carl Menger, Ludwig Mises, Friedrich Hayek, Israel Kirzner, and Peter Boettke neither provide a justification for a wholesale rejection of formalization nor actually reject it. Adequate formalization can serve as a remedy for lacking logical and semantic rigor in standard mathematical economics as well as in murky verbal chains of reasoning. (shrink)

There is no doubt that Carl Menger and Ludwig von Mises can be considered as two of the most representative and influential members of the Austrian school of economics. However, given the fact that this school is well known for being a methodological school, it might be surprizing to note how far these two prominent economists apparently stand on methodological questions. While Menger frequently insisted that "no essential differences between the ethical and the natural sciences exists, but at (...) most only one of degree"1, Mises emphasizes the alleged gulf between social and natural sciences to the point of adopting what he called a "methodological dualism". As a consequence of this dualism, Mises did not hesitate when it comes to the analysis of human action to refer to laws "derived a priori" that "permit of no exception" because they belong to "an aprioristic and universally valid theory" 2. Such an uncompromising apriorism was so contrary to the empiricist mood of.. (shrink)

Review of The Philosophical Origins of Austrian Economics, by David Gordon. Auburn, Alabama: Ludwig von Mises Institute, 1993.

Ayn Rand highly recommended the economic writings of the Austrian school, particularly those of Ludwig von Mises. At least insofar as regards antitrust, money, and government, for the most part, paradoxically, the subjectivist Austrians, and the objectivist Randians, are as two peas in a pod. On the first two of these three, moreover, Rand and Murray Rothbard are on similar sides of the argument, at least vis-a-vis Mises and F. A. Hayek. With regard to the third, there is disagreement (...) amongst the Austrians, and this is matched by ambivalence on the part of Rand herself. (shrink)

In recent academic and to some extent public debates, mainstream economics has been accused of excessive mathematization. The rejection of mathematical and other formal methods is often cited as a crucial trait of Austrian economics. Based on a systematic discussion of potential benefits and potential drawbacks of formalization in economics, the paper concludes that - contrary to the received view - the most prominent representatives of Austrian economists including Carl Menger, Ludwig Mises, and Friedrich August (...) Hayek neither provide a justification for a rejection of formalization tout court nor actually reject it. Those Neo- Austrians who do, seem to rely on an unconvincing Sprachgeist argument traceable to Friedrich Wieser. (shrink)

This book emphasizes the compatibility of Aristotelianism, Austrian economics, and Ayn Rand's Objectivism, arguing that particular ideas from these areas can be integrated as a potential paradigm of human flourishing and happiness in a free society. It constructs an understanding from various disciplines into a clear, consistent, and systematic whole.

This article presents a skeleton of a potential paradigm of human flourishing and happiness in a free society. It is an exploratory attempt to construct an understanding from various disciplines and to integrate them into a clear, consistent, coherent, and systematic whole. Holding that there are essential interconnections among objective ideas, the article specifically emphasizes the compatibility of Aristotelianism, Austrian Economics, Positive Psychology, and Ayn Rand’s Objectivism arguing that particular ideas from these areas can be integrated into a (...) paradigm of human flourishing and happiness based on the nature of man and the world. Such a paradigm will help people to understand the world and to survive and flourish in it. It is hoped that the paradigm will grow and evolve as scholars engage, question, critique, interpret, and extend its ideas. Our goal is to have a paradigm that accords with reality and there is always more to learn from reality. (shrink)

Under one understanding of marketing, this discipline focuses on the creation of customer value. Although nobody doubts today that value is subjective and it emerges from consumer judgment, the causality is less clear. Do producers bring about value, or do consumers receive ‘raw’ products that only attain value in their estimation? Or, do producers and consumers co-create value as much of contemporary marketing theory assumes? Recent works on value creation, the building of customer relationships, and the service-dominant logic are related (...) to insights derived from both Austrian schools of value theory. The emphasis on value as a ratio between perceived benefits and perceived costs may be seen as a continuation of Menger’s and Wieser’s work. The focus on relations as a category distinct from goods goes back to Böhm-Bawerk. And the service-dominant logic reflects insights developed both by Menger and by philosophers of the Brentano School. The direct influence of Austrian economics on business studies is small and is restricted to very few scholars. But the potential is great for a fruitful development of current approaches in marketing by drawing on insights from Austrian economics and, perhaps even more so, from Austrian philosophy. This paper defines the relations between the thought from economists and philosophers and presents examples for how cutting-edge marketing thinking may profit from both Austrian schools of value. (shrink)

SUBJECTIVISM, INTELLIGIBILITY AND ECONOMIC UNDERSTANDING: ESSAYS IN HONOR OF LUDWIG M. LACHMANN ON HIS EIGHTIETH BIRTHDAY Edited by Israel M. Kirzner New York: New York University Press, 1986. 319 pp., $35.00.

In almost all countries, the transition from a centrally planned economy to a market economy caused high unemployment. The governments attempted to ease the changeover to a market economy for the unemployed by introducing several passive and active labour market policies. This paper first points out which effects were to be expected of such policies from the perspective of Austrian Economics. These theoretical hypotheses are then tested empirically. It turns out that the hypotheses deducted from Austrian (...) class='Hi'>Economics theory are impressively corroborated by the empirical evidence.Dans presque tous les pays, la transition d’une économie centralement planifiée vers une économie de marché ont provoqué un chômage élevé. Les gouvernements ont essayé d’adoucir la transition vers une économie de marché pour les chômeurs en introduisant plusieurs politiques passives et actives sur le marché du travail. Tout d’abord, cet article souligne quels étaient les effets attendus de telles politiques à la lumière de l’économie autrichienne. Ces hypothèses théoriques sont ensuite testées de manière empirique. Il en ressort que les hypothèses déduites de la théorie économique autrichienne sont corroborées de manière significative par les preuves empiriques. (shrink)

Friedrich Hayek (1899–1992) remains a controversial figure, applauded by those who support the late-twentieth-century turn to neoliberalism and criticized by those who see him as the poster-boy of...

This paper examines Kirzner's contribution to the study of the equilibrating tendency in economics. By analyzing his interpretation of Jevons’ law of indifference, we participate in the debate on Kirzner association with neoclassicals when discussing the equilibrating tendency. A reconstruction of Kirzner’s use of Jevons’ law is conducted, considering his argumentative strategy when presenting the Austrian economics ideas to other professionals in the field. We conclude that Kirzner drew close to neoclassical economics to emphasize the relevance (...) and uniqueness of Austrian economics. By doing so, we highlight the main differences between the two currents of economic thought. (shrink)

The pivotal point in the Austrian literature on homogeneity, choice and indifference was constituted by Nozick’s On Austrian Methodology. Nozick provoked a long debate on the above notions within Austrianism. The aim of this paper is to elaborate such an account of homogeneity that would take the sting out of Nozick’s challenge and allow for non-trivial formulation of the law of diminishing marginal utility. Hence, we shall first take a closer look at the debate on indifference within the (...) Austrian camp, while defending and building upon the Hoppean account vis-à-vis Block’s criticism. Our justification of the Hoppean position shall consist in showing that his account of the correct description of an action is not an ad hoc move aimed at solving just one problem of indifference but is highly intuitive and widely applicable. We conclude by restating the above-mentioned law, thus demonstrating that the Nozickian objection can be successfully replied. (shrink)

Les pères de l’école connue sous le nom d’ « École autrichienne d’économie », Carl Menger (1840-1921) et son premier disciple Eugen von Böhm-Bawerk (1851-1914), ont analysé les pratiques d’affaires et la nature des activités de l’entrepreneur au-delà de ce qui se faisait en leur temps au sein de l’école historique allemande. Ont-ils pour autant déjà donné une « théorie de l’entrepreneur » en tant que telle, et le pouvaient-ils? Toujours est-il qu’émergent dans leurs œuvres les éléments d’analyse d’un intérêt (...) neuf pour des aspects de l’entreprise et la nature du système de production capitaliste dont l’impact allait se faire sentir de la société de leurs contemporains et chez leurs héritiers (comme Israel Kirzner) jusqu’à nos jours. (shrink)

Bruce Caldwell has disputed a number of points in my earlier account of the development of the Austrian school of economics from Carl Menger to Ludwig von Mises and F.A. Hayek. The issues in contention regard Friedrich von Wieser’s intellectual affiliation with Hayek and his influence on the formation of Hayek’s economic thought; Wieser’s status as a general equilibrium theorist; and the reason for Hayek’s early flirtation with general equilibrium theory. In this article I argue that Hayek was (...) a self-conscious adherent of the Wieserian tradition and remained so even after he received the Nobel Prize in 1974 and that he distinguished between this tradition and the Böhm-Bawerkian tradition followed by Ludwig von Mises. I also contend that Wieser used the construction of a general equilibrium economy subject to a single will as both a normative benchmark by which to appraise the performance of the real-world market economy and as an analytical tool to explain the formation of market prices. Finally, I argue that Hayek concerned himself with the problems of the Wieser-type general equilibrium economy beginning with his earliest writings as a professional economist, years before he began to focus on the theoretical problems of money and the business cycle.Bruce Caldwell a discuté un certain nombre de points de mon article récent sur le développement de l’école autrichienne d’économie de Carl Menger en passant par Ludwig von Mises et F.A. Hayek. Les controverses concernant l’affiliation intellectuelle de Hayek vis-à-vis de Friedrich von Wieser et l’influence de ce dernier sur la pensée économique de Hayek, le statut de Wieser en tant que théoricien de l’équilibre général, et les raisons pour lesquelles le jeune Hayek flirta avec la théorie de l’équilibre général.Dans cet article je défends la thèse selon laquelle Hayek était conscient du fait qu’il s’inscrivait dans la tradition Wieserienne et qu’il l’était toujours même après sa réception du prix Nobel en 1974 et quand il fît la distinction entre cette tradition et la tradition inaugurée par Böhm-Bawerk et poursuivie par Mises. L’article affirme aussi que Wieser utilisa la construction d’une économie en équilibre général sujette à une volonté unique à la fois comme standard normatif pour évaluer les performances des marchés dans le monde réel et comme outil analytique pour expliquer la formation des prix marchands. Enfin, l’article argumente que Hayek s’intéressa aux problèmes relevant d’une économie en équilibre général à la Wieser dans ses premiers écrits en tant qu’économiste et cela bien avant qu’il ne se concentrât sur les problèmes théoriques de la monnaie et du cycle des affaires. (shrink)