Austrian School

As Austrian School, Vienna School, Austrian marginal utility school, or (rarely ) school of psychology, a group of theorists is called, which represented a certain school of thought in economics. Central is the idea of evolutionary creation of knowledge by the entrepreneur and the consideration of the dynamic uncertainty of economic processes. The school emphasizes the importance of individuals and their individual preferences for economic processes ( subjectivism, individualism Methodological ). There is also a dislike of the mathematical representation form of economic contexts. This approach compared to the about the same time incurred the Lausanne School and Cambridge School stand with their mathematically formulated equilibrium models ( neoclassical theory).

As the founder of the Austrian School, Carl Menger is commonly regarded that contributed to the theory of marginal utility to the marginalist revolution: He took the view that the classical value paradox, ie the question of the relationship between value and benefits can be achieved by that the value of a good is determined by the contribution of an additional unit of a product to satisfy a human need. This approach in the dispute over methods of economics with the Historical School, in the Menger defended the thesis that economic theory with respect to the economic history was independently became known. Eugen von Böhm- Bawerk, Menger's theory supplemented by a subjectivist capital theory, according to which the interest on capital arises in a market process between individuals with different time preferences. The owners of capital forgo consumption in the present in order to get in return for his resignation interest. Ludwig von Mises built on this basis to a monetary and economic theory. He explained business cycles with the distortion of the production process through the creation of money by central banks to stimulate by excessively low interest overinvestment. Friedrich von Hayek clarified this theory and stood thus in sharp contrast to the theory of John Maynard Keynes '. Von Hayek was awarded for his work " Prices and Production" Nobel Prize in Economics in 1974, where he took over the capital theory of Böhm -Bawerk, who was already deceased at this time.

Hayek's Nobel Prize winning and Israel Kirzner's work on the concept of the entrepreneur led in 1974 to the so-called Austrian revival in the United States. Kirzner argues that market equilibria in reality, the exception should be since there is no complete information there. The task of the entrepreneur consists precisely in the fact according to Kirzner, ( " alertness " engl.) to create through its " resourcefulness " knowledge and to identify ways to win, so to use information advantages. The returning on Murray Rothbard Austrian Economics or neo- Austrians call for a continuation of that specific subjectivist economics teaching in the U.S., on the other hand, the natural law legitimized political, libertarian ideology Rothbard. The assignment of this ideology to the Austrian School is controversial.

3.3.1 Capital and Interest ( 1884-1902 )
3.3.2 Criticism of Marshall, Marx and Clark

3.4.1 Theory of money and fiduciary media (1912 )
3.4.2 The social economy (1922 )
3.4.3 Human Action (1949 )

3.5.1 Prices and Production ( 1931)
3.5.2 dispute with the Chicago School and Keynes
3.5.3 The Counter - Revolution of Science ( 1955)
3.5.4 Legal, Law and Freedom ( 1973-1979 )

3.6.1 Murray Rothbard ( 1926-1995 ) 3.6.1.1 America 's Great Depression (1963 )
3.6.1.2 Man, Economy and the State (1962 )

4.1 Primary Sources
4.2 Secondary Literature

Conceptual content

With Austrian School Austrian School or be partly referred to very different positions. Israel Kirzner, a student of Ludwig von Mises ', five different views on the concept of content:

Teaching ( Overview )

Fritz Machlup, a student of Wieser's and von Mises ', called 1982 six main teachings of the Austrian school, which form the heart of the Austrian innovations by about 1930:

Methodological individualism: economic issues need to be explained by the actions of individuals out ( not to be confused with ideological or political individualism, the contrast illustrates the methodological collectivism ).
Methodological subjectivism: Economics is based on the study of the actions of real individuals whose subjective knowledge (or ignorance ), their perceived needs and their subjective expectations.
Theory of marginal utility: All economic decisions are determined by the marginal utility.
Usefulness: Subjective ratings ( usefulness ) and decreasing marginal utility determine the demand and therefore the trading price.
Opportunity costs (also Wieser cal Expenses Act ): actions depend on the evaluation of alternative courses of action.
Time structure of consumption and production: The decision to save or consume is produced by the subjective time preference.

As within the school disputed it leads to the following lessons that radiated especially by Ludwig von Mises from the 1960s in the United States:

Full sovereignty of consumers: consumers express their needs on demand. Only the unfettered by state intervention through market competition ensures that permanently ( via the price system as a control mechanism ) the needs of consumers are optimally satisfied.
Political individualism: Only complete economic freedom ensures permanent political and moral freedom of the citizens. Economic constraints lead to increasing spread and restriction of political and moral freedom.

As the undisputed theses of the school were soon recognized by all economic schools, Israel Kirzner sees the list as two points in need of completion in respect of the late work of Mises and von Hayek to:

Markets and competition as a learning and discovery process
Individual decisions as a choice between individually identifiable alternatives in principle unknown context.

The U.S. neo- Austrians, the Murray Rothbard are primarily influenced by von Mises and his student, define themselves primarily by the demarcation of neoclassical and ( neo) Keynesian, referred to as static, equilibrium models. Jesús Huerta de Soto, a Spanish representative of the neo- Austrians, stands as characteristics of this special direction following lessons out:

Formation of a universal theory of human action (as opposed to purely economic theory of rational decision).
The knowledge -creating, creative entrepreneurs as an economic agent (in contrast to neoclassical homo economicus ).
Possibility of entrepreneurial failure ( as opposed to the neo-classical model of complete information ).
Strict distinction between objective ( scientific ) and subjective ( practical) knowledge.
Markets as a discovery process (in contrast to neoclassical perfect competition model).
Subjective cost theory (in contrast to neoclassical objective cost theory).
Verbal logic (in contrast to neoclassical mathematical formalization ).
Priori - deductive method (as opposed to empirical model).
Impossibility of quantitative predictions, but restriction to pattern predictions.
Forecast economic events through the entrepreneurial skills of each person (as opposed to social engineering ).

History of theory and development

Ancient and scholastic predecessors

Representative of the school see already in Cicero's De re publica 51 anticipated BC arguments that would later be central to von Mises ' and Hayek's reflections on the impossibility of socialism: Never have a central position comparable knowledge available, how the price system is one expression. A centrally managed economy is thus necessarily inferior to a market system of performance.

" ( 2) Is dicere solebat whether Hanc causam praestare nostrae civitatis statum ceteris civitatibus, quod in illis singuli fuissent fere, qui suam rem Quisque publicam constituissent legibus atque institutis suis, ut Cretum Minos, Lycurgus Lacedaemoniorum [ ... ], nostra autem res publica non unius ingenio eat, sed multorum. [ ... ] Nam neque Ullum ingenium tantum extitisse dicebat, ut quem nulla res Fugeret quisquam, aliquando fuisset, neque cuncta ingenia conlata in unum tantum posse uno tempore providere, ut omnia complecterentur sine rerum usu ac vetustate. "

" ( 2) This man used to say, it lies the reason for the preference dividend of our Constitution before the other states that while these are only individual lived, which, each in his own country, the constitution of the state through its laws and institutions had founded; for example, when the Cretans, Minos, with the Spartans by Lycurgus; [ ... ] The other hand, in our state, not the talent of an individual, but of many, the Constitution established. [ ... ] After all, he said, never and nowhere there was probably a man of such all-encompassing spirit, which nothing had escaped; also it is impossible that an association of all the talents could be so calculate the duration of a period everything that he would be able to replace the experience and the test of time. "

Von Hayek looks in contrast to Max Weber the origins of capitalism in Calvinist and Protestant ethics, but in the late scholastic school of Salamanca and cited in his Nobel Prize acceptance speech in 1974 Luis de Molina and Juan de Lugo; Murray Rothbard called the School of Salamanca as a "proto- Austrians ". Jesús Huerta de Soto sees in their teachings, as well as Richard Cantillon and Turgot fully exploited all the essential ideas of the Austrian School:

Diego de Covarrubias y Leyva (1512-1577) had already developed in Opera Omnia (1604 ) a subjective value theory that depended on the value of a thing not of inherent, objectively given properties, but only by the you subjectively are received with appreciation. Carl Menger cited his work veterum collatio numismatum in principles of economy theory (1871 ). The ratio of costs to prices would be discussed at Luis Saravia de la Calle; teach in Instrucción de Mercadores ( 1544) this ( in contrast to the later classical economics ) that costs of prices depended. The just price will be determined by the market scarcity. The idea of dynamic competition is already dealt with Luis de Molina and Jeronimo Castillo de Bovadillo ( Política para corregidores (1585 ) ). About the so characteristic of the later classical economics equilibrium prices write Juan de Lugo (1583-1660) 1643: " pretium iustum matematicum licet soli Deo notum " ( German: " to know the fair mathematical price, only God is allowed" ). Considerations of time preference and the creation of money by banks were to be found 1556 Martín de Azpilcueta. Published in 1605 Juan de Mariana in De monetae mutatione a theory about the harmful effects of inflation, and in 1625 the Discurso sobre las enfermedades de la companía, in which he declares state intervention due to the limited knowledge of the state is harmful. Intervention constitutes a violation of natural rights and lead to long-term chaos.

The creative entrepreneur as a key figure of the economic process would be dealt with Richard Cantillon in 1730, dispersed knowledge in 1759 Turgot. Jaime Balmes (1810-1848) occupied himself in his essay Verdadero idea del valor (1844 ) with the classical value paradox and make considerations for the solution by considering the marginal utility of.

First Generation: Carl Menger (1840-1921)

Principles of economy theory (1871 )

First and second generation is also described as older Austrian School. As the actual founder of the school is Carl Menger published in 1871, with its principles of economy theory, which are dedicated to Wilhelm Roscher. The principles are the first overall view of the economy consistently subjectivist view. Menger she saw especially in sharp contrast to classical economics. Center of Menger's considerations is the human being as creative doer and as a protagonist of all economic and social processes. Based on the methodological subjectivism saw Menger as " ultimate goal " of all economic activity, the satisfaction of human needs. Goods he therefore divided into goods of the first order (or consumer goods ) and goods of higher order. Through first-order goods directly human needs are satisfied; Goods of higher order form intermediate stations in the production of goods of the first order. The value of a commodity is its subjective appreciation for the satisfaction of human needs, the utility: " to serve the suitability of a thing, the satisfaction of human needs. " Huerta de Soto sees this as the most important contribution of Menger in economics; Frank H. Knight, however, interpreted this as " less important contributions ."

The so-called classical value paradox was solved by Menger using the observation of marginal utility. This path had taken almost simultaneously with him and each independently, Hermann Heinrich Gossen already, Léon Walras ( Eléments d' économie politique pure (1874 ) ) and William Stanley Jevons ( Theory of Political Economy (1871 ) ); In contrast to these Menger's explanation is based not on mathematical considerations, but is merely a consequence of the applied subjectivist view.

Studies on the Method of Social Sciences ( 1883)

Another important contribution is his theory of Menger's development of " social phenomena " which he discussed the principles already in the example of money. In the studies on the methodology of social sciences and political economy in particular (1883 ) later employed him again the question: "Why are assets to the public interest and to arise most important institutions for its development without looking at the reasons general will? " Friedrich von Savigny, Montesquieu, Hume, and Burke had established the theoretical tradition of evolutionary, historical, and spontaneous development; them stood against the representatives of a rationalist perspective ( Thibaut, Bentham ). Menger pleaded in the principles of historical perspective. This he generalized in the investigations. All social phenomena are " unintended resultant " and would arise spontaneously and evolutionary.

Citing Aristotle Menger defended the thesis that the knowledge of the social reality two complementary but fundamentally different epistemological Sciences demand: theory ( εἶδος - eidos, form ') and history ( ὕλη - Hyle, cloth '). The theory is axiomatic- deductive, whereas the story is based on empirical data. The historical school mix both in an improper way. Economic theory can never be based on empirical data, but was a purely spiritual science, like mathematics. Economic history is by contrast a separate, but equal science.

The dispute over methods of economics

Contradiction in the German economics against Menger's investigations came in particular from the prevailing Prussian Historical School to Gustav von Schmoller, who represented a relativistic approach. Menger, however, did not consider the economic laws of historically relative, but for logical objectively recognizable. The different approaches led to the so-called dispute over methods of political economy in which Menger's work was defended mainly by Eugen von Böhm -Bawerk and Friedrich von Wieser. The term Austrian school (or Viennese School ) was initially used by representatives of the historical school and should devalue the circle around Menger as provincial. However, the Austrians took him soon and even cited later polemical like their opponents, who had himself initially meant positively as " intellectual bodyguard of the House of Hohenzollern " means.

During the dispute, the methods Austrian School was formed as a new, internationally recognized direction of economics; Wrote in 1891, Eugen von Böhm- Bawerk an essay for the American journal Annals of the American Academy of Political and Social Science, in which he explained its basic tenets. See more posts from the early phase of the Austrian School came from John of Komorzynski ( The value in the insulated economy (1889 ) ), Robert Zuckerkandl ( On the theory of the price ( 1889) ), Viktor Mataja ( The entrepreneur's profit (1884 ) ), Gustav Large ( the doctrine of the entrepreneur's profit (1884 ) ), Emil Sax (Foundations of theoretical political economy (1887 ) ) and Robert Meyer ( the essence of the Convention ( 1887) ). Awareness in German-speaking reached the school by the positive mention in the textbook Outline of Political Economy (1893 ) by Eugen von Philippovich.

Second generation: Eugen von Böhm- Bawerk (1851-1914)

The second generation received their characterization by Eugen von Böhm- Bawerk. In addition, Friedrich von Wieser (1851-1926) is sometimes attributed to the Austrian School. It was after 1903, the Chair successor Menger and written contributions to a subjective theory of opportunity costs. He used the first time the concept of marginal utility. Von Mises his work held for little creative and ordered him rather the School of Lausanne to Walras as the Vienna school. Von Hayek his theory of societal economic thought (1914 ) for a more personal achievement as a work of the Austrian School.

Capital and interest on capital (1884-1902)

From Böhm -Bawerk had in capital and interest on capital significantly to the development of a subjectivist theory of capital and interest. Human action refers to any willing -controlled behavior of the people for him. The objectives of this action are freely chosen and tries to through freely chosen means appear subjectively suitable for the goal. Value and usefulness here describe the mental appreciation of the target and the agent. Objectives and methods are not objectively given, but the result of entrepreneurial activities of man. As a result of volitional activity of man is this, often unconsciously, plans; A plan is a mental preview of the gradual achievement of objectives in time. Time is for him not to be understood in the physical sense, but a category of Economics for human action. Human behavior has always been a goal. From this goal, man is separated by time. The use of time evaluates the person less than the objective to be achieved. He pulls, ceteris paribus, the same value in two needs, the sooner to reach the later to be achieved before ( law of time preference ).

Capital goods are intermediate stages in every action and production process. What are capital goods depends on the subjective analysis. Capital goods serve one goal, that is, they are goods of higher order (also called " means of production" ). Capital goods can be natural resources, labor and time, which are used by the entrepreneurial skills of the people. Conditio sine qua non for the production of capital goods is saving, the namely the absence of immediate consumption. Böhm -Bawerk explains this with the example of Robinson Crusoe: This collects his diet every day blackberries. By an act of creative entrepreneurial knowledge creation, he finds that he can turn higher branches by the aid of a stick and thus reap more blackberries in a shorter time. To find a suitable floor and to edit it, it would take about five days. Since he can reap no blackberries at this time, he has to take precautions in the savings and additional harvest, which would take about ten days for this time. The accumulation of capital goods therefore suffers by weighing the best possible utilization of present and future. Commits the capitalist an entrepreneurial error, then the renunciation of consumption proves useless. In modern economies, the role of the capitalists have changed in any way by contrast, if the economic processes more complex, and the time horizon is much longer, as the essential feature of the capitalist lies in saving. The difference between rich and poor nations lies in the amount of the accumulated savings in time capital stocks. Under capital Böhm -Bawerk understands the value of capital goods in market prices. Since there is no market and therefore no prices are available in socialist economic systems, no economic calculation is possible and it therefore exists no capital.

The appreciation of goods is different from person to person and also the same people in time. Consequently, it come through barter to a market. The interest was explained by the interaction of capital goods and of time preference: If some people estimate capital goods in the presence of higher than capital goods in the future, so it 'll also be a market. People who value capital goods in the presence of low, forego these and give them to people who have this in high esteem in the present. So the capitalist waive a portion of its consumption to provide workers, but also owners of the means of production capital. The entrepreneurial assessment of the value of time preference pressures from market prices: interest rate. The interest is central to the production structure of a society, the credit market is only a small part of this market. The capital theory Böhm - Bawerk represents the permanent core of the Austrian doctrine for some observers; other hand, see inconsistencies with Menger subjektivistischem approach.

Criticism of Marshall, Marx and Clark

Parallel to the methodological dispute led Böhm -Bawerk an argument with Alfred Marshall. This saw the price as determined by the historically given cost, so as objectively given to. Böhm -Bawerk, however, saw the costs as a result of the award to ( subjective cost theory ).

The Austrian school began early on to deal with Marxism; their representatives reject it from any kind of socialism and central planning. This is mainly due to Böhm -Bawerk, who advanced in his work Capital and Interest (1884-1902) Menger's work, while the labor theory of value by Karl Marx - that applies to Marxism as fundamentally - tried to systematically refute, while many other economists only after the October Revolution of 1918 to deal with Marxism began. Böhm -Bawerk argued as the first, the inconsistency of the labor theory of value in the first and third volume of Marx's Das Kapital. The dispute took place at von Mises and von Hayek its continuation in the dispute over economic calculation under socialism.

Böhm -Bawerk turned especially against Marx's theory of the " exploitation " of the workers. In fact, the owners of the means of production would help the workers, because they would pay these wages in advance. Marx ignore the time factor and the time preference. He also overestimate the labor factor. The labor theory of value Marx ' is circular. Technical progress does not replace human labor, he 'm just more productive and caring thus for increasing the capital stock and prosperity. He opposed Marx's theory of crisis of capitalism: Why should continue to produce the capitalist despite falling rate of profit?

Even through his criticism of Marx, he soon became the best-known representatives of the Austrian School. From the Marxist side you looked at this as soon as the epitome of bourgeois critique of Marx. Nikolai Bukharin tried to refute this criticism of the Marxist side. Rudolf Hilferding took 1906 von Böhm- Bawerk's a seminars.

Böhm -Bawerk also opposed the capital theory John Bates Clark and Walras ', which he calls " mystical " and " static" known as. Capital will not lead to an interest rate as such ("value jelly" ). It should be used for this purpose under good business sense.

Third generation: Ludwig von Mises (1881-1973)

Third and fourth generation is also described as younger Austrian School. The most important representative of the third generation was Ludwig von Mises. Other representatives of this phase of development are Hans Mayer ( Chair of Wieser's successor ), Richard von Strigl, Ewald Schams, Leo Schonfeld - Illy and Alexander Mahr ( Economics ( 1948) ). Von Mises to the reading of Menger's principles in winter 1903 was a supporter of the Historical School of Schmoller and then took part in Böhm - Bawerk to 1914 private seminar, which also Joseph Schumpeter belonged. He expanded the teachings of Menger and Böhm - Bawerk to a monetary theory, laid the foundations for the Austrian theory of business cycles. He grabbed the Austrian School teachings together in the most systematic form so far in Human Action.

Theory of money and fiduciary media (1912 )

Von Mises problem of circular reasoning in the use of marginal utility to the theory of money sparked by his regression theorem. The purchasing power of money is created by supply and demand. Up to von Mises ' theory of money and fiduciary media now posed the problem that the demand for money is currently being built by its purchasing power. Von Mises solved this by now on its purchasing power in the past attributed the demand for money until the day on which for the first time money was coined. There, the value of money through its commodity value was ( for example, the gold value ) was determined. The theory is consistent with Menger's evolutionary theory of social institutions.

Von Mises ' theory of money and fiduciary media soon became the standard work in this area in the whole of continental Europe. In Anglo-Saxon countries, the work was hardly been received even after its translation into English in the 30s. Keynes later regretted not to have known theory of money before his works of Mises '.

Von Mises ' business cycle theory was created by the combination of Böhm - Bawerk's capital theory and the work of the Currency School. Responsible for business cycles is the creation of money by banks and the Central Bank. By cycling and uncontrolled money growth would arise ex nihilo loans with artificially low interest rates. Inflation and credit expansion, the entire pricing system would distort the price of losing his function of information scarcity, unproductive modes of production would thus kept alive artificially. Crises and recessions are the inevitable result to align the resulting induced bad investments to reality. The global economic crisis saw von Mises as the result of monetary mistakes in the 20s. The only solution are banks with 100% reserve. Von Mises ' statement represents the first micro- economic explanation of business cycles

The social economy (1922 )

After the methodological dispute and the dispute over Böhm - Bawerk's capital theory, the argument about the impossibility of socialism represents the third major dispute in the history of Economic Theory, in which the Austrian school was involved. For von Mises, the impossibility of economic calculation under socialism was the center of his argument. In a free economy, the price arises from the combination of subjective appreciation ( ordinal ) and voluntary exchange in the market; the subjective appreciation pressures there in market prices ( cardinal numbers ) from, will provide the information about the scarcities. Socialism and interventionism based on von Mises ultimately on coercion and prevented by voluntary exchange. The need for economic calculation conversion of subjective appreciation in cardinal numbers will be prevented. The central administration did not provide sufficient information.

The fallacies of socialist economic theory of Mises saw rooted in the classical objective value theory. In their equilibrium models all important information was given objective; the model is static. Frank Knight saw in 1938 in socialism actually no economic but a political problem.

The social economy brought Friedrich von Hayek, until then fabianischer Socialist, Wilhelm Röpke and to deal with the Austrian school and the removal of socialist ideas. Oskar Lange, Wlodzimierz Brus and Laski Harold then deal with that for Marx nor insignificant problem of economic calculation. Lionel Robbins was also heavily influenced by the social economy; He wrote The Nature and Significance of Economic Science ( 1932), had enormous influence on the reception of the Austrian School in the Anglo-American world. Through his mediation gained by Hayek in 1931 a position at the London School of Economics. Von Mises ' private seminars Alfred protection and Eric Voegelin was also of Felix Kaufmann, visited.

Human Action (1949 )

Human Action - A Treatise on Economics is the most systematic and consistent summary of the teachings of the Austrian school, as it had developed up to von Mises. In it, the theories developed by Mises and Menger, Bohm- Bawerk's theory of an economy to a comprehensive theory of human action, praxeology the further. For von Mises she was a value-free science, which answered the question for each action: If an action the desired consequences? Every action has an entrepreneurial core, which is the creative creation of information about the future for von Mises. Entrepreneurship is not for von Mises in deciding according to use -maximizing calculation. The economic man he believed to be an unsuitable model. The profit of an entrepreneur did not arise through the acquisition of mathematical risks, but by the best foresight of the future needs of consumers, the search and creation of information. Entrepreneurial ability is not learnable, it is fundamentally un-academic and is based instead on inherent capabilities of humans.

One of the axioms of von Mises ' praxeology heard that every human action has a goal and held a choice between these objectives. Choice is a knowledge of the external world upstream concept of the inner world and a category of human action; it is not empirically to verify or disprove, since empiricism covers only the facts of the external world. The selected destinations are the economic laws is not available, only the adequacy of the resources used can be checked. The available resources are first used for important goals ( law of diminishing marginal utility ). The former achieving the same objective is better than its delay in time ( law of time preference ). All human action takes place in time. From one state to the next man is driven by the satisfaction of needs. The story was in contrast, the theory of the content of human activities in the past.

Fourth generation: Friedrich August von Hayek (1899-1992)

Central for the fourth generation of the Austrian School was Friedrich August von Hayek. Other important representatives of the fourth phase of development are Gottfried Haberler, Fritz Machlup, Oskar Morgenstern, Paul Rosenstein - Rodan and Ludwig Lachmann.

Prices and Production ( 1931)

Von Hayek built the economic theory of Mises ' further. Prices and production is the execution of thoughts that had published by Hayek in 1928 in his essay The intertemporal price equilibrium and movements in the value of money. 1974 received from Hayek for prices and production the Nobel Prize. His analysis is based fundamentally on the traditional equilibrium theory. Influence exerted the theory Knut Wicksell; therefore based imbalance processes on the divergence of natural interest rate and the interest rate set by the banks. Fundamental to von Hayek's business cycle theory are the following considerations: Through voluntary savings, the demand for consumer goods decreased. The relative price of consumer goods decreases. The capital accumulation ratio increases, whereby the money interest rate decreases. Sinking the cost of capital, then the investment in more productive means of production worthwhile ( Ricardo effect). As long as this is based on voluntary savings, the economy strives against a balance.

Decreases by credit expansion of the money interest rate below the natural interest rate, increase investment in means of production. The reduced production of consumer goods precludes a constant demand. The consumer renunciation leads to " forced savings", which corresponds to the claimed by the investors resources. With the price increase caused by the high economy reaches a critical point: the consumer prices are rising at an increasing rate now. The only solutions were to von Hayek further credit expansion in order to avoid the decrease in capital goods demand, or the painful but unavoidable process of permanent recession. In the recession, the inter-sectoral imbalance of actual demand structure is similar to (monetary overinvestment theory ) again. In contrast to the monetarism of Hayek for the emergence of recessions by the interaction of monetary phenomena and the real structure of production was due. Due to the global economic crisis saw von Hayek confirmed his work.

After almost all representatives of the Austrian School had left (except for Hans Mayer ) at the beginning of the 1930 Vienna mostly for political reasons and continued to work in various Anglo-Saxon countries, reached the school of Hayek's business cycle theory the height of their influence on the economics. The strictly historical view sees its teachings so largely as in the conventional economics to integrated; with the extinction of Vienna as a center of the Viennese School had lapsed and become an episode in economic history. After the Historical School 's teachings were barely represented, the representative of the Austrian school could assume that their teachings would have ultimately prevailed.

Dispute with the Chicago School and Keynes

Von Hayek saw in the work of the Chicago School to Frank Knight and his " mystical " capital theory, the foundations of Keynesianism. Keynes referred to in the following the publication of the book discussion of Hayek's theory as "one of the most frightful muddles I have ever read, with scarcely a sound proposition in it". Von Hayek threw Keynes before, his theories were based on any systematic theory of capital, its macroeconomic considerations were useless. The theory of underconsumption is a myth. On the part of the Chicago School, including Milton Friedman, Hayek's economic theory was rejected, held the rigid rejection of government intervention during economic crises as dangerous and harmful:

"The Hayek - Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false. "

" The Hayek - Mises cycle theory is refuted by the facts. It is, I believe, wrong. "

The Counter - Revolution of Science ( 1955)

According to von Hayek moved to Chicago in 1949 he dealt less with purely economic issues. His work is now focused on socio-philosophical considerations for socialism, " piecemeal technology " and " social engineers ". In continuation of Menger's thought represents von Hayek, that a society is not rationally be organized, as in societies knowledge is only available scattered. Instead, was developing a " spontaneous order " to pursue their freely chosen goals with freely chosen agents in humans. However, the nature of the state is coercion and violence. Due to the violent disturbance of these spontaneous order, the incentive to knowledge creation will be reduced. All social institutions, such as language, law, morals, are not centrally controlled, but a scattered taking place, an evolutionary process in which the experiences and expectations of millions of individual human beings are relevant.

Socialist ideas were based on the transmission of atavistic ideas that were suitable for small groups and tribes from the early days of mankind. The typical for socialism maintaining these ideas lead to permanent to primitive subsistence farming in tribes. In order to increase the standard of living in a modern division of labor society that was characterized by peaceful and voluntary exchange of goods, they were no good. Von Hayek generalized to the theory of Mises ' for each Cartesian - rationalist constructed society. In The Counter- Revolution of Science ( German: abuse and decline of reason ) he calls this going back to Comte, Saint- Simon and Bentham ideas " scientism ": the methods of the natural sciences ( especially physics ) can not be transposed to the social sciences. He was also directed against Milton Friedman's positivism. Although he admired Friedman and many of his ideas, he kept his Essays in Positive Economics in (1953 ) outlined methodology dangerous. Monetarism and Keynesianism itself were ultimately very similar.

Legal, Law and Freedom (1973-1979)

Characteristic of socialism was for Hayek institutionalized and systematic coercion. In socialism, the abstract and generally applicable law to walk bureaucratic instructions for individual behavior. Freely chosen behavior standards would be replaced by government instructions. The justice is defined fundamentally different under socialism. While iustitia decide traditionally blindly and without regard to wealth and poverty according to abstract standards, social justice is the result of the arbitrary decision of a central organ in terms of equality of results. However, this contradicts fundamentally the idea of equality before the law; Legal certainty will no longer observed. The voluntary agreement would be replaced by the hegemony of the majority.

Austrian Economics and Neo - Austrians in the U.S.

The early reception of the Austrian school in the U.S. goes first on Benjamin Anderson ( The Value of Money ( 1917) ), Philip Wicksteed and Frank Fetter, from von Mises ' emigration to the United States to Henry Hazlitt, William Harold Hutt, Kurt Richebächer, Frederick Nymeyer and Hans Senn wood back. At that influenced political prominence include the U.S. Congressman Ron Paul, who publishes itself on the teachings and former Czech President Václav Klaus.

Murray Rothbard (1926-1995)

America 's Great Depression (1963 )

Murray Rothbard came in the 1950s in contact with Ludwig von Mises; whose work Human Action exerted great influence on him. In America 's Great Depression he turned to von Mises ' business cycle theory on the world economic crisis of 1929. He came to the conclusion that this was caused by previous inflationary monetary policy in the 1920s and unnecessarily extended by the subsequent interventionist economic policy Herbert C. Hoover. This is diametrically opposed to Milton Friedman at the same time appearing analysis in A Monetary History of the United States ( 1857-1960 ). These differences can be explained of course, is that Friedman followed the conventional definition of inflation, according to which this can be seen in the increase in the price level. Rothbard, however, was followed by von Mises's use of the term, according to which inflation is already present in monetary growth. He also referred to the money supply, all at par redeemable money substitutes, including repurchase rights to life insurance.

Man, Economy and the State (1962 )

Rothbard economical method sees its basis in von Mises ' praxeology: For Rothbard economics is only part of a theory of human action, which is deductively to develop from praxeological axioms. He clarified and systematized von Mises ' work, but brought in economic terms, little innovation compared to von Mises. However, he added the basics of praxeology two subsidiary assumptions:

"The present work deduces the Entire corpus of economics from a few simple and apodictically true axiom: the fundamental axiom of action -that men employ Means to achieve achievement ends, and two subsidiary postulate: that there is a variety of human and natural resources, and did leisure is a consumer 's good. "

" The present work derives the entire theoretical structure of the economics of a few simple and categorically true axioms from: the basic axiom of action - that people use resources to achieve goals - and two subsidiary conditions: that there are a variety of human and natural resources, and that Leisure is a consumer product. "

Von Mises any natural law arguments still refused strictly and was an advocate of a utilitarian method. Rothbard on the other hand trying to connect von Mises ' a priori method with the natural right union nonaggression principle: Ethics and natural law are objectively recognizable. He also replaced the principle of consumer sovereignty by individual sovereignty. Embedded in these other ideological, ethical, and political context Rothbard came to far more radical and more political implications than von Mises: the demand for a radical capitalist libertarianism, anarcho capitalism. Rothbard turned from the late 1960s to less economic issues as his political ideology, as its comprehensive representation Power and Market (1970 ) may apply. Rothbard is consistent with its natural-law reasoning in contrast to Friedrich von Hayek. For Hayek, the deduction was methodically assign from natural law premises a dangerous constructivist rationalism. Rothbard, however, held every other method than his naturrechliche irrational: Man is by virtue of his reason able to recognize the natural law. This was to be mistaken rejection of reason. From Hayek's The Constitution of Liberty, he strongly criticized: " [It is] surprisingly and distressingly, to extremely bad, and I would even say evil, book."

Ludwig von Mises Institute

In 1982, Lew Rockwell, the libertarian academic Ludwig von Mises Institute in Auburn ( Alabama). Dating back to its influence called Austrian economics in the United States usually have a natural right, conservative anarcho capitalism. This development in the United States has its origins in the interpretation of the work of Ludwig von Mises ' by Murray Rothbard. The Institute members include Hans -Hermann Hoppe ( University of Nevada, Las Vegas ), Jörg Guido Hülsmann (University of Angers), Pascal Salin ( emeritus of the University of Paris- Dauphine ) and Jesús Huerta de Soto (University Rey Juan Carlos ).

This interpretation differs in some cases significantly from the Menger's views to von Hayek: Böhm -Bawerk, von Mises and von Hayek rejected anarchy and natural law justifications Strongly object. Market could exist for them only within an institutional framework. Despite their anti- Marxist stance, the Austrian School of Menger to Hayek remained rather apolitical. Wieser closed state intervention is not enough. Von Hayek and von Mises laid great emphasis on the value of their economic freedom method. Rothbard and the standing in his tradition Ludwig von Mises Institute, however, in favor of a natural law legitimized anarcho capitalism. In cultural and moral benefits to its members organize a conservative. Therefore, observers doubt their identification with the tradition of the Austrian School. The Review of Austrian Economics ( ISSN 0889-3047 ) and the Quarterly Journal of Austrian Economics ( ISSN 1098-3708 ) is considered the most important scientific journals about Austrian economics.

Israel Kirzner (* 1930): Competition and Entrepreneurship (1973 )

Another American Von Mises student is Israel Kirzner (New York University). In contrast to Rothbard himself Kirzner continued to seek dialogue with mainstream economics, emphasizing similarities. Thus, Market Theory and the Price System ( 1963) represents an attempt to integrate the price of Mises theory in the conventional price theory. An Essay on Capital ( 1966) was a modern version of the Austrian capital theory.

Kirzner's Competition and Entrepreneurship is considered the first important American contribution to conventional economics with specifically Austrian influence. Instead, as Rothbard to argue in fundamental opposition to the neo-classical model, the contribution considers itself to supplement a widely recognized gap in the neoclassical microeconomic model: equilibrium models were there though acknowledged without controversy, but there was no consensus as equilibrium prices actually incurred. Kirzner proposed to fill this gap with the Austrian model of markets as entrepreneurial discovery processes.

The task of the entrepreneur ( entrepreneur ) is for Kirzner is to ensure at all times for the adjustment of prices to the market equilibrium. There are countless untapped opportunities from which profit could be done at any time and at any place. In the neoclassical model of complete information, however, already all profit opportunities would have to be discovered. In fact, for Kirzner just incomplete information, the cause of profit. The entrepreneur differs from others in that it harvests such opportunities through its " resourcefulness " (English " alertness " ) and it draws its profit. Entrepreneur can then in principle be any. Competition exists only for as long as entrepreneurs are allowed to compete with each other through product innovation and lower prices and compete for him.

"For me the changes the entrepreneur Initiates are always toward the hypothetical state of equilibrium; They Are Brought about changes in response to existing patterns of mistaken Decisions, a pattern Characterised by missed opportunities. The entrepreneur, in my view, brings into mutual adjustment Those discordant elements Which resulted from prior market ignorance. "

" For me, the changes introduced by the entrepreneur are always focused on the hypothetical state of equilibrium; There are changes that are in response to the present wrong decisions, characterized by missed opportunities produced. In my view, the entrepreneur brings non- matching elements that arose from prior market ignorance to gegenseitier adjustment. "

Ultimately represents Kirzner work a fusion of of Mises'schen business concept, enriched by the concept of resourcefulness ( alertness ), with von Hayek's theory of knowledge Represents the conventional neoclassical model emphasizes in his opinion the equilibrium price in insubordinate manner since it was in fact only a transitional stage. To study the evolutionary transition processes is an equally important part of economic science.

Thus, Kirzner sees monopolies in the traditional sense than merely short-term result of product innovation and entrepreneurial skill: Provides an entrepreneur as only a particular product, so this is as long as unproblematic, as there is the possibility for others, also offer their innovative product on the market. True, harmful monopolies are for him only those arising by state privilege and are caused by legal barriers for competitors.

Kirzner found with his work remarkable hearing within the mainstream economics and cared so for a wider reception of the Austrian school as a whole, beyond the fundamental opposition Rothbard. He arranged next to the so-called von Hayek's Nobel Prize austrian revival in the United States.

533731