The Austrian School of economics — the causal-realist, marginalist, subjectivist tradition established by Carl Menger in l871 — has experienced a remarkable renaissance over the last five decades (Vaughn 1994; Rothbard 1995; Oakley 1999; Salerno 1999b, 2002). Austrian economics flourished originally in Vienna during the last three decades of the 19th century, and in Europe and North America through the 1920s, then entered a prolonged eclipse in the 1930s and 1940s. Kept alive by important contributions from Hayek (1948), Mises (1949), Lachmann (1956), Rothbard (1962), Kirzner (1973), and others, the Austrian tradition emerged once more as an organized movement in the 1970s, and remains today an important alternative to the “mainstream” tradition of neoclassical economics.
It is not always clear, however, exactly what distinguishes the Austrian School from other traditions, schools of thought, approaches, or movements within economics and its sister disciplines. As a social movement, the Austrian School possesses the formal markers usually taken to demarcate a school of thought, such as its own institutions specialized journals, conferences, academic societies, and funding agencies — and the patterns of self-citation emphasized by Crane (1972). Here, though, I am concerned not with the sociology of the Austrian School but with its core theoretical doctrines, propositions, and modes of analysis, particularly as they apply to everyday, pedestrian, ordinary economic problems. These are the basic problems of price theory, capital theory, monetary theory, business-cycle theory, and the theory of interventionism, problems that are central to any approach within economics.
CONTINUED at the Ludwig von Mises Institute. Written by Peter G. Klein.