26 Facts About Austrian School

Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals.

Austrian School originated in late-19th and early-20th-century Vienna with the work of Carl Menger, Eugen von Bohm-Bawerk, Friedrich von Wieser, and others.

Since the mid-20th century, mainstream economists have been critical of the modern-day Austrian School and consider its rejection of mathematical modeling, econometrics and macroeconomic analysis to be outside mainstream economics, or "heterodox".

Austrian School owes its name to members of the German historical school of economics, who argued against the Austrians during the late-19th century Methodenstreit, in which the Austrians defended the role of theory in economics as distinct from the study or compilation of historical circumstance.

The Austrian School was one of three founding currents of the marginalist revolution of the 1870s, with its major contribution being the introduction of the subjectivist approach in economics.

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Austrian School obtained his PhD in 1894 from the University of Halle and then was made Professor of Political Economy and Finance at Cornell in 1901.

Several important Austrian School economists trained at the University of Vienna in the 1920s and later participated in private seminars held by Ludwig von Mises.

Sometime during the middle of the 20th century, Austrian School economics became disregarded or derided by mainstream economists because it rejected model building and mathematical and statistical methods in the study of economics.

Reputation of the Austrian School rose in the late 20th century due in part to the work of Israel Kirzner and Ludwig Lachmann at New York University and to renewed public awareness of the work of Hayek after he won the 1974 Nobel Memorial Prize in Economic Sciences.

Austrian School went on to call the rift subversive to economic analysis and the historical understanding of the fall of Eastern European communism.

Hoppe acknowledged that Hayek was the most prominent Austrian School economist within academia, but stated that Hayek was an opponent of the Austrian School tradition which led from Carl Menger and Bohm-Bawerk through Mises to Rothbard.

Austrian economist Walter Block says that the Austrian School can be distinguished from other schools of economic thought through two categories—economic theory and political theory.

Hoppe emphasizes that Hayek, which for him is from the English empirical tradition, is an opponent of the supposed rationalist tradition of the Austrian School; Menger made strong critiques to rationalism in his works in similar vein as Hayek's.

Austrian School emphasized the idea that there are several institutions which were not deliberately created, have a kind of "superior wisdom" and serve important functions to society.

Austrian School talked about Burke and the English tradition to sustain these positions.

When saying that the libertarian political theory is an integral part of the Austrian School and supposing Hayek is not a libertarian, Block excludes Menger from the Austrian School too since Menger seems to defend broader state activity than Hayek—for example, progressive taxation and extensive labour legislation.

Many theories developed by "first wave" Austrian School economists have long been absorbed into mainstream economics.

Former American Federal Reserve Chairman Alan Greenspan said that the founders of the Austrian School "reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in this country".

Currently, universities with a significant Austrian School presence are George Mason University, New York University, Grove City College, Loyola University New Orleans and Auburn University in the United States; King Juan Carlos University in Spain; and Universidad Francisco Marroquin in Guatemala.

Austrian School wrote that conclusions could not be inferred from empirical observation or statistical analysis and argued against the use of probabilities in economic models.

Since Mises' time, some Austrian School thinkers have accepted his praxeological approach while others have adopted alternative methodologies.

Austrian School included two additional tenets held by the Mises branch of Austrian economics:.

Austrian School stated that interest rates and profits are determined by two factors, namely supply and demand in the market for final goods and time preference.

Austrian School concludes that Friedrich Hayek was wrong to argue that high levels of government spending harms an economy and "a generous social-welfare state is not a road to serfdom but rather to fairness, economic equality and international competitiveness".

Critics generally argue that Austrian School economics lacks scientific rigor and rejects scientific methods and the use of empirical data in modelling economic behavior.

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Austrian School analyzed the issue using newer data in 1993, and again reached the same conclusion.