Austrian school

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Austrian School

A school of economics that argues that human behavior is so complex it is extremely difficult or impossible to model. For that reason, it promotes deductive, as opposed to inductive, reasoning in its analysis. It is an extremely individualist school, advocating laissez faire policies and opposing all or nearly all government interventions in the economy. The Austrian School, and particularly its rejection of modeling, has faced criticism from both right- and left-leaning economists. It is so named because most of its founders were born in or around Austria. See also: Ludwig von Mises.

Austrian school

a group of late 19th-century economists at the University of Vienna who established and developed a particular line of theoretical reasoning. The tradition originated with Professor Carl Menger who argued against the classical theories of value, which emphasized PRODUCTION and SUPPLY. Instead, he initiated the ‘subjectivist revolution’, reasoning that the value of a good was not derived from its cost but from the pleasure, or UTILITY, that the CONSUMER can derive from it. This type of reasoning led to the MARGINAL UTILITY theory of value whereby successive increments of a commodity yield DIMINISHING MARGINAL UTILITY.

Friedrich von Wieser developed the tradition further, being credited with introducing the economic concept of OPPORTUNITY COST. Eugen von Böhm-Bawerk helped to develop the theory of INTEREST and CAPITAL, arguing that the price paid for the use of capital is dependent upon consumers’ demand for present CONSUMPTION relative to future consumption. Ludwig von Mises and Friedrich von Hayek subsequently continued the tradition established by Carl Menger et al. See also CLASSICAL ECONOMICS.

References in periodicals archive ?
He provided an invaluable example and advice on simply learning how one goes about building an academic career as an Austrian economist.
The technique is called "information economics" and is inspired by the Austrian economist Friedrich Hayek's article "The Use of Knowledge in Society," published in The American Economic Review in 1945.
However, in the first half of the 20th century, Austrian economist Friedrich Hayek provided an ingenious insight about the role of free markets in solving information problems.
And along with Raico and Reisman he began sitting in on the graduate seminar at New York University hosted by eminent Austrian economist Ludwig von Mises, often spending his college breaks taking notes in the back of the classroom.
He knows his classics, from "the great Austrian economist Friedrich Hayek," to Milton Friedman, not to forget Joseph Schumpeter and Israel Kirzner.
When John Maynard Keynes published "The General Theory of Employment, Interest and Money'' in the winter of 1935-36, its fundamental errors were so glaring to the Austrian economist Friedrich Hayek that Hayek figured the book would quickly slip into oblivion.
Language is thus a prime example of what the Austrian economist Friedrich Hayek calls "spontaneous order.
In this sense, East Asia's economies have embraced the process of "creative destruction" described by the Austrian economist Joseph Schumpeter, whereby the economic structure is continually revolutionised from within.
The Austrian economist Joseph Schumpeter talked about the "perennial gale of creative destruction" that howls through the business world.
Some economists are now pointing out that we also need to be aware that economic cycles - first identified by Austrian economist Joseph Schumpeter in his book Business Cycles, published in 1939.
This year s two prize-winning papers, which were selected from numerous excellent submissions, address particularly topical economic policy issues and display outstanding academic quality: Systemic Sovereign Risk: Macroeconomic Implications in the Euro Area by Saleem Abubakr Bahaj, University of Cambridge, and Information Frictions and the Law of One Price: 'When the States and the Kingdom became United by Claudia Steinwender, an Austrian economist currently at the London School of Economics.
Rather than the "perennial gale of creative destruction" Austrian economist Schumpeter used to describe innovation, Prof Swann likened its force to more of a gentle breeze.

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