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Announces that the organizers of the Austrian Economic Association are soliciting technical papers for the 2002 conference in Vienna, Austria. Submission procedure; Theme of the conference; Special award to be given to young economists.

The Nationalökonomische Gesellschaft (NOeG) was founded in June 1918 by a group of young scholars, mostly based in Vienna, as a forum for theoretical debate. Despite the prominent economists involved (e.g. Schumpeter, Mises, Mayer, Spann, Amonn) its activities soon petered out. The relaunch of the NOeG in 1927 originated from the necessity of the two strands of the Austrian school, led by Mayer and Mises, to find some tolerable arrangement; Spann and economists outside the University of Vienna were excluded. Around 1930 the NOeG and Vienna in general proved an attraction for many well-known economists from abroad, and many of the papers presented were printed and cited in first-rate journals. Yet with the emigration of many Austrian economists during the 1930s the NOeG mirrored the general decline of academic economics in Austria and the number and quality of the papers presented decreased. After the Anschluss 1938 the NOeG and its president Mayer were quick in dismissing its Jewish members and in the following adhered to a strategy of inconspicuous adaptation; its formal existence did not lead to any substantial activities. The post-war period was characterized by the restoration of the situation before 1938, with Mayer's continued presence at the university as well as at the NOeG a case in point. In the end, it led Austrian academic economics into a state of international isolation and "provincialization" much lamented by the émigré economists of the Austrian school. [ABSTRACT FROM AUTHOR]

This article serves as the introduction to a symposium on O'Driscoll and Rizzo's The Economics of Time and Ignorance. The book was first published in 1985. The symposium aims to provide a retrospective assessment of the book's contribution to modern Austrian economics. The article characterizes the book's essential features and gives a brief sketch of the intellectual backdrop that provided the impetus for the book. It also summarizes the five other papers that are part of the symposium, including the responses by the two authors themselves. [ABSTRACT FROM AUTHOR]

This paper reports on the preliminary results of a research project (supported by the Oesterreichische Nationalbank) about Austrian economists under the Nazi regime from 1938 to 1945. The biographies of nearly 200 economists were collected who had close relations to Austria and who were affected in some way or another by the politics of the Third Reich: some as perpetrators, followers or opportunists, others as victims who were persecuted, forced to emigrate or who even lost their lives. To illustrate the diverse fate of Austrian economists after the Anschluss, a brief account is given of three economists who belonged to different economic "schools" and who were affected by the Nazi regime in very different ways: Friedrich Gottl-Ottlilienfeld, an NS party member and adherent of the German Historical School; Friedrich Otto Hertz, a sociologist and economist, who was forced into emigration twice; and Karl Schlesinger, a banker with remarkable theoretical contributions to economics who committed suicide on the day the German Wehrmacht invaded Austria. [ABSTRACT FROM AUTHOR]

In a series of recent papers, the prominent Austrian economist Peter Boettke has criticised orthodox economics for its lack of realism. This paper situates Boettke’s critique in the context provided by recent developments in the methodology of economics, most notably critical realism. While there is a good deal of common ground between Boettke’s approach and critical realism, the latter also helps to reveal some of the limitations of the variant of Austrian economics to which Boettke subscribes. Suggestions are made as to how critical realists and Austrians such as Boettke might move forward together in developing a more realistic, relevant and fruitful approach to economic analysis. [ABSTRACT FROM AUTHOR]

When considered as a unified project, the Ostroms' themes of polycentricity, self-governance, and the art and science of association have strong intellectual roots and connections with Austrian economics. In this paper, we show the close relationship between the Ostroms and the Austrians. We then describe how contemporary Austrian economists can be inspired and can further the work of the Ostroms in the areas of civil societies and self-governing communities, the use of fieldwork and case studies, and public economies and coproduction. Although there are perceived tensions between the Ostroms and the Austrians, we contend that these can be reconciled and pursued as fruitful areas of research. [ABSTRACT FROM AUTHOR]

This paper re-evaluates the orthodox understanding of the role which the 1974 award of the Nobel Prize in Economics to F.A. Hayek had on the revival of Austrian Economics in the later part of the 20th century. The orthodox view, which focuses exclusively on the sociological role of the award on returning Austrian economists to the conversation among academic economists, omits the critical role of purely doctrinal developments. In particular, the work done in the decade 1937-1948 is argued to be central to the Austrian revival. In this decade, both Hayek and Mises independently developed new clarifications of Austrian thought which represented an extension of the subjectivist tradition in economics: Mises' emphasis on human entrepreneurial action and Hayek's exploration of the role of knowledge in the market process. The interest of a generation of younger academics to the ideas developed in that critical decade is thus understood to be the true cause of the Austrian revival, with the award of the Nobel Prize serving a catalytic rather than causative role. [ABSTRACT FROM AUTHOR]

In this paper I defend the euro from the point of view of Austrian economics. Following Mises and Hayek I will try to demonstrate the euro is finally acting as a proxy of the gold standard disciplining politicians and putting a limit to the growth of the welfare state. In order to accomplish this task I will divide my presentation in four different parts: first, I will explain the ideal monetary system according to Austrian economists, and why they have traditionally defended, as second best, a system of fixed exchange rates against monetary nationalism and flexible exchange rates; second, I will analyze the euro is acting as a 'proxy' for the gold standard, and why the champion of the free market should support the euro while the only alternative is a return to monetary nationalism; third, I will make some comments on the diverse anti-euro coalition; and fourth, I will analyze the true cardinal economic sins of Europe and especially the fatal error of the European Central Bank, finishing with some concluding remarks comparing the euro vs. the dollar, as well the traditional positions of Hayek vs. Keynes. [ABSTRACT FROM AUTHOR]

Commenting on the Pinochet regime, Friedrich Hayek famously claimed in 1981 that he would prefer a ‘liberal’ dictator to ‘democratic government lacking liberalism.’ Hayek's defense of a transitional dictatorship in Chile was not an impromptu response. In late 1960, in a little known BBC radio broadcast, Hayek suggested that a dictatorial regime may be able to facilitate a transition to stable limited democracy. While Hayek's comments about Pinochet have generated much controversy, this paper neither provides a blanket condemnation of his views (he did not advocate dictatorship as a first-best ‘state of the world’) nor tries to excuse his failure to condemn the Pinochet junta's human rights abuses, but instead provides a critical assessment of Hayek's implicit model of transitional dictatorship. [ABSTRACT FROM PUBLISHER]

Austrian economists have contributed several important concepts to business cycle theory including: inter-temporal coordination of production and consumption, heterogeneous specificity of capital, non-neutrality of money, and the capital structure of production. Noticeably lacking, however, is a clear theory of expectations. Recent Austrian responses to rational expectations critiques-such as positing a prisoner's dilemma, heterogeneous entrepreneurs, and adverse selection-try to fill this gap. But much work remains to be done developing an Austrian theory of expectations, one where they are endogenous to the market process and market institutions. This paper explores how people adapt their expectations to changing market phenomena based upon their perceived costs and benefits of doing so. It then applies endogenous expectations to the 2008 financial crisis. [ABSTRACT FROM AUTHOR]

This article explores certain aspects of James Buchanan's struggles, over a period of years, to come to grips with Austrian subjectivism in economic theory. [ABSTRACT FROM AUTHOR]

It is plain that the Austrian revival that began in the 1970s has yet to succeed in convincing the mainstream of the academy to jettison their physics-based mathematical models in favor of the sort of models and forms of argumentation that contemporary Austrians advocate. Agent-based computational modeling is still in its relative infancy but is beginning to gain recognition among economists disenchanted with the neoclassical paradigm. The purpose of this paper is to assuage concerns that readers might have regarding methodological consistency between agent-based modeling and Austrian economics and to advocate its adoption as a means to convey Austrian ideas to a wider audience. I examine models developed and published by other researchers and ultimately provide an outline of how one might develop a research agenda that leverages this technique. I argue that agent-based modeling can be used to enhance Austrian theorizing and offers a viable alternative to the neoclassical paradigm. [ABSTRACT FROM AUTHOR]

Trade economists have for long considered gravity models to estimate unexhausted potentials for bilateral trade. Similar to the discrepancy between “normal” and “actual” bilateral trade, one may ask the question about the difference between “normal” and actual bilateral multinational activity. However, with multinational activity, zero bilateral data and heteroskedasticity are very important, even more so than with trade data. Therefore, this paper suggests using generalized linear rather than log-linear models to specify “normal” FDI and obtain estimates of unexhausted FDI potentials. I use panel data on Austria’s bilateral multinational activity across 25 countries and 7 country-blocs, 4 sectors and 13 years to illustrate the disadvantage of log-linear model estimation at quasi-maximum likelihood estimation. [ABSTRACT FROM AUTHOR]

This paper has two principal components. First, it provides a sketch of Alan Greenspan's life, with emphasis on his attraction to Objectivism in the 1960s and his "public service" since 1974. This sketch is based primarily on three recent biographies of Greenspan—books by Bob Woodward, Jerome Tuccille, and Justin Martin—which are themselves reviewed. Second, it explains why Austrian business cycle theory is crucial to a proper assessment of Greenspan's performance as head of the Federal Reserve. The paper concludes that that performance has been significantly overrated by almost everyone except Austrian economists. [ABSTRACT FROM AUTHOR]

Austrian economists are perhaps most well-known for developing the theory of the market process - how producers and consumers, guided by market prices, are able to coordinate their actions over time. In this paper we extend Austrian insights to the provision of fundamental governance goods. It is typically thought that such goods, because of their publicness, cannot be provided by market mechanisms. We argue orthodox public finance and political economy is mistaken in this regard. The market process applied to governance goods, which we call political pricingi is capable of creating governance environments conducive to a high degree of social cooperation under the division of labor. We highlight some problems with orthodox public finance and political economy approaches, theoretically develop a market process approach to governance, and discuss two examples of such mechanisms in creating wealth. [ABSTRACT FROM AUTHOR]

The article discusses Austrian economist Oskar Morgenstern and the historical school of economics based in Vienna, Austria from 1925 to 1950. It outlines Morgenstern's professional career, his shifting attitudes regarding Jews and Nazism, and his interest in the use of mathematics and mathematical models in economics. Other subjects explored include the Austrian Institute for Business Cycle Research run by Morgenstern and the Mathematical Colloquium founded by mathematician Karl Menger, science philosopher Otto Neurath, and the interpersonal relationships of the intelligentsia of Vienna in the interwar period.

Economist Adolph Lowe's theoretical acumen was largely responsible for the practical planning and management of the currency reforms that brought the great German, hyperinflation to an end. He accomplished this from his post as Section Head in the Ministries of Labour and Economics of the Weimar republic. When the awful German hyperinflation had finally ended in 1923 and the currency was in ruins, wholesale German prices averaged 14 trillion times as high as before the war. As a result the currency reform set the new mark equal to 1 trillion old marks and the most severe inflation in history up to that time was finally ended. Unlike Germans, Austrian economists ended their hyperinflation before the final crack-up. Especially because tiny little Austria was all that remained of the once huge Austrian-Hungarian empire, a hyperinflation collapse of the currency would have led to chaos followed by the invasion of Austria by foreign troops and foreign powers would have built a new state. The downward plunge of the Austrian crown was miraculously stopped in 1922 and invasion forestalled for more than a decade Germany's hyperinflation was roaring in free fall when tiny Austria shut down the paper money printing presses.

Following the intellectual exodus of the 1930s and persecution by the Nazi regime, economics in Austria had, with only a handful of exceptions, lost connection to international trends. After 1945, political choices further consolidated this state of affairs. Only after a generation change and thanks to a climate of reforms in the late 1960s and 1970s, research both outside and inside universities managed to catch up. Today, academic economics in Austria is part of an integrated European and North American market for economists as well as for economic ideas. [ABSTRACT FROM AUTHOR]

How to do economics was one of Menger's primary interests, his point of view being distinctly Aristotelian, differing in this aspect greatly from his immediate successors, such as Wieser and Böhm-Bawerk, and also from later Austrian economists. Menger's Aristotelian realism (or classical realism) ran against the nominalist trend of his own and subsequent time, but it may have a more sympathetic hearing now, with remarkable parallels between Aristotelian essentialism and the thesis of theory-laden facts, associated with Rorty, Feyerabend and others. The most important aspect of his Aristotelian realism was his belief that economic theory had to be abstracted from the phenomena by a rational grasp of economic phenomenal forms, Menger explicitly stating that he was not dealing with deductions from a priori axioms. Instead, he was eager to promote what he called exact science. The pursuit of exact science is simply a certain way of treating any subject matter whatever it may be, a certain direction of cognitive endeavour. An exact law provides a theoretical understanding of only one aspect of actual phenomena and neither can be nor need be verified by full empirical actuality. One can still find significance in our time in Menger's ideas on how to do economics. [ABSTRACT FROM AUTHOR]

Andrew Farrant and Edward McPhail demonstrate Hayek's willingness to support, under certain circumstances, a transitional dictator who seeks to implement an institutional structure conducive to liberty, understood to mean economic freedom. This comment links this support to Hayek's mistaken rejection of democracy as a constitutive component of freedom, which is the result of his overestimation of the epistemological abilities of judges. [ABSTRACT FROM PUBLISHER]

This article places recent evidence of Hayek's public defense of the Pinochet regime in the context of the work of the other great twentieth-century classical liberal economists, Milton Friedman and James M. Buchanan. Hayek's view that liberty was only instrumentally valuable is contrasted with Buchanan's account of liberty situated in the notion of the inviolable individual. It is argued that Hayek's theory left him with no basis on which to demarcate the legitimate actions of the state, so that conceivably any government action could be justified on consequentialist grounds. Furthermore, Friedman's account of freedom and discretionary power undermines Hayek's proposal that a transitional dictatorship could pave the way for a genuinely free society. It is contended that Hayek's defense of Pinochet follows from pathologies of his theories of liberty and democracy. [ABSTRACT FROM PUBLISHER]

Why would Hayek, the great critic of ‘rational constructivism’ and defender of spontaneous orders, think a transitional dictatorship could work? Here I attempt to dissect the alchemy of ‘turning a constitution into a can opener’ as Farrant & McPhail (2014) put it. Hayek argues against the imposition by an external source of order upon a society. He stresses the importance of an evolving culture and tradition, noting that they should be spontaneous orders not command systems, and that the culture of a society must be accepting and supportive of its institutions. Sometimes the culture is more important than the formal institutions of a society for efficiency. So why would Hayek argue that a transitional dictator could impose a constitution upon the people? It will be argued here that if Hayek had pursued the theoretical line set out in his Constitution of Liberty, he might have responded to the situation in Chile differently. [ABSTRACT FROM PUBLISHER]

The Economics of Time & Ignorance (1985) is a key text within Austrian economics. Among the so-called 'third generation' of modern Austrian economists, however, the book seems to have had very little impact compared to the notable influence it had upon the proceeding generation. Several possible reasons are considered, including a disagreement with the substantive claims made in Time & Ignorance or the possibility that Time & Ignorance has nothing to offer this generation. We challenge these potential explanations and, argue, that the root cause of this seeming neglect is the movement by this generation towards applied research, an area where Time & Ignorance has relatively less to offer. [ABSTRACT FROM AUTHOR]

We examine various, sometimes divergent, conceptions of capital and its structure in the Austrian tradition from Menger (1871) to Lachmann (1956). We outline Menger’s methodological and philosophical position that recommends investigating the morphology of capital—its shape, form, and structure; it also recommends maintaining some “realisticness” in the treatment of capital in economics. Prominent Austrian contributions are examined and compared along various dimensions: the existence or otherwise of “original” factors of production; time conceptions; analytical domain assumptions; real and money capital doctrines; the causal role of the entrepreneur in creating capital; and the fundamental question of capital aggregation into a stock or fund. We consider the extent to which Menger’s avowed followers and successors diverged from his original vision of capital, subsequent consequences for the development of Austrian capital theory, and implications of Mengerian structural analysis for the study of capital more generally. [ABSTRACT FROM PUBLISHER]

The article discusses Austrian economics.

This article documents the spread of the Austrian school of economics in central and eastern Europe following the fall of the Berlin Wall. Extensive research based on interviews, fieldwork and archival analysis records the development of distinct epistemic communities throughout the region and the subsequent networks that have emerged to unite them. In doing so, we provide a rare history of 'centre-right' political ideas in eastern Europe, a chronology of the development and influence of libertarianism, cursory intellectual biographies of neglected Austrian economists and empirical evidence that contributes to the epistemic communities approach to the study of idea diffusion. The findings support the view that the policy reforms during the transition process were built on neoclassical orthodoxy rather than 'neoliberalism' or 'market fundamentalism' but point to a fast-growing epistemic community that has had increasingly significant policy influence. [ABSTRACT FROM AUTHOR]

Carl Menger, who became regarded as the founder of the Austrian School, did not only confront the German Historical School and criticize British Classical Political Economy, he also read the French Liberal economists. The link between Say and Menger has already been asserted, but on an intuitive basis. It seemed necessary to give substantial proof of its true extent, as well as to document it with proper archival work—that is done in the present article. Menger’s reading of other French authors: Count Pellegrino Rossi, who succeeded Say at the Collège de France, Michel Chevalier, a major name of the French Industrialization, Frédéric Bastiat, the famous defender of free-trade, is less known. It is also documented here, bringing to light first-hand material, mainly from the Menger Collection located in Japan, and the Perkins Library at Duke University. Thus are acknowledged the origins of Menger’s thought in French liberal economists. [ABSTRACT FROM AUTHOR]

Examines the relationship between Joseph Schumpeter and the Austrian School of economics. Major characteristics of Austrian economics; Leading personalities of the Austrian School of Economics; Attitudes of the Austrian School toward questions of method; Classical tradition in the theory of economic growth.

Interviews Israel M. Kirzner, author of the book 'Competition and Entrepreneurship.' Purpose for writing the book; Economists who contributed to Austrian economics; Difference between American and European scholars.

The article looks into the ability of the intelligent economists to discuss significant matters including the economic condition of a country. He notes the instances in which economists including Carl Menger, Ludwig Von Mises and Murray Rothbrad, cannot reconcile on their views and preference in Austrian economics. He discusses the proprieties of intellectual publication which sometimes not offer a bibliography, references and citations of the literature. He notes the arguments of professor Hans-Hermann Hoppe on the new publishers and their manner of writings and negates his presumptions.

The article presents information regarding transaction cost economics in Austria. Economic theories by economists Ludwig von Mises and F. A. Hayek is also presented. Arguments on various Austrian ideas including property rights, entrepreneurship, and economic calculation are discussed. It informs that professor Carl Menger's approach to economics were realistic and explained real-world prices and institutions. Many Austrian ideas have alternatives and are more dominant perspectives. The author interprets that the entrepreneurs cannot believe on any market and thus a person should have a good judgment to start a firm.

The author comments on Austrian economics and the current global financial crisis while giving his profile. It is stated that, the mainstream economics are full of inconsistencies like, treating consumers and producers as two different persons with differing behaviors, and only Austrian economics is rigorously coherent. The author states that, before him there had never been an economist in his family, and he wanted to become an economist because he wanted to understand how large differences in the levels of development between countries were possible. The author states that, the current crisis is not a crisis of capitalism, but a crisis of state interventionism, and it is also a consequence of a mechanicist approach to economic problems.