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The Quarterly Journal of Austrian Economics

, Volume 11, Issue 3–4, pp 165–187 | Cite as

The Mundane Economics of the Austrian School

  • Peter G. Klein
Article

Abstract

The Austrian School of economics—the causal-realist, marginalist, subjectivist tradition established by Carl Menger in 1871—has experienced a remarkable renaissance over the last five decades. 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. This paper argues that Austrian economics, while part of a broader tradition emphasizing the coordination of the market order, is nonetheless a distinct kind of economic analysis, and that its essence is not subjectivism, the market process, or spontaneous order, but what I call “mundane economics”—price theory, capital theory, monetary theory, business-cycle theory, and the theory of interventionism. Call this the “hard core” of Austrian economics. I argue that this hard core is (1) distinct, and not merely a verbal rendition of mid-twentieth-century neoclassical economics; (2) the unique foundation for applied Austrian analysis (political economy, social theory, business administration, and the like); and (3) a living, evolving body of knowledge, rooted in classic contributions of the past but not bound by them. Most Austrian economists from Menger to Rothbard devoted their energies to developing and communicating the principles of mundane economics, not because they failed to grasp the importance of time, uncertainty, knowledge, expectations, institutions, and market processes, but because they regarded these issues as subordinate to the main task of economic science, namely the construction of a more satisfactory theory of value, production, exchange, price, money, capital, and intervention.

Keywords

Austrian economics Price theory Equilibrium State of rest Market process 

Notes

Acknowledgement

I thank Per Bylund, Nicolai Foss, David Gordon, Jeff Herbener, Dan Klein, Fabio Rojas, Joseph Salerno, and participants at the 2007 Grove City College Conference in Honor of Ludwig von Mises and the 2007 Austrian Scholars Conference for helpful comments and conversations on this material. The usual caveat applies.

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© Ludwig von Mises Institute 2008

Authors and Affiliations

  1. 1.Division of Applied Social SciencesUniversity of MissouriColumbiaUSA

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