Largely confined to the outer fringe of “scientific” economics, Austrians have to jump with glee at any mention—positive or negative—that their theories receive in mainstream journals. It is with this attitude that I examine Paul Samuelson’s article in The Quarterly Journal of Economics entitled “A Summing Up.” Historical Background This article
THE INTEREST PROBLEM Eugen von Böhm-Bawerk’s three-volume work, Capital and Interest , is a classic, both because of its brilliant analysis and its witty exposition. The first volume provides a history and critique of all preceding explanations of the “interest problem.” For Böhm-Bawerk, the task of the interest theorist was to explain why a
Because of their minority status, most budding Austrian economists must endure graduate training in the mainstream orthodoxy before earning their Ph.D.s. As a recent graduate of New York University, I thought it might be useful to highlight some of the major differences I perceived between Austrian economics and the neoclassical, New Keynesian
Perhaps the most distinctive feature of the economics of Ludwig von Mises is his insistence on the a priori approach. For Mises, economic “laws” must be logically deduced from antecedent axioms, so that—assuming the initial assumptions are true—the conclusions reached are just as valid as any result in Euclidean geometry. This stands in sharp
The importance of the Austrian school of economics is nowhere better demonstrated than in the area of monetary theory. It is in this realm that the simplifying assumptions of mainstream economic theory wreak the most havoc. In contrast, the commonsensical, “verbal logic” of the Austrians is entirely adequate to understand the nature of money and
In a recent article , I laid out the Misesian approach of praxeology , or the science of human action. Contrary to the mainstream positivist position, in which all economic theories must lead to falsifiable predictions that can be tested, Ludwig von Mises believed that valid economic theorems must be deducible from the axiom, “Humans act.” Many
In a previous article , I explained Eugen von Böhm-Bawerk’s conception of the “interest problem.” Specifically, why could a capitalist earn an effortless flow of real wealth, year after year, from his fund of capital? To state the problem in an equivalent form, why is it that a capitalist can spend, say, $1,000 on labor and raw materials, in
[Originally published December 2003.] The Bush Administration recently announced that it would repeal its controversial steel tariffs, proving that even Republicans will occasionally let market prices do their job. The move of course had nothing to do with a newfound appreciation of David Ricardo: Even the official press releases make it clear
In a previous article , I criticized Hal Varian’s (orthodox) description of the current state of game theory. You see, there are many games in which there is a unique “Nash equilibrium”—that is, out of all the strategies available to the players, only one set will leave each player happy, given everyone else’s Nash strategy. Because of this, the
La importancia de la escuela austriaca de economía no queda mejor demostrada que en el ámbito de la teoría monetaria. Es en este ámbito donde los supuestos simplificadores de la teoría económica dominante causan más estragos. Por el contrario, el sentido comunal, la «lógica verbal» de los austriacos es totalmente adecuada para entender la
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.