A new look at the Austrian school of economics: Review and prospects

Abstract

This paper looks at the Austrian School of Economics from the subjectivist perspective. It begins by reviewing the major architects in the Austrian School, Carl Menger, Ludwig von Mises, Friedrich A. Hayek, Murray N. Rothbard, Ludwig M. Lachmann and Isaac M. Kirzner. The paper then elucidates the major tenets of the Austrian School of Economics, namely methodological subjectivism and interpretative economics; entrepreneurship, knowledge and coordination problems in the market process; central planning and Austrian business cycle. It highlights the agreements with public choice school, new institutional economics, evolutionary economics, feminist economics and disagreements with the Marxist economics, Neo-Ricardian School and orthodox neoclassical paradigm. It also clarifies similarities and differences between the Chicago School and Austrian School of Economics. The paper ends with further suggestions on the Austrian subjectivist approach to economic problems by using two illustrations of recent international events, Financial Crisis in 2007 and nuclear meltdown in Japan.