After a long neglect, the Austrian school of economics is enjoying a resurgence of both academic and lay interest. In 1981, New York University, a center for Austrian economic thought, convened a conference in honor of the most distinguished leader of this school, Ludwig von Mises (1881-1973). A product of that conference, Method, Process and Austrian Economics reflects the inspiration of the intellectual courage of this rare economist. 

The term “Austrian school” was never entirely accurate and was, in fact, a slur leveled by their opponents, the Hegelian-dominated German historical school of economics. At the time, to be “Austrian” in intellectual circles was to be reactionary and close-minded. This slur, mind you, was made by the economists who considered themselves as forming “the intellectual bodyguard of the House of Hohenzollern.” Starting with Carl Menger of the University of Vienna, one of the great fathers of marginal utility theory, the Austrian school has been characterized by a methodological individualism that precludes any theory that makes value inherent in the object or in the labor which produced it. 

Von Mises elaborated the Austrian paradigm by exploring the role of time, individual choice, and the market process in economics. As New York University Professor Israel Kirzner notes: “For Mises, the market constitutes a social process made up of the systematic sequences of decisions of interacting purposeful individual beings continually discovering what they believe to be better ways of improving their respective situations.” 

Although stimulated by Ludwig von Mises, the essayists are not slavish epigones of this important thinker, but challenge him and each other over the correct interpretation of the role of the entrepreneur and the element of choice in human action. Nonetheless, they realize that it was Ludwig von Mises who pioneered the way in the analysis of the entrepreneur and recognized the entrepreneurial element in all human action. Von Mises broadened the concept of economics into “praxeology” as the study of human purposive action through individual choice. 

To noneconomists, the most accessible part of the book would be the discussion of the Misesian view of state interventionism. Von Mises noted the vicious circle created by intervention, whereby the harmful effects of one intervention would be attributed to the market and used to justify yet another round of misguided intervention. Murray Rothbard in Man, Economy, and State and The Ethics of Liberty has extended von Mises’s insights by show ing how intervention may be either bilateral (theft, fraud, or taxation) or triangular (interference with two or more persons trading with each other, as in import quotas or minimum wage laws). Rothbard contends that both kinds of interventions are inherently unjust aggressions against individuals. 

Long eclipsed by the vogue of Keynes and Marx, the thought of Ludwig von Mises deserves the serious attention it is now receiving. 



[Method, Process and Austrian Economics: Essays in Honor of Ludwig von Mises, by Israel M. Kirzner (Lexington, MA: Lexington Books) $29.00]