Why Austrian Economics Matters
by Llewellyn H. Rockwell, Jr.
[essay in pdf] 

Economics,
wrote Joseph Schumpeter, is "a big omnibus which contains many
passengers of incommensurable interests and abilities." That is,
economists are an incoherent and ineffectual lot, and their reputation
reflects it. Yet it need not be so, for the economist attempts to
answer the most profound question regarding the material world.

Pretend
you know nothing about the market, and ask yourself this question: how
can society's entire deposit of scarce physical and intellectual
resources be assembled so as to minimize cost; make use of the talents
of every individual; provide for the needs and tastes of every
consumer; encourage technical innovation, creativity, and social
development; and do all this in a way that can be sustained?

This
question is worthy of scholarly effort, and those who struggle with the
answer are surely deserving of respect. The trouble is this: the
methods used by much of mainstream economists have little to do with
acting people, and so these methods do not yield conclusions that have
the ring of truth. This does not have to be the case.

The
central questions of economics have concerned the greatest thinkers
since ancient Greece. And today, economic thinking is broken into many
schools of thought: the Keynesians, the Post Keynesians, the
New-Keynesians, the Classicals, the New Classicals (or Rational
Expectations School), the Monetarists, the Chicago Public Choicers, the
Virginia Public Choicers, the Experimentalists, the Game Theorists, the
varying branches of Supply Sideism, and on and on it goes.

The Austrian School

Also
part of this mix, but in many ways apart from and above it, is the
Austrian School. It is not a field within economics, but an alternative
way of looking at the entire science. Whereas other schools rely
primarily on idealized mathematical models of the economy, and suggest
ways the government can make the world conform, Austrian theory is more
realistic and thus more socially scientific.

Austrians
view economics as a tool for understanding how people both cooperate
and compete in the process of meeting needs, allocating resources, and
discovering ways of building a prosperous social order. Austrians view
entrepreneurship as a critical force in economic development, private
property as essential to an efficient use of resources, and government
intervention in the market process as always and everywhere destructive.

The
Austrian School is in a major upswing today. In academia, this is due
to a backlash against mathematization, the resurgence of verbal logic
as a methodological tool, and the search for a theoretically stable
tradition in the madhouse of macroeconomic theorizing. In terms of
policy, the Austrian School looks more and more attractive, given
continuing business-cycle mysteries, the collapse of socialism, the
cost and failure of the welfare warfare regulatory state, and public
frustration with big government.

High Points in the Austrian Tradition

In its
twelve decades, the Austrian School has experienced different levels of
prominence. It was central to the price theory debates before the turn
of the century, to monetary economics in the first decade of the
century, and to the controversy over socialism's feasibility and the
source of the business cycle in the 1920s and 1930s. The school fell
into the background from the 1940s to the mid-1970s, and was usually
mentioned only in history of economic thought texts.

The
proto-Austrian tradition dates from the 15th-century Spanish
Scholastics, who first presented an individualist and subjectivist
understanding of prices and wages. But the formal founding of the
school dates from the 1871 publication of Carl Menger's Principles of
Economics, which changed economists' understanding of the valuing,
economizing, and pricing of resources, overturning both the Classical
and the Marxian view in the "marginal revolution."

Menger
also generated a new theory of money as a market institution, and
grounded economics in deductive laws discoverable by the methods of the
social sciences. Menger's book, said Ludwig von Mises, made an
economist of him, and it is still of great value.

Eugen
von Böhm-Bawerk was the next important figure in the Austrian School.
He showed that interest rates, when not manipulated by a central bank,
are determined by the time horizons of the public, and that the rate of
return on investment tends to equal the rate of time preference. He
also dealt a deadly blow to Marx's theory of capital and exploitation,
and was a key defender of theoretical economics at a time when
historicists of every stripe were trying to destroy it.

Böhm-Bawerk's greatest student was Ludwig von Mises, whose first major project was the development of a new theory of money. The Theory of Money and Credit, published
in 1912, elaborated on Menger, showing not only that money had its
origin in the market, but that there was no other way it could have
come about. Mises also argued that money and banking ought to be left
to the market, and that government intervention can only cause harm.

In that
book, which remains a standard work today, Mises also sowed the seeds
of his business-cycle theory. He argued that when the central bank
artificially lowers interest rates, it causes distortions in the
capital-goods sector of the structure of production. When
malinvestments occur, an economic downturn is necessary to wash out bad
investments.

Along
with his student F. A. Hayek, Mises established the Austrian Institute
for Business Cycle Research in Vienna, and he and Hayek showed that the
central bank is the source of the business cycle. Their work eventually
proved to be most effective in combating Keynesian experiments in
fine-tuning the economy through fiscal policies and the central bank.

The
Mises-Hayek theory was dominant in Europe until Keynes won the day by
arguing that the market itself is responsible for the business cycle.
It didn't hurt that Keynes's theory advocating more spending,
inflation, and deficits was already being practiced by governments
around the world.

Socialist Calculation

At the
time of the business-cycle debate, Mises and Hayek were also involved
in a controversy over socialism. In 1920, Mises had written one of the
most important articles of the century: "Economic Calculation in the
Socialist Commonwealth," followed by his book, Socialism. Until then,
there had been many critiques of socialism, but none had challenged
socialists to explain how their economy would actually work absent free
prices and private property.

Mises
argued that rational economic calculation requires a profit-and-loss
test. If a firm makes a profit, it is using resources efficiently; if
it makes a loss, it is not. Without such signals, the economic actor
has no way to test the appropriateness of his decisions. He cannot
assess the opportunity costs of this or that production decision.
Prices and the profit-and-loss corollary are essential. Mises also
showed that private property in the means of production is necessary
for these prices to be generated.

Socialism
holds that the means of production should be in collective hands. This
means no buying or selling of capital goods and thus no prices for
them. Without prices, there is no profit and loss test. Without
accounting for profit and loss, there can be no real economy. Should a
new factory be built? Under socialism, there is no way to tell.
Everything becomes guesswork.

Mises's
essay ignited a debate all over Europe and America. One top socialist,
Oskar Lange, conceded that prices are necessary for economic
calculation, but he said that central planners could generate prices
out of their own heads, watch the length of lines at stores to
determine consumer demand, or provide the signals of production
themselves. Mises countered that "playing market" wouldn't work either;
socialism, by its own internal contradictions, had to fail.

Hayek
used the occasion of the calculation debate to elaborate upon and
broaden the Misesian argument into his own theory of the uses of
knowledge in society. He argued that the knowledge generated by the
market process was inaccessible to any single human mind, especially
that of the central planner. The millions of decisions required for a
prosperous economy are too complex for any one person to comprehend.
This theory became the basis of a fuller theory of the social order
that occupied Hayek for the rest of his academic life.

Mises
came to the U.S. after fleeing the Nazis and was taken in by a handful
of free-market businessmen, preeminently Lawrence Fertig. Here he
helped build a movement around his ideas, and most free-market
economists acknowledge their debt to him. No one, as Milton Friedman
has said, did as much as Mises to promote free markets in this country.
But those were dark times. He had trouble finding the paid university
post he deserved, and it was difficult to get a wider audience for his
views.

During these early years in America, Mises worked to rewrite his just completed German-language treatise into Human Action, an all-encompassing work for English-language audiences. In it, he
carefully reworked the philosophical grounding of the social sciences
in general and economics in particular. This proved to be a significant
contribution: long after the naive dogmas of empiricism have failed,
Mises's "praxeology," or logic of human action, continues to inspire
students and scholars. This magnum opus swept aside Keynesian fallacies and historicist pretensions and ultimately made possible the revival of the Austrian School.

The Revival

Until
the 1970s, however, it was hard to find a prominent economist who did
not share the Keynesian tenets: that the price system was perverse,
that the free market was irrational, that the stock market was driven
by animal spirits, that the private sector could not be trusted, that
government was capable of planning the economy to keep it from falling
into recession, and that inflation and unemployment were inversely
related.

One exception was Murray N. Rothbard, another great student of Mises's, who wrote a massive economic treatise in the early 1960s called Man, Economy, and State. In
his book, Rothbard added his own contributions to Austrian thought.
Similarly, the work of two other important students of Mises, Hans F.
Sennholz and Israel Kirzner, carried on the tradition. And Henry
Hazlitt, then writing a weekly column for Newsweek, did as much as anybody to promote the Austrian School, and made contributions to the school himself.

The
stagflation of the 1970s undermined the Keynesian School by showing
that it was possible to have both high inflation and high unemployment
at the same time. The Nobel Prize that Hayek received in 1974 for his
business-cycle research with Mises caused an explosion of academic
interest in the Austrian School and free-market economics in general. A
generation of graduate students began studying the work of Mises and
Hayek, and that research program continues to grow. Today, the Austrian
School is most fully embodied in the work of the Mises Institute.

The Core of Austrian Theory

The
concepts of scarcity and choice lie at the heart of Austrian economics.
Man is constantly faced with a wide array of choices. Every action
implies forgone alternatives or costs. And every action, by definition,
is designed to improve the actor's lot from his point of view.
Moreover, every actor in the economy has a different set of values and
preferences, different needs and desires, and different time schedules
for the goals he intends to reach.

The
needs, tastes, desires, and time schedules of different people cannot
be added to or subtracted from other people's. It is not possible to
collapse tastes or time schedules onto one curve and call it consumer
preference. Why? Because economic value is subjective to the individual.

Similarly,
it is not possible to collapse the complexity of market arrangements
into enormous aggregates. We cannot, for example, say the economy's
capital stock is one big blob summarized by the letter K and
put that into an equation and expect it to yield useful information.
The capital stock is heterogeneous. Some capital may be intended to
create goods for sale tomorrow and others for sale in ten years. The
time schedules for capital use are as varied as the capital stock
itself. Austrian theory sees competition as a process of discovering
new and better ways to organize resources, one that is fraught with
errors but that is constantly being improved.

This
way of looking at the market is markedly different from every other
school of thought. Since Keynes, economists have developed the habit of
constructing parallel universes having nothing to do with the real
world. In these universes, capital is homogeneous and competition is a
static end state. There are the right number of sellers, prices reflect
the costs of production, and there are no excess profits. Economic
welfare is determined by adding up the utilities of all individuals in
society. The passing of time is rarely accounted for, except in
changing from one static state to another. Varying time schedules of
producers and consumers are simply nonexistent. Instead we have
aggregates that give us precious little information at all.

A
conventional economist is quick to agree that these models are
unrealistic, ideal types to be used as mere tools of analysis. But this
is disingenuous, since these same economists use these models for
policy recommendations.

One
obvious example of basing policy on contrived models of the economy
takes place at the Justice Department's antitrust division. There the
bureaucrats pretend to know the proper structure of industry, what kind
of mergers and acquisitions harm the economy, who has too much market
share or too little, and what the relevant market is. This represents
what Hayek called the pretense of knowledge.

The
correct relationship between competitors can only be worked out through
buying and selling, not bureaucratic fiat. Austrian economists, in
particular Rothbard, argue that the only real monopolies are created by
government. Markets are too competitive to allow any monopolies to be
sustained.

Another
example is the idea that economic growth can be manufactured by
manipulating aggregate demand curves through more and faster government
spending considered to be a demand booster instead of a supply reducer
or government bullying of the consuming public.

If the
hallmark of conventional economics is unrealistic models, the hallmark
of Austrian economics is a profound appreciation of the price system.
Prices provide economic actors with critical information about the
relative scarcity of goods and services. It is not necessary for
consumers to know, for example, that a disease has swept the chicken
population to know that they should economize on eggs. The price
system, by making eggs more expensive, informs the public of the
appropriate behavior.

The
price system tells producers when to enter and leave markets by
relaying information about consumer preferences. And it tells producers
the most efficient that is, the least costly way to assemble other
resources to create goods. Apart from the price system, there is no way
to know these things.

But
prices must be generated by the free market. They cannot be made up the
way the Government Printing Office makes up the prices for its
publications. They cannot be based on the costs of production in the
manner of the Post Office. Those practices create distortions and
inefficiencies. Rather, prices must grow out of the free actions of
individuals in a juridical setting that respects private property.

Neoclassical
price theory, as found in most graduate texts, covers much of this
territory. But typically, it takes for granted the accuracy of prices
apart from their foundation in private property. As a result, virtually
every plan for reforming the post-socialist economies talked about the
need for better management, loans from the West, new and different
forms of regulation, and the removal of price controls, but not private
property. The result was the economic equivalent of a train wreck.

Free-floating
prices simply cannot do their work apart from private property and
concomitant freedom to contract. Austrian theory sees private property
as the first principle of a sound economy. Economists in general
neglect the subject, and when they mention it, it is to find a
philosophical basis for its violation.

The
logic and legitimacy of "market failure" analysis, and its public-goods
corollary, is widely accepted by non-Austrian schools of thought. The
notion of public goods is that they cannot be supplied by the market,
and instead must be supplied by government and funded through its
taxing power. The classic case is the lighthouse, except that, as
Ronald Coase has shown, private lighthouses have existed for centuries.
Some definitions of public goods can be so broad that, if you throw out
common sense, everyday consumer goods qualify.

Austrians
point out that it is impossible to know whether or not the market is
failing without an independent test, of which there is none outside the
actions of individuals. The market itself is the only available
criterion for determining how resources ought to be used.

Let's
say I deem it necessary, for various social reasons, that there be one
barber for every 100 people and, as I look around, I notice that this
is not the case. Thus I might advocate that a National Endowment for
Barbers be established to increase the barber supply. But the only
means for knowing how many barbers there ought to be is the market
itself. If there are fewer than one per hundred, we must assume that a
larger number is not supposed to exist by any reasonable standard of
efficient markets. It is not economically proper to develop a wish list
of jobs and institutions that stands apart from the market itself.

Externalities

Conventional
economics teaches that if the benefits or costs of one person's
economic decisions spill over onto others, an externality exists, and
it ought to be corrected by the government through redistribution. But,
broadly defined, externalities are inherent in every economic
transaction because costs and benefits are ultimately subjective. I may
be delighted to see factories belching smoke because I love industry.
But that does not mean I should be taxed for the privilege of viewing
them. Similarly, I may be offended that most men don't have beards, but
that doesn't mean that the clean-shaven ought to be taxed to compensate
me for my displeasure.

The
Austrian School redefines externalities as occurring only with physical
invasions of property, as when my neighbor dumps his trash in my yard.
Then the issue becomes crime. There can be no value-free adding-up of
utilities to determine subjective costs or benefits of economic
activity. Instead, the relevant criterion should be whether economic
actions occur in a peaceful manner.

Another
area where Austrians differ is how the government is supposed to go
about the practical problem of correcting for market failures. Grant
that somehow the government can spot a market failure, the burden of
proof is still on the government to demonstrate that it can perform the
task more efficiently than the market. Austrians would refocus the
energy that goes into finding market failures to understanding more
about government failures.

But the
failure of government to do what mainstream theory says it can is not a
popular subject. Outside of the Public Choice schools, it is usually
assumed that the government is capable of doing anything it wants to
do, and of doing it well. Forgotten is the nature of the state as an
institution with its own pernicious designs on society. One of the
contributions of Rothbard was to focus Austrians on this point, and on
the likely patterns interventions will take. He developed a typology of
interventionism, and provided detailed critiques of many kinds of
interventions and their consequences.

The Fortune Tellers

The
question is often asked, in James Buchanan's famous phrase, What Should
Economists Do? Mainstreamers answer, in part: forecast the future. This
goal is legitimate in the natural sciences, because rocks and sound
waves do not make choices. But economics is a social science dealing
with people who make choices, respond to incentives, change their
minds, and even act irrationally.

Austrian
economists realize that the future is always uncertain, not radically
so, but largely. Human action in an uncertain world with pervasive
scarcity poses the economic problem in the first place. We need
entrepreneurs and prices to help overcome uncertainty, although this
can never be done completely.

Forecasting
the future is the job of entrepreneurs, not economists. This is not to
say that Austrian economists cannot expect certain consequences of
particular government policies. For example, they know that price
ceilings always and everywhere create shortages, and that expansions of
the money supply lead to general price increases and the business
cycle, even if they cannot know the time and exact nature of these
expected events.

Government Numbers

One
final area of theoretical concern that distinguishes Austrians from the
mainstream is economic statistics. Austrians are critical of the
substance of most existing statistical measures of the economy. They
are also critical of the uses to which they are put. Take, for example,
the question of price elasticities, which supposedly measure consumer
responsiveness to changes in price. The problem lies in the metaphor
and its applications. It suggests that elasticities exist independent
of human action, and that they can be known in advance of experience.
But measures of historical consumer behavior do not constitute economic
theory.

Another
example of a questionable statistical technique is the index number,
the prime means by which the government calculates inflation. The
problem with index numbers is that they obscure relative price changes
between goods and industries, and relative price changes are of prime
importance. This is not to say the Consumer Price Index is irrelevant,
only that it is not a solid indicator, is subject to wide abuse, and
masks highly complex price movements between sectors.

And the
Gross Domestic Product statistic is riddled with composition fallacies
inherent in the Keynesian model. Government spending is considered part
of aggregate demand, and no effort is made to account for the
destructive costs of taxation, regulation, and redistribution. If
Austrians had their way, the government would never collect another
economic statistic. Such data is used primarily to plan the economy.

Public Policy

For
Austrians, economic regulation is always destructive of prosperity
because it misallocates resources and is extremely destructive of small
business and entrepreneurship.

Environmental
regulation has been among the worst offenders in recent years. Nobody
can calculate the extraordinary losses associated with the Clean Air
Act or the absurdities associated with wetlands or endangered species
policies.

However,
environmental policy can do what it is explicitly intended to do: lower
standards of living. But antitrust policy, in contrast to its stated
policy, does not generate competitiveness. Such bogeymen as predatory
pricing still scare the bureaucrats at Justice, whereas simple economic
analysis can refute the idea that a competitor can sell below his cost
of production to take over the market and then sell at monopoly prices
later. Any firm that attempts to sell below the costs of production
will indefinitely suffer loses. The moment it attempts to raise prices,
it invites competitors back into the market.

Civil
rights legislation represents one of the most intrusive regulatory
interventions in labor markets. When employers are not able to hire,
fire, and promote based on their own criteria of merit, dislocations
occur within the firm and in labor markets at large. Moreover, civil
rights legislation, by creating legal preferences for some groups,
undermines the public sense of fairness that is the market's hallmark.

There
is another cost of economic regulation: it impedes the entrepreneurial
discovery process. This process is based on having a wide array of
alternatives open to the use of capital. Yet government regulation
limits the options of entrepreneurs, and erects barriers to the
exercise of entrepreneurial talent. Safety, health, and labor
regulations, for example, not only inhibit existing production, they
impede the development of better production methods.

Austrians
have also developed impressive critiques of redistributionism.
Conventional welfare theory argues that if the law of diminishing
marginal utility is true, then total utility can be easily increased.
If you take a dollar from a rich man, his welfare is slightly
diminished, but that dollar is worth less to him than to a poor man.
Thus redistributing a dollar from a rich man to a poor man increases
the total utility between the two. The implication is that welfare can
be maximized through perfect income equality. The problem with this,
say Austrians, is that utilities cannot be added and subtracted, since
they are subjective.

Redistributionism
takes from property-owners and producers and gives, by definition, to
non-owners and non-producers. This diminishes the value of the property
that has been redistributed. Far from increasing total welfare,
redistributionism diminishes it. By making property and its value less
secure, income transfers lessen the benefits of ownership and
production, and thus lower the incentives to both.

Austrians
reject the use of redistribution to stimulate the economy or otherwise
manipulate the structure of economic activity. Increasing taxes, for
example, can do nothing but harm. A shorthand for taxes is wealth
destruction. They forcibly confiscate property that could otherwise be
saved or invested, thus lowering the number of consumer options
available. Moreover, there is no such thing as a strict consumer tax.
All taxes decrease production.

Austrians
do not go along with the view that deficits don't matter. In fact, the
requirement that deficits be financed by the public or foreign bond
holders drives up interest rates and thus crowds out potential private
investment. Deficits also create the danger that they will be financed
through central-bank inflation. Yet the answer to deficits is not to
increase taxation, which is more destructive than deficits, but rather
to balance the budget through necessary spending cuts. Where to cut?
Anywhere and everywhere.

The
ideal situation is not simply a balanced budget. Government spending
itself, regardless of deficit or surplus, should be as small as
possible. Why? Because such spending diverts resources from better uses
in private markets.

We hear
talk of this or that "government investment." Austrians reject this
term as an oxymoron. Real investment is taken on by capitalists risking
their own money in hopes of satisfying future consumer demands.
Government limits the satisfaction of consumer demands by hampering
production in the private sector. Besides, government investments are
notorious wastes of money, and are in fact consumption spending by
politicians and bureaucrats.

Money and Banking

Mainstream
economists hold that the government must control monetary policy and
the structure of banking through cartels, deposit insurance, and a
flexible fiat currency. Austrians reject this entire paradigm, and
argue that all are better controlled through private markets. In fact,
to the extent that today we have serious and radical proposals for
having the market play a greater role in banking and monetary policy,
it is due to the Austrian School.

Deposit
insurance has been on the public mind since the collapse of the S&L
industry. The government guarantees deposits and loans with taxpayer
money, and that makes financial institutions less careful. Government
effectively does to financial institutions what a permissive parent
does to a child: encourages poor behavior by eliminating the threat of
punishment.

Austrians
would eliminate deposit insurance, and not only allow bank runs to
occur, but appreciate their potential as a necessary check. There would
be no lender of last resort that is, the taxpayer in an Austrian
monetary regime, to bail out bankrupt and illiquid institutions.

Much of
the Austrian critique of central banking centers around the Mises-Hayek
business cycle theory. Both argued that the central bank, and not the
market itself, is responsible for the cyclical behavior of business
activity. To demonstrate the theory, Austrians have undertaken
extensive studies of many historical periods of recession and recovery
to show that each was preceded by central-bank machinations.

The
theory argues that central-bank efforts to lower interest rates below
their natural level causes borrowers in the capital goods industry to
overinvest in their projects. A lower interest rate is normally a
signal that consumers' savings are available to back up new production.
That is, if a producer borrows to build a new building, there is enough
savings for consumers to buy the goods and services that will be made
in the building. Projects undertaken can be sustained. But artificially
lowered interest rates lead businesses into undertaking unnecessary
projects. This creates an artificial boom followed by a bust once it is
clear that savings weren't high enough to justify the degree of
expansion.

Austrians
point out that the Monetarist growth rule ignores the "injection
effects" of even the smallest increase in money and credit. Such an
increase will always create this business-cycle phenomenon, even if it
works to maintain a relatively stable index number, as in the 1920s and
1980s.

What
then should policy makers do when the economy enters recession? Mostly,
nothing. It takes time to wipe out the malinvestment created by the
credit boom. Projects that were undertaken have to go bankrupt,
employees mistakenly hired must lose their jobs, and wages must fall.
After the economy is cleansed of the bad investments induced by the
central bank, growth can begin anew, based on a realistic assessment of
the future behavior of consumers.

If the
government wants to make the recovery process work faster if, say,
there is an election coming up there are some things it can do. It can
cut taxes, putting more wealth into private hands to fuel the recovery
process. It can eliminate regulations, which inhibit private-sector
growth. It can cut spending and reduce the demand on credit markets. It
can repeal anti-dumping laws, and cut tariffs and quotas, to allow
consumers to buy imported goods at cheaper prices.

Central
banking also creates incentives toward inflationary monetary policies.
It is not a coincidence that since the creation of the Federal Reserve
System, the value of the dollar has declined 98%. The market did not
make this happen. The culprit is the central bank, whose institutional
logic drives it toward an inflationary policy just as a counterfeiter
is driven to keep his printing press running.

Austrians
would reform this in fundamental ways. Misesians advocate a return to a
100% gold coin standard, an end to fractional-reserve commercial
banking, and the abolition of the central bank, while Hayekians
advocate a system where consumers select currencies from a variety of
alternatives.

The Future of the Austrian School

Today,
Austrian economics is on the upswing. Mises's works are read and
discussed all over Western and Eastern Europe and the former Soviet
Union, as well as Latin America and North Asia. But the new interest in
America, where the insights of the Austrian School are even more sorely
needed, is especially encouraging.

The
success of the Ludwig von Mises Institute is testimony to this new
interest. The primary purpose of the Institute is to ensure that the
Austrian School is a major force in the economic debate. To this end,
we have cultivated and organized hundreds of professional economists,
provided scholarly and popular outlets for their work, educated
thousands of graduate students in Austrian theory, distributed millions
of publications, and formed intellectual communities, most notably at
Auburn University and the University of Nevada, Las Vegas, where these
ideas thrive.

Every
year we hold a summer instructional seminar on the Austrian School
called the Mises University, with a faculty of more than 25, and
top-flight students from around the country. We also hold academic
conferences on theoretical and historical subjects, and the Institute's
scholars are frequent participants at major professional meetings.

Transaction Publishers co-sponsors the Institute's scholarly Quarterly Journal of Austrian Economics,
the only quarterly journal in the English-speaking world devoted
exclusively to the Austrian School. Transaction also publishes some of
our books. The Austrian Economics Newsletter is written and edited by
and for Austrian School graduate students. The Free Market applies
Austrian ideas to issues of government policy.

The
Mises Institute assists students and faculty at hundreds of colleges
and universities. We have a program for visiting fellows to complete
dissertations, and for visiting scholars to pursue new research, as
well as our major center for graduate students. At Auburn, the
Institute's Austrian Economics Workshop explores new areas of history,
theory, and policy, and the weekly colloquium brings students and
faculty together to apply Austrian thought within an interdisciplinary
context.

New
books on the Austrian School appear every few months, and Austrians are
writing for all the major scholarly journals. Misesian insights are
presented in hundreds of economics classrooms all over the country
(whereas just 20 years ago, no more than a dozen classrooms presented
them). Austrians are the rising stars in the profession, the economists
with the new ideas that attract students, the ones on the cutting edge
with a pro-market and anti-statist orientation.

Most of
these scholars have been cultivated through the Mises Institute's
academic conferences, publications, and teaching programs. With the
Institute backing the Austrian School, tradition and constructive
radicalism combine to create an attractive and intellectually vibrant
alternative to conventional thought.

The
future of Austrian economics is bright, which bodes well for the future
of liberty itself. For if we are to reverse the trends of statism in
this century, and reestablish a free market, the intellectual
foundation must be the Austrian School. That is why Austrian economics
matters.

---------------

Llewellyn H. Rockwell, Jr., (rockwell@mises.org) is the founder and president of the Ludwig von Mises Institute. This essay is based on a lecture he presented at the Heritage Foundation.

https://mises.org/etexts/why_ae.asp