What Is Austrian Economics?

I was recently invited to give a talk to a group of local investors about Austrian economics. The presentation ran about 2hrs w/ questions. Below is the slide show I shared, which I believe also has slide notes attached that explain the contents of each slide. The material, while lengthy, is not comprehensive. This is supposed to be a holistic flyover. Also, while the intended audience were investors, really only the last few slides pertain to things investors would want to know and the majority of the presentation should make sense to anyone interested in learning more about (Austrian) economics.

In preparing this presentation, I found two resources helpful. One is a “top 10” list of what Austrian economics is about according to Eamon Butler from the UK. The second was from an article I searched for which I think I found on Mises.org called “What is Austrian economics?” which I then distilled down to the summary concepts from the larger narrative of the article.

Eamon Butler

  1. Economics is about individuals (micro vs. macro)
  2. Economics is not like natural sciences (no experimental method; in economics cause is known, effect is unknown, in natural sciences effect is known, cause is unknown)
  3. Subjective value vs. objective value
  4. Prices communicate meaningful info about value and cost
  5. Competition is a process of entrepreneurial discovery, not deterministic perfection
  6. Private ownership essential to price formation and exchange (can not get prices without exchange, prices show us what is most valued versus least valued)
  7. Production is an entrepreneurial act that may result in malinvestment
  8. Money is not neutral and inflation distorts the economy
  9. Spontaneous order vs. central planning
  10. Govt intervention involves social guesswork and has real costs

What Is Austrian Economics?

  1. First job of an economist is to tell govt what it can’t do
  2. Methdology of the “thought experiment”
  3. Economics is not about amassing data, but verbalizing universal facts and exploring their logical implications
  4. “Marginalist revolution”
  5. methodological individualism; science of individual choice
  6. uses deductive logic
  7. emphasizes universal fact of time preference
  8. normal rate of profit = interest rate
  9. heterogenous capital w/ time dimension
  10. economic growth = capital intensitivity and longer (roundabout) process
  11. regression theorem; money originates in the market
  12. ABCT (application?)
  13. socialism permits no ownership and exchange of capital goods; creates calculational chaos
  14. deductive method; praxeology, logic of action
  15. monopoly theory; welfare & utility; theory of the state

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