History of the Austrian School of Economics

[This speech was delivered at the offices of the Mises Institute, September 14, 1999, the date on which

The number of inhabitants in a state depends on their means of subsistence. The means of subsistence depend on the method of cultivating the soil, and this method depends chiefly on the taste, desires, and manner of living of the property owners.

I hope that, in raising money for the Mises Institute by finishing the marathon, I will have enough inspiration to surmount the challenges I will face while running. My aim is to raise $1,000 for every mile that I run.

Part of the experience of reading Newsweek in the early 1960’s was a weekly column called "Business Tides."  It offered wide-ranging and insightful commentary on just about anything that had anything to do with the economy or with economics.

Capital and interest theory, and its relation to income, is a very complex area of economics. It is also one in which the Austrians have made major contributions, and these unravel current confusions.

Mises (1881–1973) is one of the sleeping giants of the 20th century. For many decades he was the leader of the Austrian School of economic and social thought but he is scarcely a household name, even among economists and classical liberals.

Schumpeter is properly assiduous about Smith. He obviously had total contempt for Smith, and for good reason. And he hates Ricardo — that's another great thing about Schumpeter. His hatred of Ricardo shines through.

Paul Krugman is despairing of late, because a growing number of mainstream economists are adopting (versions of) Austrian business-cycle theory. The most recent convert is Minneapolis Fed president Narayana Kocherlakota.

If we were to award a prize for "brilliancy" in the history of economic thought, it would surely go to Anne Robert Jacques Turgot, the baron de l'Aulne (1727–1781). His career in economics was brief but brilliant and in every way remarkable.

Mises was the premier Austrian economist of his generation, whose legacy reveals him to be the greatest economist of the 20th century. Almost singlehandedly, he kept the embers of free-market economics burning during the interwar years.