The austrian school It is a current of economic thought which was developed in Vienna in 1871, which is why it is also known as the Vienna school. This current of thought stands out from others of the time for its individualistic approach, which they call praxeology. The concept of praxeology is related to the logical methodology of human actions, in which one of its first statements affirms that the human being is a being of perfect rationality.
In this article you will find:
What is the origin of the Vienna School?
It is usually located in the year 1871 thanks to the publication of Carl Menger's Principles of Economics but some other experts consider the Vienna School as a continuation of trends like the Salamanca School.
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The Salamanca school is recognized for having liberal thoughts about economic theories, property advocates private, this school postulates like some before them the importance of private property for the optimal development of the Commerce.
What is the foundation of the Vienna School?
The main foundation of it is methodological individuality, which attributes each of the phenomena of society as a consequence of the behavior of individuals. In this way, as a foundation, they are in charge of categorically rejecting empiricism and the mathematical form as they used to see economic phenomena.
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From here the basic concepts of him start since for this economic school the irrefutable facts explain much of the laws of the economy which They start from social functioning and not the other way around, they also highlight that the macro economy and the micro economy are not two different things but the same phenomenon.
Other fundamentals
Another basis for which he was characterized was by his criticism of socialism, which is why this current of thought stood out for his theorem of the impossibility of socialism. The theorem on the socialist impossibility, manifests the impossibility on the part of the socialists to allocate resources in an efficient way, if not They know the value or the price, which allows to have knowledge about the valuations of the individuals, a fundamental aspect to manage the resources.
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First Wave and Outstanding Authors of the Austrian School
It refers to the first years or origins of the Vienna school, at its beginnings which occurred when the Austrian Empire was established, during this time there were many thinkers who contributed to it What:
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Carl menger
Known for his theories regarding economics even though he really was a lawyer, contributed largely during the first wave of the Vienna school with his theory of the value of subjective.
The subjective value theory maintains that the value of goods is given by the needs of individuals, who are the ones who move the economy through his economic decisions and from this he was able to describe the goods as things strictly useful to satisfy the needs human.
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Another contribution or way of thinking regarding the economy of Menger is to have separated what he considered essential goods or of first order, which are consumer goods and higher order goods, which satisfy human needs in a different way through of creating first-rate goods, in what he describes as a chain of valuation processes related to the subjective needs of people.
Economic goods
This theory, together with the theory of subjective value which we mentioned before, are 2 of the major contributions of Carl Menger to economic theory. In this sense, the author describes the goods as "Those for whom there is a need greater than the available supply" and non-economic goods are those like water or air, in which the supply actually exceeds the demand.
It could be said that non-economic goods are those resources that today we know as non-renewable. In this sense, Menger also made a note, referring to the fact that economic and non-economic goods can change according to supply and supply. demand, so perhaps a resource such as water can become an economic resource, as has been the case in times modern.
The Austrian school in the 20th century
The twentieth century was of great importance in what were economic theories, since the same situation that was lived was the ideal terrain to test different theories. After the Second World War ended for his rejection of statistics and the use of mathematics to carry out economic studies.
From these the Austrian school can be interpreted according to two currents of thought, the first having as one of its greatest exponents Ludwig von Mises, a critic of what he considered a flawed neoclassical methodology, and Friedrich Hayek, who on his part accepted much of the notions of that methodology. neoclassical.
Later and in modern times there have also been economists who have contributed to the thought and foundations of the Austrian school such as Anthony Carilli and Gregory Dempste.
