Robert Murphy: What is Austrian Economics?

The Mises Institute is doing some great work in building up a comprehensive online university curriculum covering every aspect of Austrian economics. In this sample introductory lecture from the Mises Academy’s inaugural online course, “Understanding the Business Cycle,” Dr Robert P. Murphy attempts to answer the question, “What is Austrian Economics?”.

The subjects covered in this introductory lecture, after a brief introduction, include:

  • Methodological Individualism (starts at 1:45 minutes) — The basis of all economics should be based upon the individual person making discrete choices
  • Methodological Subjectivism (10:00 minutes) — The preferences behind those choices and how they determine the processes behind price formation
  • Market Process vs. Equilibrium Determination (17:00 minutes) — The Austrian need for entrepreneurial interaction in the market process and why other schools of economics entered the rival blind alley of mathematical determinism
  • Time Structure of Production (26:15 minutes) — The vital and almost unique inclusion of the passage of time in how Austrians view capital formation and structures of production, and how this builds towards the human act of final consumption
  • A Priori Deductive Laws (31:30 minutes) — The Misesian and subsequent Rothbardian tradition of building up economics from basic axioms, the primary one of which is that humans act
  • Why Austrian Economics Matters (39:15 minutes) — A brief exposition on why the Austrian school is seen by outsiders as being merely ideological, but why it really matters despite this criticism
  • Overview of the Mises-Hayek Trade Cycle Theory (44:00) — The view from 30,000 feet of the Austrian Business Cycle Theory (ABCT) and how this theory lies behind the booms and busts of the modern financial world

Materials recommended for further reading alongside the lecture series include the following two books, both of which are available online in their entirety:

Right at the end of his lecture, Dr Murphy also points towards the famous Hayek-Keynes rap video, which explains the entire dichotomy between Keynesianism and Austrianism in a mere seven minutes and thirty-three seconds. Fortunately, Dr Murphy’s reference in his lecture provides me with the great excuse to link to this video here:

For those with a few hours to spare, rather than seven minutes and thirty-three seconds, my own favourite and fuller introduction to the Austrian school is the six lecture series provided by Murray Rothbard on The History of Economic Thought:

  1. Ideology and Theories of History
  2. The Emergence of Communism
  3. The Pre-Austrians
  4. Menger and Böhm-Bawerk
  5. Mises and Austrian Economics
  6. Hayek and His Lamentable Contemporaries