Austrian Economics: An Annotated Bibliography, Part I: The Austrian Economists

Introductory Readings

Friedrich von Hayek, “Economic Thought: The Austrian School,” in the International Encyclopedia of the Social Sciences, ed. by David Sills (New York: Macmillan Co., 1968) vol. 4, pp. 458-462.

Ludwig M. Lachmann, “The Significance of the Austrian School of Economics in the History of Ideas,” in Capital, Expectations and the Market Process, ed. by Walter E. Grinder (Kansas City: Sheed, Andrews and McMeel, 1977) pp. 45-64.

Ludwig von Mises, The Historical Setting of the Austrian School of Economics (New Rochelle: Arlington House, 1969).

Emil Kauder, A History of Marginal Utility Theory (Princeton University Press, 1965).

Henry Seager, “Economics at Berlin and Vienna,” Labor and Other Essays (Freeport: Books for Libraries Press, 1968) pp. 1-29.

In the history of economic thought various schools are distinguishable by the common core concepts or ideas that can be seen as binding the contributions of a group of writers into one tradition. In the case of the Austrian School this is exemplified by: a persistent adherence to methodological individualism and methodological subjectivism, and an emphasis on their application to a variety of economic problems. These applications have extended from the logic of human action and choice to the understanding of the spontaneous formation of market and social orders, and the processes of change, adjustment and coordination in alternative institutional settings.

During the fifty years following 1870, the Austrian School economists focused upon a restatement of the theory of value in terms of the subjective valuations of market actors on the basis of the marginal principle. In opposition to the Labor Theory of Value of the Classical economists, they argued that value was not an intrinsic or objective quality embedded in an object, but rather value was bestowed upon an object by an evaluating mind. And, the Austrians said, it was an evaluation made at the “margin” of decision-making, i.e., the importance in terms of utility of the next (last) unit of a good that could be obtained or would have to be given up in an act of choice and exchange. The Austrians spun out the wider implications of the marginal concept by applying the theory to the explanation of capital and interest, and wages and rent. While the Austrians shared the marginal concept with the other founders of neo-classical economics, William Stanley Jevons and Leon Walras, the Austrians’ unique and distinctive twist was an emphasis on the wider aspects of a subjectivist approach, specifically the subjectivism of knowledge, perceptions and intention from the point-of-view of the market actors. This led the Austrians to an interest in the market processes leading to an equilibrium rather than a mere specification of the conditions requisite for a state of equilibrium to exist.

In the twenty years following World War I the Austrian economists continued their investigations into what has usually been called economic dynamics, by analyzing the role of time in economic processes; by applying the subjectivist-marginalist approach to monetary phenomena; by studying business cycles in terms of a micro analysis of sequential change, error, and adjustment in the wake of monetary disturbances; and through penetrating critiques of the meaning and significance of “equilibrium” in the body of economic theory.

During the thirty years following the 1936 publication of Keynes’ The General Theory, however, the Austrian School and its approach were eclipsed by the new interest in macroeconomics. Rather than focusing on causal relationships connecting individual transactors and markets, the analysis was shifted to the study of statistically-derived aggregate magnitudes, on the basis of which functional correlations were to be established for the purpose of both furthering theoretical understanding and assisting the implementation of stabilization policies. At the same time, microeconomic theory, under the influence of Walrasian and Paretian economics, was reduced to dry, mathematical formalism that returned a large portion of economic analysis to a study of states of equilibrium rather than processes of markets. In such an intellectual climate, the Austrian School was relegated by the economics profession to a small corner of the history of economic thought and was considered to represent an outdated stage of scientific development.

But over the last fifteen years doubts and uncertainties concerning the corpus of economics have resulted in a radical change in how the economics profession views the Austrian School. Having reached an analytical dead-end in their formulation of ever-more esoteric general equilibrium models, and experiencing growing concerns about the microeconomic foundations of a wobbly macroeconomics, a sizable number of economists has “rediscovered” the Austrian School. Furthermore, a new generation of Austrian School economists has made a conscious effort to pick up and advance the analytical strands that were severed during the Keynesian episode.

Historical Roots

A comprehensive history of the Austrian School and its members has yet to be written. The interested student, therefore, must draw from several sources to follow the School’s evolution and development. Brief histories can be found in Friedrich von Wieser’s “The Austrian School of Economics,” in Henry Higgs, ed., Palgraves Dictionary of Political Economy, vol. I (London: Macmillan and Co., Ltd., 1926) pp. 814-818; and Friedrich A. von Hayek’s “Economic Thought: The Austrian School,” in David Sills, ed., International Encyclopedia of the Social Sciences (New York: Macmillan and Co., 1968) vol. 4, pp. 458-462.

The closest to a history of the Austrian School is Emil Kauder, A History of Marginal Utility Theory (Princeton University Press, 1965). Though far from comprehensive either in terms of content or interpretation, Kauder relates the Austrians to the development of utility theory over the centuries, discusses the specific contributions of the Austrians, and compares them with other marginalist schools in this century. Equally useful is R. S. Howey, The Rise of the Marginal Utility School, 1870-1889 (Lawrence: University of Kansas Press, 1960); as the title suggests it covers only the earliest stages of the period and discusses the Austrians only in the context of the marginal concept, contrasting the Austrian formulation with that of others in the era. The Austrian chapters, however, contain a wealth of background material, though the author’s interpretation and understanding of the Austrian position can at times be challenged. A fascinating account of life among the Austrians in the early 1890s was written by Henry Seager, who spent a semester at the University of Vienna in 1892-1893: “Economics at Berlin and Vienna,” Journal of Political Economy, vol. I (March, 1893) pp. 236-262, reprinted in Seager, Labor and Other Essays [1931] (Freeport: Books for Libraries Press, 1968) pp. 1-29.

The particular social and intellectual environment in which the Austrian School arose in the Austro-Hungarian Empire is discussed by Ludwig von Mises in The Historical Setting of the Austrian School of Economics (New Rochelle: Arlington House, 1969). For the suggestion that socioeconomic position may have played a role in the emergence and form of the early Austrian School, see Erich Streissler, “Structural Economic Thought: On the Significance of the Austrian School Today,” Zeitschrift für Nationalökonomie, Bd. 28 (1968) pp. 256-266. William M. Johnston held the view that Austrian sympathy for non-intervention in the market place originated with the impartiality which had been traditionally associated with the Josephenist bureaucracy, in “Economists as Bureaucrats,” in The Austrian Mind: An Intellectual and Social History, 1848-1938 (Berkeley: University of California Press, 1972) pp.76-87. Nikolai Bukharin, on the other hand, accused the Austrian School of protecting the vested interests of parasitic rentiers in his Economic Theory of the Leisure Class (New York: Monthly Review Press, 1972).

The relationships between the Austrians and on one hand, the Classical economists who preceded them, and on the other, the mathematical economists of the contemporaneous Laussane School, are concisely explained by Ludwig M. Lachmann in “The Significance of the Austrian School of Economics in the History of Ideas,” [1966] in Capital, Expectations and the Market Process, ed. by Walter E. Grinder (Kansas City: Sheed Andrews and McMeel, Inc., 1977) pp. 45-64.

There were important differences between the three marginalist co-founders. In particular, Menger placed a unique emphasis on the process of market adjustment rather than on the end-state equilibrium of that process. These differences are brought out by William Jaffé, in “Menger, Jevons and Walras De-Homogenized,” Economic Enquiry, vol. 14 (Dec., 1976) pp. 511-524; and Erich Streissler, “To What Extent Was the Austrian School Marginalist?” in R. D. Collison, Black, A. W. Coats and Craufurd D. W. Goodwin, eds., The Marginalist Revolution in Economics, Interpretation and Evaluation (Durham: Duke University Press, 1973) pp. 160-175.

Menger: the Founder

The Austrian School began with Carl Menger and the publication of his Principles of Economics [1871] (New York: New York University Press, 1981). This and the only other complete book he published, Problems of Economics and Sociology [1883] (Urbana: University of Illinois Press, 1963), have served as the seminal core from which all later developments of the School ultimately stem. How the young Menger, while a civil servant reporting on price movements, was led to the subjective theory of value by noticing the discrepancy between classical doctrine and the actual formation of prices is told by Friedrich von Wieser, “Carl Menger,” Palgraves Dictionary of Political Economy, pp. 923-924.

Numerous essays have been written about Menger and his place in the history of economic thought. The ones most worthwhile consulting are: Friedrich A. Hayek, “Carl Menger,” Economica (1934), and reprinted as the introduction to the New York University Press edition of Menger’s Principles; George Stigler, “The Economics of Carl Menger,” Journal of Political Economy, vol. 45 (April, 1937) pp. 229-250, reprinted in Production and Distribution Theories, The Formative Years (New York: Macmillan Co., 1941) pp. 137-157; and Joseph A. Schumpeter, “Carl Menger, 1840-1921,” in Ten Great Economists (New York: Oxford University Press, 1951) pp. 80-90. For a less enthusiastic interpretation of Menger, see Frank H. Knight’s “Introduction” to the first English edition of Menger’s Principles (Glencoe: The Free Press, 1950) pp. 9-35. Henri-Simon Bloch, “Carl Menger: The Founder of the Austrian School” Journal of Political Economy vol. 48 (June, 1940) pp. 428-433, emphasizes what he sees as the similarities between Menger, Jevons and Walras as well as drawing attention to Menger’s methodological writings. And Knut Wicksell, “Carl Menger” [1921] in Selected Papers on Economic Theory, Erik Lindahl, ed. (London: George Allen & Unwin, 1958) pp. 186-192, points out the revolutionary character of Menger’s work.

Böhm-Bawerk and Wieser

If Menger was the founder of the School, its development and international recognition was due to the efforts of two young followers, Eugen von Böhm-Bawerk and Friedrich von Wieser. As students together they discovered Menger’s Principles and immediately appreciated its importance.

Böhm-Bawerk’s contribution centered on the careful working out of an Austrian theory of Capital and Interest, 3 vols. (South Holland: Libertarian Press, 1959).

Embedded in volume two, The Positive Theory of Capital, is an elaborate and detailed discussion of the subjectivist basis of value and price, pp. 121-256. Also useful as background on the Austrians and their approach to value theory are Böhm-Bawerk’s articles, “The Austrian Economists” [1891] and “The Ultimate Standard of Value” [1894] reprinted in Shorter Classics of Böhm-Bawerk (South Holland: Libertarian Press, 1962).

Joseph Schumpeter includes an extended and very complimentary evaluation of Böhm-Bawerk’s works in Ten Great Economists, pp. 143-190. For a more critical discussion see George Stigler’s Production and Distribution Theories, pp. 179-227. Böhm-Bawerk’s participation in Austro-Hungarian public life is briefly discussed in Friedrich von Wieser’s “Eugen von Böhm-Bawerk,” Palgraves Dictionary of Political Economy, pp. 825-826.

Bohm-Bawerk’s policies as Minister of Finance of Austria at the turn of the century are explained in some detail by Alexander Gerschenkron in An Economic Spurt That Failed (Princeton: Princeton University Press, 1977) pp. 85-127, where the author focuses on what he sees as the detrimental consequences of Böhm-Bawerk’s “fiscal conservativism.”

Wieser’s two principal works were Natural Value [1889] (New York: Augustus M. Kelley, 1971) and Social Economics [1914] (New York: Augustus M. Kelley, 1967), the latter being the only systematic treatise published by a member of the Austrian School before World War I.

Wieser’s two fundamental contributions were the concept of opportunity cost and the theory of imputation, i.e., the determination of the distributional shares of the factors of production. Wieser twice defended the Austrian approach to value, cost, and price in English; “The Austrian School and the Theory of Value,” Economic Journal vol. 1 (March, 1891) pp. 108-121, and “The Theory of Value,” Annals of the American Academy of Political and Social Science, vol. 2 (March, 1892) pp. 24-52.

W. L. Valk contrasted Wieser’s imputation theory with John Bates Clark’s marginal productivity theory in The Principles of Wages (London: P. S. King & Son, Ltd., 1928). A critical analysis of Wieser’s approach is offered in George Stigler, Production and Distribution Theories, pp. 158-178. For a more favorable interpretation see Wesley C. Mitchell, “Wieser’s Theory of Social Economics,” [1915] in The Backward Art of Spending Money [1937] (New York: Augustus M. Kelley, 1950) pp. 225-257. A summary of Wieser’s life and work can be found in Friedrich A. Hayek, “Hayek on Wieser,” [1926] in Henry William Spiegel, The Development of Economic Thought (New York: John Wiley & Sons, Inc., 1952) pp. 555-567; Schumpeter, “Friedrich von Wieser, 1851-1926,” in Ten Great Economists, pp. 298-301; and Oskar Morgenstern, “Friedrich von Wieser, 1851-1926,” [1927] in Selected Economic Writings of Oskar Morgenstern, ed. by Andrew Schotter (New York: New York University Press, 1976) pp. 481-485. Also worth consulting is Hans Mayer, “Friedrich Freiherr von Wieser,” Neue Österreich Biographie, Bd. 6 (Wien: Amalthea-Verlag, 1929) which also contains a complete bibliography of Wieser’s writings.

While Menger, Böhm-Bawerk and Wieser are commonly regarded as the late nineteenth-century giants of the Austrian School, there were a number of minor figures as well. A brief summary of them and their works can be found in Howey’s The Rise of the Marginal Utility School, 1870-1889, pp. 161-172. Amplifying Howey’s discussion are reviews by Henry Seager of Eugen von Philippovich, Grundriss der politischen Oekonomie in Annals of the American Academy of Political and Social Science, vol. 4 (July, 1894) pp. 168-179; by Edmund J. James of Emil Sax, Grundlegung der theortischen Staatswirtschaft in Political Science Quarterly vol. 5 (March, 1890) pp. 166-169; and by Henry Raymond Mussey of Franz Čuhel, Zur Theorie von den Bedürf-nissen in Political Science Quarterly, vol. 24 (June, 1909) pp. 323-325.

Two excellent summaries of the Austrian theory of value, cost, and price as it was presented in the writings of these early Austrians can be found in James Bonar, “The Austrian Economists and Their View of Value,” Quarterly Journal of Economics, vol. 3 (Oct., 1888) pp. 1-31; and William Smart, An Introduction to the Theory of Value, Along the Lines of Menger, Wieser and Böhm-Bawerk [1891] (New York: Augustus M. Kelley, 1965).

The Interwar Period

The Austrian School, while maintaining certain fundamental conceptions in common, broke into two branches in the interwar period. Some aspects of this division are discussed in an article critical of the Austrian approach in general by Alan R. Sweezy, “The Interpretation of Subjective Value Theory in the Writing of the Austrian Economists,” Review of Economic Studies, vol. 1 (1934) pp. 176-185.

One branch of the Austrian School transformed economics into a formal analysis of the allocation of given means for the satisfaction of given ends which were ranked in order of importance. The basis for this formulation was Hans Mayer’s psychological “Law of the Periodic Recurrence of Wants,” and from this “law” an Austrian theory of consumption-period planning was constructed. The groundwork can be found in Mayer, “Untersuchung zu dem Grundgesetz der Wirtschaftlichen Wirtrechnung,” Zeitschrift für Volkswirtschaft und Sozialpolitik, Bd. 2 (1922) pp. 1-23; and Mayer, Bedürf-nis,” Handwörterbuch der Staatswissenschaften, Bd. 2 (Jena: Gustav Fischer, 1924) pp. 450-456; and recapitulated in Mayer, “Zur Frage der Rechenbarkeit des Subjektiven Wertes,” in Wirtschaftstheorie und Wirtschaftspolitik, Festschrift für Alfred Amonn, ed. by Valentin F. Wagner and Fritz Marbach (Bern: Francke Verlag, 1953) pp. 57-78.

Mayer’s approach was adopted by Leo Schönfeld in his Grenznutzen und Wirtschaftrechnung (Wien: Manz’sche Verlags-und Universitäts-Buchhandlung, 1924); summarized by Paul N. Rosenstein-Rodan, “Marginal Utility,” [1927] International Economic Papers vol. 10 (1960) pp. 82-83 and Rosenstein-Rodan, “The Role of Time in Economic Theory,” Economica, vol. 1 (Feb., 1934) pp. 78-84; and extended by Oskar Morgenstern, “The Time Moment in Value Theory,” [1935] in Selected Economic Writings of Oskar Morgenstern, pp. 151-167. On Hans Mayer, the reader should consult Alexander Mahr, “Hans Mayer––Leben und Werk,” Zeitschrift für Nationalökonomie, Bd. 16 (March, 1956) pp. 3-16; and Wilhelm Weber, “Hans Mayer,” Handwörterbuch der Sozialwissenschaft, Bd. 7 (Stuttgart: Gustav Fischer, 1961) pp. 364-365. On Schönfeld see Hans Mayer, “Leo Illy (Schönfeld),” Zeitschrift für Nationalökonomie, Bd. 14 (Oct., 1953) pp. 1-3.

The other branch of the Austrian School drew a sharp line between economics and psychology, viewing economics as a purely formal and logical analysis of action and choice. The non-psychological formulation in Richard Strigl’s Die ökonomischen Kategorien und die Organisation der Wirtschaft (Jena: Gustav Fischer, 1923) was, however, analogous to Mayer’s, i.e., an analysis of the allocation of scarce given means among competing given ends, but in which the psychological state of the individual and the social and technological circumstances under which the allocation was made were “given” datum within which the ends-means framework applied. On Strigl, see, F. A. Hayek, “Richard von Strigl,” Economic Journal vol. 54 (June-Sept., 1945) pp. 284-286.

Ludwig von Mises

The leading and best-known member of this second branch of the Austrian School was Ludwig von Mises. Mises’ formulation was of a more dynamic character, in that he adopted Max Weber’s concept of “meaningful” behavior as purposeful or intentional conduct in which an individual initiated action on the basis of his subjective interpretation of circumstances. Rather than taking the ends and means as given, “purposeful conduct” was a broader concept that analyzed the logical process by which the individual constructed an ends-means framework within which economizing then occurred. This Misesian view emerged in a series of articles published as Epistemological Problems of Economics [1933] (New York: New York University Press, 1981) and was restated in a more complete and refined form in Human Action, A Treatise on Economics [1949] (Chicago: Contemporary Books, 3rd revised ed., 1966), Theory and History [1957] (New Rochelle: Arlington House, 1969), and The Ultimate Foundation of Economic Science [1962] (Kansas City: Sheed Andrews and McMeel, 1978). Mises viewed his other writings on monetary theory, comparative economic systems, and the market process as “applications” of his concept of action. A complete bibliography of Mises’ works can be found in Bettina Bien, The Works of Ludwig von Mises (Irvington: Foundation for Economic Education, 1969).

Mises explains his intellectual evolution in Ludwig von Mises’ Notes and Recollections (South Holland: Libertarian Press, 1978), originally written in 1940 shortly after he arrived in the United States from Europe. A useful, though brief, summary of Mises’ contributions can be found in Murray N. Rothbard, “The Essential Von Mises,” an appendix in Mises, Planning for Freedom (South Holland: Libertarian Press, 4th ed., 1980) pp. 234-270. Mises’ position vis-a-vis the development of economics as a science is analyzed by Israel M. Kirzner, The Economic Point of View [1960] (Kansas City: Sheed and Ward, Inc., 1976).

Extensive discussions of Mises’ writings can also be found in several Festschriften in his honor: Mary Sennholz, ed., On Freedom and Free Enterprise (Princeton: D. Van Nostrand, Co., Inc., 1956); Toward Liberty (Menlo Park: Institute for Humane Studies, 1971); Lawrence S. Moss, ed., The Economics of Ludwig von Mises (Kansas City: Sheed and Ward, Inc., 1976); Homage to Mises (Hillsdale: Hillsdale College, 1981); “Ludwig von Mises—seine Ideen und seine Wirkung,” Wirtschaftspolitische Blätter, Bd. 28 (Fall, 1981); Israel M. Kirzner, ed., Method, Process and Austrian Economics (Lexington: Lexington Books, 1982). Finally, a glimpse of the personal side of Mises can be found in Margit von Mises, My Years with Ludwig von Mises (New Rochelle: Arlington House, 1976).

In the Vienna of the 1920s and early 1930s, Mises’ university and private seminars were the catalyst for a new generation of Austrian economists. Among them were such scholars as Gottfried Haberler, Friedrich A. von Hayek, Felix Kaufman, Fritz Machlup, Oskar Morgenstern, Paul N. Rosenstein-Rodan, Alfred Schütz and Richard von Strigl. The importance of the seminars is outlined in Gottfried Haberler, “Mises’ Private Seminar,” Wirtschaftspolitische Blätter, vol. 28 (Fall, 1981) pp. 121-126, also an earlier version reprinted in Mises’ Planning for Freedom, pp. 276-278; and the contributions of Friedrich A. Hayek and Fritz Machlup in Tribute to Mises, The Mont Pelerin Society (Kent: Quadrangle Publications, Ltd., 1974) pp. 2-7 & 10-16.

Many of the strands of Mises’ formulation of Austrian economics have been continued by his former student, the 1974 Nobel Laureate, Friedrich A. von Hayek. Hayek’s voluminous and important contributions will be discussed in detail in later parts of this series. Summaries and evaluations of various aspects of Hayek’s work are now available in Gerald P. O’Driscoll, Economics as a Coordination Problem, The Contributions of Friedrich A. Hayek (Kansas City: Sheed, Andrews & McMeel, 1977); Norman P. Barry, Hayek’s Social and Economic Philosophy (London: Macmillan Press, Ltd., 1979); G. L. S. Shackle, “F. A. Hayek, 1899-” in D. P. O’Brien and John R. Presley, ed., Pioneers of Modern Economics (Totowa: Barnes and Noble Books, 1981) pp. 234-261; and Fritz Machlup, ed., Essays on Hayek (New York: New York University Press, 1976). The particular contributions by other members of the interwar Austrian School will also be mentioned in the relevant sections of future segments of this bibliography.

The arrival of Keynesian economics eclipsed the Austrian School for almost three decades with only Ludwig von Mises, Friedrich von Hayek, and Ludwig M. Lachmann consciously continuing the tradition in their writings.

Ludwig M. Lachmann was a student of Hayek’s at the London School of Economics in the early 1930s; his Austrian approach is presented in a series of essays now collected as Capital, Expectations and the Market Process, ed. by Walter E. Grinder (Kansas City: Sheed, Andrews and McMeel, 1977) and in his book, Capital and Its Structure [1956] (Kansas City: Sheed, Andrews and McMeel, 1978). For an intellectual biography of Lachmann, see the introduction to Capital, Expectations and the Market Process by Walter E. Grinder, pp. 3-24.

After World War II, a revival of the Austrian School emerged from Mises’ seminar at New York University in the 1950s and 1960s, with the two most prominent figures being Israel M. Kirzner, Market Theory and the Price System (Princeton: D. Van Nostrand, Co., Inc., 1963) and Competition and Entrepreneurship (Chicago: University of Chicago Press, 1973), and Murray N. Rothbard, Man, Economy and State, 2 vols., [1962] (Los Angeles: Nash Publishing Co., 1970) and Toward a Reconstruction of Utility and Welfare Economics [1956] (New York: Center for Libertarian Studies, 1977).

The extent of the growing interest in the Austrian tradition is exemplified by a series of volumes that have appeared during the last decade devoted to exploring its various themes; among them, Sir John Hicks and Wilhelm Weber, ed., Carl Menger and the Austrian School of Economics (Oxford: Oxford University Press, 1973); Edwin G. Dolan, ed., The Foundations of Modern Austrian Economics (Kansas City: Sheed and Ward, Inc., 1976); Louis Spadaro, ed., New Directions in Austrian Economics (Kansas City: Sheed Andrews & McMeel, 1978); a series of articles on “Carl Menger and Austrian Economics,” in the Atlantic Economic Journal, vol. VI, no. 3 (Sept., 1978); Mario J. Rizzo, ed., Time, Uncertainty and Disequilibrium, Exploration of Austrian Themes (Lexington: Lexington Books, 1979); Thomas C. Taylor, The Fundamentals of Austrian Economics (London: Adam Smith Institute, 1980); and Alex H. Shand, Subjectivist Economics, The New Austrian School (Exeter: The Pica Press, 1981).

In the next issue of the HSR we shall begin to take up the substance of the Vienna tradition by considering the methodology of the Austrian School.

(Editor’s note: There are two universities that offer programs in Austrian Economics. The first is headed by Professor Israel M. Kirzner at New York University. Inquiries about the program should be addressed to Professor Kirzner, Department of Economics, New York University, 8 Washington Place, Room 700, New York, NY 10003. The second is at George Mason University, The Center for the Study of Market Processes, directed by Professor Richard Fink. The Center publishes a newsletter, Market Process, which is free upon request from The Center for Market Processes, Department of Economics, George Mason University, 4400 University Drive, Fairfax, VA 22030.)