Some aspects of the relationship between the Freiburg School and the Austrian School

Abstract

This paper is about some aspects of the interre-lationship of the Freiburg School and the Austrian School. The relationships between these schools will be discussed in the field of econo-mic theory and economic policy. No attention will be paid to the similarities and differen-ces in the field of social phi-loso-phy and methodo-lo-gy. For the Frei-burg School we will concentrate on W. Eucken, F.A. Hayek and W. RA¶pke. For the Austrian School the following writers will be contem-plated: L. Mises and F.A. Hayek. Also the connection to Schumpeter will be discussed. In the case of Hayek there is a perso-nal union. The paper consists of the following sections:+ Eucken and the Austrian School. + RA¶pke and the Austrian School.+ Some closing remarks. The five authors who have got our special attention in trying to say something on the relationships between the Freiburg and the Austri-an School took different positions in economic theory and economic policy. Schumpeter and Mises belong to the same generation of the Austrian School. Schumpeter studied the relations between socialism, capitalism and democracry but obstained from formu-lating ideas on a policy to influence the developments he prophetized. Mises staunchly defended libera-lism and attacked the cen-trally administered economy and interventionism. He questi-oned whether the renewal of libera-lism (by e.g. Eucken, Hayek and RA¶pke), for which the founda-ti-ons were laid by Cannan, Knight and himself would avoid interventi-onism (i.e. interfe-rences in the economic process by direct controls). Eucken, Hayek and RA¶pke were looking for possibilities to influence developments. In principle the disagreement between the fundamental position of Mises and this triumvira-te may bedescribed as follows. In contrast to Mises they thought that their diagnosis of the crisis of society had to be followed by showing a way out of that crisis by the programmes of active policy they formulated. The crisis accor-ding to them was so deep and severe that they felt themsel-ves obliged to do their utmost to turn the tide. For that reason they thought active policies were neces-sary, with avoidance of centrallyadmi-nis-tered econo-mies and the kind of interventionism which Mises in their opinion with convincing arguments warnedagai-nst.J.E.L.code: B29, B31, P10, P51