The Austrian School and Mathematics: Reconsidering Methods in Light of Complexity Economics

Abstract

This article reconsiders the Austrian school’s historical position regarding the role of mathematics in economics in light of complexity economics’ approach to this issue. It first shows the three typical objections to the traditional use of mathematics raised by Austrian economics. Secondly, it presents complexity economics’ critique of algebraic mathematics, which is employed in mainstream economics, and its proposal for using algorithmic mathematics and computation. Then, it analyzes the similarities between the Austrian and complexity economics positions and considers whether the alternative algorithmic method that complexity economics advocates is compatible with and valuable for Austrian economics. The article concludes that Austrian economics can use algorithmic mathematics to elaborate economic theory without contradicting its own methodology and that algorithmic models and simulations can in fact enlarge Austrian theories on the working and emergence of the market process.