Austrian Concept Research Articles

Saving government failure theory from itself: recasting political economy from an Austrian perspective

The economic approach to politics revolutionized the way scholars in economics and political science approached the study of political decision-making by introducing the possibility of government failure. However, the persistent and consistent application of neoclassical models of economics also seemed to suggest that once the full costs were accounted for, this failure was an illusion. This paper counters these arguments, typically associated with George Stigler, Gary Becker and Donald Wittman, by focusing on the underlying economic theory. We develop an alternative model of political economy grounded in the Austrian conception of the dynamic market process.

Austrian persistence? Capital-based business cycle theory and the dynamics of investment spending

Survey data are used to investigate the very long spending lags estimated in neo- classical studies of investment expenditures. Neoclassical investment theory has trouble ex- plaining the length of these lags. By recognizing the Austrian concept of the capital structure and applying it to the problem, the present paper explains the length of these lags as proceed- ing from interactions between types of capital. Austrian arguments stemming from Austrian business-cycle theory seem to be needed to explain these lags.

Empirical Evidence on the Austrian Business Cycle Theory

The Austrian business cycle theory suggests that a monetary shock disturbs relative prices, such as the term structure of interest rates, systematically altering profit rates across economic sectors. Resource use responds to those changes, generating a cyclical pattern of real income. The divergence of the interest rate structure, from the previous and unchanged time preferences, means that the expansion is unsustainable and must end in recession. Quarterly data for eight U.S. business cycles, 1950:1 through 1991:1 are standardized by time period and used to explore business cycle facts and relations between money, interest rates, capacity utilization and income. Results are consistent with the hypotheses of the Austrian theory of a business cycle caused by a monetary shock and propagated by relative price changes. The Austrian theory of the business cycle, as originally presented by Mises (1966, 1971) and Hayek (1967), implies several distinctive hypotheses about patterns of relative prices, the response of the income level and its composition, and the role of resource constraints. Business cycle theories demonstrate their power of explanation by hypothesis testing or by simulation in comparison to actual cycles. Since Burns and Mitchell (1946), "stylized facts" of cycles have become the behavior that needs to be explained. Austrian theory offers distinctive stylized facts about the cyclical behavior of real interest rates, changes in composition of capital structure, the relation of short-term to long-term interest rates, and the endogenous nature of expansion and contraction phases. Garrison (1986:449-450), Tullock (1988:74-76), and others have considered the empirical question of the explanatory power of the Austrian theory and whether the mechanism of price induced changes in the composition of the capital stock is sufficient in magnitude to account for the macroeconomic phenomenon of a business cycle. There is a clear need to consider how well the Austrian theory can explain observed cyclical behavior. There have been few empirical analyses of the Austrian theory, due to limited ability to express Austrian concepts in operational terms and to methodological opposition to empiri- cal testing of hypotheses. Mises (1966:56) claimed that "the impracticality of measurement is not due to the lack of technical methods for the establishment of measure. It is due to the absence of constant relations.... Statistical figures referring to economic events are his- torical data. They tell us what happened in a non-repeatable historical case." Within this methodology, empirical behavior could confirm or illustrate theory or characterize historical episodes, but would not be considered evidence in the evaluation of theory. The concepts of subjective economic behavior present widely recognized problems for measurement and

Working Backwards: Instrumental analysis as a policy discovery procedure

Following up on suggestions of Adolph Lowe, the paper draws on the work of Peirce, Polya and Michael Polanyi to elaborate the notion of Lowe's instrumental analysis as a policy discovery procedure. It is argued that such an interpretation of Lowe's instrumentalism may contribute to the formulation of effective practical policies. It is also argued in the paper that this interpretation throws light on some issues concerning markets and planning that relate to the debate on socialist calculation that has been revived in the name of the 'knowledge problem' by contemporary Austrian economists. In particular, it is argued that Lowe's Instrumentalism brings to the fore the role of discovery and creativity-which are central to Austrian conceptions of entrepreneurial activity in the market-in policy formulation. In this sense Lowe's work may be seen as an antecedent to more recent work in planning that critiques-and promotes nonessentialist alternatives to-optimal or rational planning.

Policy Innovation as a Discovery Procedure: Exploring the Tacit Fringes of the Policy Formulation Process

Following up on the suggestions of Adolph Lowe, the paper investigates the potential contribution of pragmaticist philosopher Charles Sanders Peirce's concept of retroduction (and especially Norwood Hanson's elaborations of that concept), mathematician George Polya's work on heuristics, physical chemist and philosopher of science Michael Polanyi's explorations of tacit knowledge, and sociologist C. Wright Mills' notion of The Sociological Imagination, to the elaboration of a methodology of economic policy innovation. Lowe's instrumental inference is thus reinterpreted as a policy discovery procedure, and the view is put forward that such an elaboration may contribute to the formulation of effective practical policies. It is also argued in the paper that this interpretation throws light on some issues concerning markets and planning that relate to the debate on socialist calculation that has been revived in the name of the knowledge problem by contemporary Austrian economists. In particular, it is argued that Lowe's Instrumentalism brings to the fore the role of discovery and creativity--which play a central role in Austrian conceptions of entrepreneurial activity in the market--in policy formulation. In this sense Lowe's work may be seen as an antecedent to more recent work in planning that critiques--and promotes nonessentialist alternatives to--optimal or rational planning.

The influence of Austrian humanism in Theodor Herzl's vision of a Jewish state

Theodor Herzl's thought was a product of an austrian political and humanist culture. His political values were formed within a multinational, cameralist tradition that at its best bred a tolerance for differing persons and cultures but isolated the private individual from a responsible role in his or her own governance. The problem of governmental power in relation to the members of its society became for Herzl a conundrum whose solution was a redistribution of that power downward. Herzl's depiction of the future Jewish state in his 1896 The Jewish State and in his 1902 novel Old-New Land offers the vision of a privatized society in which each citizen may eventually become a cooperative owner. An examination of Herzl's vision reveals a thread of Austrian humanistic concepts and values that have characterized social-economic thought in Austria since the Enlightenment.

A Neo-Austrian two-period multisector model of capital

In the seventies there have been various attempts to revive Austrian capital theory,1 which may be classified into three groups: (1) HICKS’ [20,22]2 approach has received most attention [8,9,10,12,16,23]. But HICKS is only so far a Neo-Austrian as he takes into consideration the time-consuming nature of capital production [10]. He does, however, not use the Austrian concepts of superiority of roundabout methods, of impatience and of the period of production. (2) To the second group belong TINTNER [33], VON WEIZSACKER [34,35,36], REETZ [31] and FEHL [11,12,13] who resume the concept of the period of production. But as proved by the great capital controversy of the thirties [26] this is a dubious tool for the analysis of non-steady state developments (see e.g. [30]). Furthermore WICKSELL [37], AKERMAN [1], V.STACKELBERG [32] and VON HAYEK [17] demonstrated the possibility of deriving the conclusions of the Austrian capital theory without this concept. (3) The autors of the third group employ superiority, roundaboutness and time preference to prove that the rate of interest is positive. JAKSCH [24,25] shows in a general linear multisector model that investment implies a positive rate of interest under certain rather strong conditions. Using a weak definition of superiority he is able to show that superiority follows from efficiency and roundaboutness.

Heilpädagogik, Hans Asperger

There is no English translation for the German word Heilpädagogik, yet we may define it as educational treatment of neuropsychopathologic disorders of children. The German school limits this activity field to mental retardation, whereas the Austrian concept comprises a far wider range. This is due to the fact that Vienna has played a leading traditional role in the research development of child psychopathology. Freud, Adler, Bühler and Economo had great influence not only on pediatric psychology, but on sociology and normal pedagogy.

Capital Theory in a System With No Agents Fixed in Quantity

Previous articleNext article No AccessCapital Theory in a System With No Agents Fixed in QuantityEverett E. HagenEverett E. Hagen Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of Political Economy Volume 50, Number 6Dec., 1942 Article DOIhttps://doi.org/10.1086/255965 Views: 3Total views on this site Citations: 2Citations are reported from Crossref PDF download Crossref reports the following articles citing this article:Peter Stauvermann Literatur, (Jan 1997): 147–161.https://doi.org/10.1007/978-3-322-99385-4_8 Sergio Rebelo Long-Run Policy Analysis and Long-Run Growth, Journal of Political Economy 99, no.33 (Oct 2015): 500–521.https://doi.org/10.1086/261764