From Chapter Six of David C. Colander’s principles-level Macroeconomics 5th ed., (McGraw Hill, 2004) is titled “Economic Growth, Business Cycles, Unemployment, and Inflation.” Appendix A to this chapter (pp. 157-59) is titled “Nonmainstream Approaches to Macro.” In addition to short introductory and concluding sections, Colander deals with the Austrians, the Post Keynesians, the Institutionalists, and the Radicals.
AUSTRIANSAustrian economists are economists who believe in the liberty of all individuals first and social gaols second. They oppose state intrusion into private property and private activities. Thay are not all economists from Austria; rather they are economists from anywhere who follow the ideas of Ludwig von Mises and Friedrich von Hayek, two economists who were from Austria. Austrian economists are sometimes classified as conservative, but they are more appropriately classified as libertarians... Consistent with their views, they are often willing to support what are sometimes considered radical ideas, such as legalizing addictive drugs or eliminating our current monetary system—ideas that conservative economists would oppose.
In macroeconomics, Austrian economists emphasize the uncertainty in the economy and the inability of a government controlled by self-interested politicians to undertake socially beneficial policy. Well-known Austrian macroeconomists include Murray Rothbard, Peter Boettke, and Mario Rizzo.One proposal of Austrian economists will give you a flavor of their approach. That proposal is to eliminate the Federal Reserve System and to establish a free market in money—a policy that would leave people free to use any money they want, and would significantly reduce banking regulation. In a sense, their proposal carries the Classical argument in favor of laissez-faire to its logiical conslusions. Why should the government have a monopoly of the money supply? Why shouldn’t people be free to use whatever money they desire, denominated in whatever unit they want? Why don’t we rely upon competition to prevent inflation? Why don’t we have a free market in money?
A sub-group of Austrian economists is public choice economists.They use the mainstream supply-and-demand approach, but apply it much more broadly than do mainstream economists. Specifically, they see government decisions as reflecting economic forces rather than attempts by government to do good. Well-known public choice economists include Gordon Tullock, James Buchanan, and Robert Tollison.
