The Austrian School of Economics: An Introduction

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History of the Austrian School of Economics: Question and Answer Session

  • The Austrian School of Economics: An Introduction

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03/11/2005Ludwig M. Lachmann


Was George Stigler sympathetic to the Austrian school? Lachmann doesn’t think so because Stigler was a favorite student of Knight. Austrians should have dealt with Keynes, instead they quarreled with Knight.

What policies do Austrians pursue? Those that favor the market.

Is Milton Friedman an Austrian? Austrians agree with whatever Friedman says about the market, but not his methodology.

The Austrian policy for macroeconomics follows from knowing that interference in the market prevents some knowledge being revealed.

Hayek’s proposals for denationalizing money? L is still not sure how it would work.

Role of gold in monetary system? L says Mises was a great defender of gold standard. L says Austrians do not have in principle any problem with a fixed rate of money.

Austrians think that it is wrong in a market economy to speak of any distribution of wealth. The market is a distribution of wealth.

Austrian economics is simply not a natural science. It is not that that Austrians hate statistics, but they do not assume an unchanging world. Prediction is not possible with human subjectivity.

What is the proper role of government? Classical liberalism says there must be some state – a framework, but it should be confined to protecting property and contract. There is the problem of democracy where the markets distribute in one way and voters distribute in another.

Is Austrian methodology consistent with Popper’s Theory of Scientific Discovery? Yes. Predeterminism is not enough. There is the world of our objective mind which is accessible to us. It was Keynes’ view also.

Democracy vs the market? Do you believe that all men are rational? The future is unknowable but not unimaginable.


This question and answer session followed a lecture given to the Department of Economics of the University of Colorado on October 25th, 1977. Special thanks to Mr. Fred Glahe for his generous donation of this lecture audio to the Ludwig von Mises Institute.


Ludwig M. Lachmann

Ludwig Lachmann (1906–1990) was a German-born member of the Austrian School of economics. He studied at the London School of Economics in the 1930s, taught at the University of Wiwatersrand in South Africa, and wrote seminal material on Austrian capital theory.

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