From Harry Landreth and David Collander, History of Economic Thought (4th ed., 2002), pp. 494-496: Until 1960 Austrian economics was considered part of the mainstream; but as neoclassical economics faded and as mainstream economics opted for formal model building, the Austrians reemerged as dissenters. ... These differences, while substantial, did not place Austrians out of the mainstream until the 1960s. But in the 1960s, with (1) the increasing formalization of economics; (2) the almost total dominance of the mainstream by general equilibrium theory; and (3) the increasing tendency for mainstream economics to see itself as a science in which truth is determined solely by model building and econometric testing, Austrian economics parted from the mainstream. Recent generations of what are called neo-Austrian economists, especially the students of Ludwig von Mises and Friedrich Hayek—Murray Rothbard, Israel Kirzner, and Ludwig Lachmann—contend that many of Menger’s chief insights have been lost. ...
Until recently, there were strong political overtones to in Austrian economics. It remains difficult to find an Austrian who is not a conservative; most simply assume the market is desirable and necessary for achievement of individual freedom. Many Austrians themselves, however, would characterize their political views not as “conservative” but as “radical libertarian” or “anti-statist.” They argue that such views follow naturally from a study of history. ...
Although many mainstream economists seem willing to grant the Austrians their acceptance on existing institutions and belief in the importance of uncertainty, which makes formal modeling and empirical work difficult, they argue that the Austrians (1) overemphasize the difficulties, (2) have not developed an acceptable alternative, and (3) have allowed value judgments to creep into their heuristic analysis.
