The Austrian School of Economics: An Introduction

History of the Austrian School of Economics

The Austrian School of Economics: An Introduction
Ludwig M. Lachmann

Biographical remarks about Lachmann (1906-1990). Then, Lachmann describes Austrian economics as being subjectivism (individual human action), a certain attitude to time (the future is unknowable), and a distrust of macroeconomic entities (they exist, but Austrians look at macro as mechanistic).

Lachmann recommends Menger, Jevons and Walras De-homogenized by William Jaffe for comparisons of these three Austrians. Weiser formulated the principle of opportunity cost. Lachmann says that Bohm-Bawerk’s chief question was what is the origin and nature of the rate of interest. Bohm-Bawerk kept working on the theory of capital. Menger did not like his theory.

Hayek called 1904-1914 the Golden Decade of the Austrian School. Mises in 1912 wrote his book on the theory of money and credit. In the 1920s a new generation came forward. Around Mises were Hayek, Haberler, and Fritz Machlup. Lachmann was a student and later colleague of Hayek at the London School of Economics. Hayek was most critical of Keynes’ thesis.

Lachmann speaks of the years in the wilderness, during which only Mises’ Human Action was a bright light. Lachmann, speaking in 1977, thinks Austrians are reviving.

This lecture was 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.