A Starting Point for Studying Austrian Economics
By Turbo - @TurboHodl
Austrian Economics is an ever-growing school of thought, and Bitcoin it is the catalyst that introduces many to it. Whether someone loves or hates Bitcoin, the discovery itself begs the question “what is money?” This question sets in motion a domino effect of many other questions about the economy, the state, and social order. For many, this paradigm shift feels chaotic, because everything that used to make sense about the world no longer does. When the legitimacy of money, media, and politicians becomes blurred, Austrian Economics acts as a set of glasses to understand reality and see clearly. This system of thinking is not to be a framework for understanding the morality of any institution or action, but as a methodical way to explain how the world works.
This step toward further realization of truth can be a daunting task. Whether someone understands little or much about how the market works, relearning economics can be an intimidating undertaking. There are countless books, articles, podcast, and videos to watch about Austrian Economics – where do you begin? When I started to do my own research, I ran into this problem and did not know what was best or who to listen to. I reached out to people, but the few resources they gave me still left me confused. The goal of this post is not to present a deep understanding of Austrian Economics but to help people get to the starting line and headed in the right direction.
Any economic school of thought is an approach that desires to explain how the world works. For more information on the similarities and differences, Wikipedia lists 29 schools of economic thought in total, and the Mises Institute created a graph that compares nine prominent schools of economic thought.
A basic definition of Austrian Economics is a system of thinking that focuses on theory rather than history or data. It concentrates on how individuals will make decisions based on the subjective value they find in any given product, service, etc. These are seven key terms and ideas to begin with:
o Methodological Individualism – All social phenomenon in society come from individual action (praxeology).
o Dynamic Analysis – Examining the world the way it is – based in reality – without using aggregates, charts, or models.
o Reasoning to Achieve Ends – Looking at how to achieve a goal rather than scientific rationalism. An individual will act on what they want or need in any given moment. There is no need for scientific and mathematical equations to calculate what a given outcome will be.
o Opportunity Cost – The foregoing of potential returns by choosing a different option.
o Subjective Value – The value of a good is determined by the importance of acting individual places on a good for the achievement of the desired ends.
o Marginal Utility – The benefit gained from consuming one additional product or service.
o Alternative Costs – Costs that attract resources away from their next most beneficial use.
Again, start here to understand Austrian Economics, but do not take this as a complete explanation. Perhaps in a future post I will enhance on these definitions, but even a simple understanding of them creates a solid foundation to build on. To continue learning, read the following recommended resources to develop these ideas further. While not extensive, this list of resources will be great tools in the exploration of Austrian Economics.
For beginners:
o An Introduction to Austrian Economics (Releases 12/27) – Orange Pill Addicts Podcast with Stephan Livera
o Intro to Bitcoin Austrian Thought – SLP71 Stephan Livera
o An Introduction to Austrian Economics with Israel Kirzner (Youtube)
o An Introduction to Austrian Economics by Thomas C. Taylor (Free PDF book at Mises.org)
o Visit Mises.org for free and helpful resources
For those ready to graduate to the next level:
o Principles of Economics by Carl Menger (Free PDF book at Mises.org)
o Natural Value (Free PDF book at Archive.org) and Social Economics(Free PDF book at Mises.org) by Friedrich von Wieser
o Capital and Interest (Free PDF book at Mises.org) and The Positive Theory of Capital (Free PDF book at Mises.org) by Eugen von Bohm-Bawerk
o Human Action (Free PDF book at Mises.org) by Ludwig von Mises
o The Road to Serfdom (Free PDF at Archive.org) by Friedrich von Hayek
o Making Economic Sense (Free PDF at Mises.org) by Murray N. Rothbard
o Basic Economics by Thomas Sowell (Free PDF book at Academia.edu)
This list is not exhaustive, but they all are great resources that can help digest the evolution of Austrian thought, which Menger kicked off in 1871. If there is one author that makes better since than others, then read more of their works – all of them are great thinkers! Furthermore, find most of these authors’ works for free at Mises.org. The rabbit hole is never ending, so do not be discouraged and continue to ask questions.
Sources:
[1] “Intro to Austrian Economics W/ Willem Cornax.” YouTube, Bitcoin Magazine, 21 Oct. 2022, https://youtu.be/myOAt1454a0.
[2] Taylor, Thomas C. “An Introduction to Austrian Economics.” Mises Institute, 18 Aug. 2014, https://mises.org/library/introduction-austrian-economics.
Originally published on The Weekly Dose at orangepilladdicts.com on December 22, 2022.
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