Austrian economics and the political economy of freedom
Doctoral thesis, Book
Ebeling, Richard M.
- Publisher: Edward Elgar Publishing Ltd
Economics and Finance,
The following articles submitted in partial fulfillment of the requirements for the degree of PhD by published works attempt to restate, refine and extend various themes in the tradition of the Austrian School of Economics and their relationship to selected topics in political economy.\ud It is argued that two traditions developed out of the "marginal revolution" in economic theory, beginning in the 1870s: the Neo-Classical and Austrian approaches. In the Neo-Classical tradition, a theory of economic equilibrium is formulated on the basis of a "static" view of man and the market, in which \ud actors are assumed to have a "given" ends-means framework in which agents narrowly maximize to attain "optimal" results within their respective decisions and across individuals for determination of interpersonal equilibrium. The Austrians, on the other hand, developed a more dynamic process theory of \ud market activities based on a conception of man as an intentional being who creates his ends-means framework and initiates actions to improve his circumstances. The Austrian framework emphasized the role of time, uncertainty and imperfect knowledge, with a focus on the temporal-sequence of market interactions that may tend to bring about a pattern of interpersonal coordination of individual plans. It is also explained how the Classical Economists' concept of man and the market was much closer to the Austrian perspective than to that of the Neo-Classical Economists.\ud The Austrian approach is extended by showing a "phenomenological foundation" to Austrian Economics in the writings of Edmund Husserl and its influence on the methodological works of Ludwig von Mises. The sociological \ud contributions of Max Weber are shown to be the starting point for Mises' theory of "action," and how Weber's conception of the Ideal Type was adopted by Mises as a tool for understanding the process of expectations-formation in the market. The writings of Austrian sociologists, Alfred Schutz, are used to explain the reasoning behind the Austrian theory of action and the mental processes through which the social actors creatively imagine what becomes the endsmeans framework, which the Neo-Classical Economists assume are "given." Schutz's refinement of Weber's Ideal Typification schema is reformulated to explain the process through which individuals in the social and market arenas construct situational and personal ideal types that create the structures of intersubjective meaning enabling expectations-formation and the potential for interpersonal plan coordination.\ud Lastly, the Austrian theme of acting man and the market process are applied to the issues of economic calculation under socialism, problems with Neo-Classical assumptions concerning government intervention in the market economy and the limits of economic policy within the market order.