Austrian Economics 101

Austrian Economics 101

Austrian Economics 101 Jonathan Poland

Austrian economics is a school of economic thought that originated in Austria in the late 19th century with Carl Menger, professor of political economy at the University of Vienna from 1873 to 1903. Later Fredrick Hayek, Ludwig von Mises, and Murray Rothbard would demonstrate the mastery Austrian style of analysis can have over today’s economy.

The theory is based on the idea that individuals, rather than governments or other large organizations, are the primary drivers of economic activity. Austrian economists believe that prices, wages, and other market signals reflect the underlying value of goods and services, and that these prices should be allowed to adjust freely in response to changes in supply and demand. They also place a strong emphasis on the role of entrepreneurship and innovation in driving economic growth. Austrian economics is often associated with classical liberalism and libertarianism, and it has influenced a number of economic theories and policies.

Some Axioms:

  • Human Action – All humans seek to improve their situation from their viewpoint.
  • Action Scarcity – The factors available for improving human’s situations are scarce.
  • Human Fallibility – Humans make mistakes.
  • Human Rationality – All humans are rational beings.
  • Action Time – All human actions take time.
  • Action Consequences – All human actions have consequences.
  • Action Choices – Humans choose those actions they believe will best improve their situation.
  • Action Ideas – The ideas human’s hold determine their actions.

Two important modern theorists in the Austrian school are Ludwig von Mises and Friedrich von Hayek. Mises received widespread attention from other economists in the 1920s with his challenge that socialism was totally impossible in a modern economy because of its lack of market prices, for him the indispensable means of rational resource allocation. Both Mises and Hayek have contributed significantly in molding the Austrian theory into an integrated whole. Their explanation of cyclical swings in business as resulting from uncontrolled credit expansion at the hands of government added another significant block to the Austrian structure.

Learn More
Cost Innovation Jonathan Poland

Cost Innovation

Cost innovation is the practice of finding ways to significantly improve value while reducing costs. This can be achieved through…

Forward Thinking Jonathan Poland

Forward Thinking

Forward thinking is the ability to anticipate and prepare for future events and trends in order to make informed and…

What is Design Risk? Jonathan Poland

What is Design Risk?

Design risk refers to the potential negative consequences that a business may face as a result of problems or issues…

Segregation of Duties Jonathan Poland

Segregation of Duties

Segregation of duties is a principle in internal control that aims to reduce the risk of fraud or errors by…

Tactical Risk Jonathan Poland

Tactical Risk

Tactical risk refers to the potential for losses due to changes in business conditions in real-time. Tactics differ from strategy…

Organizational Capital Jonathan Poland

Organizational Capital

Organizational capital refers to the intangible assets and resources within an organization that support its operations and enable it to…

What is Baseline? Jonathan Poland

What is Baseline?

A baseline is a reference point or starting point that represents the status or condition of something at a specific…

Experience Goods Jonathan Poland

Experience Goods

Experience goods are products or services that are consumed through an experiential or participatory process. They are characterized by their…

Sales Data Jonathan Poland

Sales Data

Sales data is a type of business intelligence that provides information about the performance of a company’s sales activities. This…

Search →

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress, a platform for building better assets, tackling global challenges, and advancing the greater good.

Key Bridge

People. Profit. Progress.

Business is the lifeblood of progress and you are the driving force regardless of where you fit in the value chain. People drive profit by bringing useful products and services to market. Profit drives progress by allowing the best ideas to emerge and the best investments to win.

This is the cycle of capital that moves the world forward and that’s why I started Key Bridge, a private membership for the pursuit of profit and progress, a platform for building better assets, tackling global challenges, and advancing the greater good.