Newspaper article The Christian Science Monitor
To `Austrian School' Economists, Robinson Crusoe Describes It Best These Free-Market Advocates Rely on Logic, Deductive Reasoning, and Colorful Metaphors
THE federal government should take economics lessons from Robinson Crusoe.
At least that's what a group of staunch free-market defenders concluded when they met in Claremont, Calif., recently. Their annual get-together is aimed at promoting the "Austrian school" of economics - primarily to graduate students in economics - and networking with fellow "Austrians." About 50 economists and 30 students attended the week-long conference.
These followers of the Austrian school of economics reject the empirical approach of mainstream economists; instead, they use examples such as Robinson Crusoe to explain certain principles.
In an age when most economists turn to calculus and statistics for answers, Austrian economists prefer to rely on logic and deductive reasoning, peppered with colorful metaphors. Followers say they practice economics that is literary, accessible, and relevant to the real world.
Carl Menger, an economist from the University of Vienna, founded the Austrian school in the 1870s. Though it soon sank into obscurity in Europe, its ideas were kept alive through the efforts of F.A. Hayek and Ludwig von Mises, both of whom taught in the United States and became the school's main contributors.
When Mr. Hayek won the Nobel Prize in Economics in 1974, the Austrian school received renewed attention. Since then, Austrian political thought has gained ground by influencing such organizations as the Cato Institute, a Washington-based think tank that actively promotes free-market ideas in conferences, seminars, and publications. Even Federal Reserve Board Chairman Alan Greenspan has given speeches leaning toward some of the Austrian's positions.
A leader of the Austrian movement, Murray Rothbard, an economics professor at the University of Nevada in Las Vegas, says he remembers when economics journals were literary. In the last 40 years, the field has become increasingly mathematical and abstract; today, these journals read more like their physics counterparts, he says. "It's just a lot of math completely removed from reality," Professor Rothbard says.
Followers of Austrian economics contend that the mainstream makes sweeping and unrealistic assumptions about people and prices to facilitate economic calculations. …