AUSTRIAN ECONOMICS

INTRODUCTION

Austrian economists regard utilities as exceptional cases where regulation may be justified. The long term aim for a public utility should be to '...turn as much as possible of that industry into a private, competitive and unregulated industry'. In the short term this may mean a 'considerable role for regulation'. The economic decisions from which all economic phenomena derive are inherently personal and unpredictable. Value does not exist in things, but in the minds of the individuals who value them. Government intervention, and policy mistakes such as inflation, disrupt this highly complex market process and invariably produce perverse

Science of the economics

Only individuals choose: Man, with his purposes and plans, is the beginning of all economic analysis. Only individuals make choices; collective entities do not choose. The study of the market order is fundamentally about exchange behaviour and the institutions within which exchanges take place. The facts of the social sciences are what people believe and think: Unlike the physical sciences, the human sciences begin with the purposes and plans of individuals. In the human sciences, the facts of the world are what

Utility and costs are subjective: The focus on alternatives in choices leads to one of the defining concepts of the economic way of thinking: opportunity costs. Since the forgone action is, never taken, when one decides, one weighs the expected benefits of an activity against the expected benefits of alternative activities. The price system economizes on the information that people need to process in making their decisions. Private property in the means of production is a necessary condition for rational economic calculation.

The competitive market is a process of entrepreneurial discovery: Since competition is an activity, the entrepreneur has a huge role as the agent of change who prods and pulls markets in new directions. Money is non-neutral. The capital structure consists of heterogeneous goods that have multi-specific uses that must be aligned. Social institutions often are the result of human action, but not of human design.

RESEARCH METHODOLOGY

The leading features of the Austrian tradition include

methodological individualism, the origin of social institutions as the unintended consequences of human action, the salience of dynamic competition and entrepreneurial innovation in the marketplace, the subjective theory of value, recognition of the time factor in social and economic processes, and

The most distinctive feature and the one that has created the most problems for them in gaining acceptance in the mainstream of modern economics is the concept of praxeology. Praxeology rests on the fundamental axiom that individual human beings act, that is, on the primordial fact that individuals engage in conscious action towards chosen goals.

CRITICISMS
Some critics argue that the Austrians strict individualist method is too narrow, and that social patterns can be used to explain and predict human groups. Critics also argue that Austrians caricature their models, which are after all only abstractions. They also insist that Austrians are too quick to blame government intervention for every failing, and that free markets produce monopolies and other problems. Most criticism focuses round the deductive method of Mises, which mainstream economists regard as unscientific.

Critics argue that praxeology rejects the scientific method and the use of empirical data. Supporters argue that empirical data in and of itself cannot explain anything, which in turn implies that empirical data cannot falsify a theory.

CONCLUSION
Austrians accept that all human action is ultimately down to individuals, but that explanations based on broad cultural, economic, or historic trends do help our understanding. Many Austrians also believe that the deductive method needs to be checked against the hard evidence of real life; and that if we start from the idea of action that is untainted by theft, fraud, coercion and government, we will end up with equally unreal conclusions. To Austrians like Hayek, it seems pointless to reject any method other than deduction and any deviation from a purely conceptual ideal. Better to show that, despite all their inevitable taints, the advantages of markets outweigh their disadvantages.