Truth and Liberty
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An Introduction to and Short Course in Austrian Economics
Why Is Economics Important?
Quite simply, because...
Individual liberty and free markets will lead to the most prosperous, wealthiest, fastest-growing society possible.
This is the conclusion of the Austrian School of Economics.
Although individualism, liberty and libertarian political viewpoints can be advocated for using philosophical and ethical arguments, this profound truth is perhaps the greatest "selling point" for individual liberty.
If you studied economics at school, college or university, you probably didn't learn about the Austrian School or their theories. Most of what is taught in educational establishments is Keynesian, Monetarist, Marxist, Neo-Classical or some other School of Economics (hereafter referred to as 'mainstream' economics).
Almost all educational establishments are controlled, either directly or indirectly, by the government. It is in the interest of governments to suppress any theory that seriously undermines their existence.
For more information, see William Anderson's article, Ignorance of Money and the Rejection of Austrian Economics.
What is the Austrian School?
All the mainstream Schools use the empirical method, similar to the physical sciences. Implicit in the assumption behind empiricism is the Constancy Principle. This is the principle that the same object will always react the same way to given stimuli. This applies to the subjects of physics, biology and chemistry - particles, organisms and atoms. But it does not apply to human beings, because human beings have the ability to choose between different actions.
Even though they are trying to explain the same phenomena, Austrian School economics could be regarded as a separate subject from mainstream economics because of the methodological difference that separates them. The Austrian school economics is not empirical; it openly rejects the scientific method and instead uses the axiomatic-deductive method. That is to say that the Austrian School is the only one that recognizes the fundamental nature of human beings - our ability to choose.
Austrian economics is not based on econometric data, statistics, correlations, analysis or observations of any kind. Instead, it is deduced using logic from the Axiom of Human Action (that human beings act based on choices), in the style of pure mathematics.
For this reason, arguing against an Austrian School explanation of something, like the Austrian Business Cycle Theory, is like arguing against Pythagoras’ Theorem; it is futile, because it has been deduced from an axiom. And where a mainstream School explanation contradicts an Austrian School explanation, the mainstream explanation must be incorrect.
Although it is irrelevant from a methodological viewpoint, Austrian School explanations of historical events such as the Depression and business cycles fit the facts better than other (mainstream) explanations. Austrians have been talking for a long time about how the Bretton-Woods system would fail, and how the closing of the gold window (1971) would eventually lead to the events that are now happening in the world. The Austrians have been and are being completely vindicated, while mainstream economists are baffled, at a loss to explain what is going on or what is going to happen next. (Time for a neo-neo-Keynesian School?)
The academic center of the Austrian School is the Ludwig Von Mises Institute, which has a vast amount of articles, ebooks, audio and video available for free on their website, www.mises.org.
The Austrian School concludes that government should be abolished (or, less radically, strictly limited to protection of life, liberty and property) in order to achieve the most prosperous, most fair and just, and most peaceful society.
A Short Course in Economics
The pages listed below explain the basics of (Austrian School) economics.
CHAPTER I: THE AXIOM OF HUMAN ACTION
CHAPTER II: DIRECT EXCHANGE
CHAPTER III: INDIRECT EXCHANGE
CHAPTER IV: GOVERNMENT INTERVENTION
CHAPTER V: BANKING
CHAPTER VI: CENTRAL BANKING
CHAPTER VII: INFLATION AND BUSINESS CYCLES
APPENDIX
Sources
The following books are the main sources used in this course:
Quite simply, because...
Individual liberty and free markets will lead to the most prosperous, wealthiest, fastest-growing society possible.
This is the conclusion of the Austrian School of Economics.
Although individualism, liberty and libertarian political viewpoints can be advocated for using philosophical and ethical arguments, this profound truth is perhaps the greatest "selling point" for individual liberty.
If you studied economics at school, college or university, you probably didn't learn about the Austrian School or their theories. Most of what is taught in educational establishments is Keynesian, Monetarist, Marxist, Neo-Classical or some other School of Economics (hereafter referred to as 'mainstream' economics).
Almost all educational establishments are controlled, either directly or indirectly, by the government. It is in the interest of governments to suppress any theory that seriously undermines their existence.
For more information, see William Anderson's article, Ignorance of Money and the Rejection of Austrian Economics.
What is the Austrian School?
All the mainstream Schools use the empirical method, similar to the physical sciences. Implicit in the assumption behind empiricism is the Constancy Principle. This is the principle that the same object will always react the same way to given stimuli. This applies to the subjects of physics, biology and chemistry - particles, organisms and atoms. But it does not apply to human beings, because human beings have the ability to choose between different actions.
Even though they are trying to explain the same phenomena, Austrian School economics could be regarded as a separate subject from mainstream economics because of the methodological difference that separates them. The Austrian school economics is not empirical; it openly rejects the scientific method and instead uses the axiomatic-deductive method. That is to say that the Austrian School is the only one that recognizes the fundamental nature of human beings - our ability to choose.
Austrian economics is not based on econometric data, statistics, correlations, analysis or observations of any kind. Instead, it is deduced using logic from the Axiom of Human Action (that human beings act based on choices), in the style of pure mathematics.
For this reason, arguing against an Austrian School explanation of something, like the Austrian Business Cycle Theory, is like arguing against Pythagoras’ Theorem; it is futile, because it has been deduced from an axiom. And where a mainstream School explanation contradicts an Austrian School explanation, the mainstream explanation must be incorrect.
Although it is irrelevant from a methodological viewpoint, Austrian School explanations of historical events such as the Depression and business cycles fit the facts better than other (mainstream) explanations. Austrians have been talking for a long time about how the Bretton-Woods system would fail, and how the closing of the gold window (1971) would eventually lead to the events that are now happening in the world. The Austrians have been and are being completely vindicated, while mainstream economists are baffled, at a loss to explain what is going on or what is going to happen next. (Time for a neo-neo-Keynesian School?)
The academic center of the Austrian School is the Ludwig Von Mises Institute, which has a vast amount of articles, ebooks, audio and video available for free on their website, www.mises.org.
The Austrian School concludes that government should be abolished (or, less radically, strictly limited to protection of life, liberty and property) in order to achieve the most prosperous, most fair and just, and most peaceful society.
A Short Course in Economics
The pages listed below explain the basics of (Austrian School) economics.
CHAPTER I: THE AXIOM OF HUMAN ACTION
CHAPTER II: DIRECT EXCHANGE
- Violence
- Voluntary Exchange
- Property Rights
- The Division of Labor
- Prices
- The Determination of Prices
CHAPTER III: INDIRECT EXCHANGE
- Money
- Income and Expenditure
- The Purchasing Power of Money
- Profits and Interest
- Allocating Factors of Production
- Monopoly and Competition
- The Money Supply and Inflation
CHAPTER IV: GOVERNMENT INTERVENTION
- Economics in One Sentence
- Types of Intervention
- Government Requires Taxation
- Taxation
- Spending
- Price Controls
- Regulations
CHAPTER V: BANKING
- The Concepts of Banking
- Loan Banking
- Deposit Banking
- Fractional Reserve Banking
- Limits to Fractional Reserve Banking
CHAPTER VI: CENTRAL BANKING
- The Bank of England (1694-1844)
- The Peel Act Structure (1844-1922)
- The International Bankers
- The First Three US Central Banks (1781-84,1791-1811,1816-36)
- The National Banking System (1865-1913)
- The Federal Reserve System (1913-)
- The Abolition of the Gold Standard (1933,1945,1971)
- The fiat Federal Reserve System (1971-)
CHAPTER VII: INFLATION AND BUSINESS CYCLES
APPENDIX
Sources
The following books are the main sources used in this course:
- "Man, Economy and State" - Murray Rothbard
- "Economics in One Lesson" - Henry Hazlitt
- "Economics, the Social Order and the Ron Paul Revolution" - Jorge Besada
- "The Case Against The Fed" - Murray Rothbard
- "The Mystery of Banking" - Murray Rothbard
