Schools of Thought in Classical Liberalism, Part 4: The Austrian School

When people refer to the “Austrian School,” they are usually referring to the ideas of two prominent economists: Friedrich Hayek and Ludwig von Mises. Dr. Nigel Ashford highlights the similarities and differences of these two influential thinkers.

On the one hand, Hayek tends to recognize the limits of human knowledge and reason. He argues that much of the order in society – language, for example – comes from human action. These orders weren’t centrally planned or designed. For this reason, Hayek concludes the government lacks the knowledge or ability to centrally plan effectively.

Mises arrives at the same conclusions as Hayek, but comes about it differently. Mises believes we can identify certain truths through experience and reasoning. Using a priori deductive reasoning, he too concludes that government has limited knowledge.

9 Comments

  1. taschrant

    I remember there was a book about the Austrian school versus the Chicago school of economics.  Trying to remember what that one was.  Cool video otherwise!

  2. asexymind

    Once you go individualism, you can’t go back. If the actions/exchanges the constitute an economy are taken by individuals, and those choices are based on subjective values, then top down control is anathema to innovation. To leverage and integrate the most knowledge, we need the individual subjective values to be expressed through choices – not limited by regulations. Creating universal laws that create a social/contract infrastructure respecting individuals leads to bottom up innovation. 

    Innovation is the engine of wealth creation. 


  3. Adam

    I greatly appreciate the comparing and contrasting of Hayek and Mises. I was introduced to Austrian thinking through Hayek’s work and have always liked his approach better. It seems like Mises followers usually arrive at more extreme conclusions. It is a shame we don’t have a F.A. Hayek Institute instead of a Mises Institute.

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