The Austrian School as mainstream economics

For many people, Austrian and Neoclassical schools are like oil and water. However, it's very interesting that Mises often distinguishes instead between Classical and Modern schools, the boundary being the Marginalist Revolution by Jevons, Menger, and Walras.

"The history of modern economics begins with the resolution of the paradox of value by Menger, Jevons, and Walras." (1)


Also, in spite of Mises's criticism of the Classical School, it is meaningful to quote him at length on his opinion about the Classic School:

"Once one has correctly grasped the position of the concept of cost within the framework of modern science, one will have no difficulty in seeing that economics exhibits a continuity of development no less definite than that presented by the history of other sciences. The popular assertion that there are various schools of economics whose theories have nothing in common and that every economist begins by destroying the work of his predecessors in order to construct his own theory on its ruins is no more true than the other legends that the proponents of historicism, socialism, and interventionism have spread about economics. In fact, a straight line leads from the system of the classical economists to the subjectivist
economics of the present. The latter is erected not on the ruins, but on the foundations, of the classical system. Modern economics has taken from its predecessor the best that it was able to offer. Without the work that the classical economists accomplished, it would not have been possible to advance to the discoveries of the modern school. Indeed, it was the uncertainties of the objectivistic school itself that necessarily led to the solutions offered by subjectivism. No work that had been devoted to the problem was done in vain. Everything that appears to those who have come afterward as a blind alley or at least as a wrong turning on the way toward a solution was necessary in order to exhaust all possibilities and to explore and think through to its logical conclusion every consideration to which the problems might lead." (2)


Plus, take the "mainstream" definition of economics by Lord Robbins: "Economics is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses." (3) Immediately following the definition, Robbins gives a list of 5 books in order to show that his definition was actually already being used by other economists. The two first books quoted are Menger's Grundsätze and Mises's Gemeinwirtschaft (Socialism). Compare that definition with Mises's definition of praxeology as "the general theory of human action" (4), this is of "purposeful behavior" (5). Then work out a little Mises's definition as to arrive at the fact that only scarce means can be the object of purposeful behavior; this is, of economizing, and you realize that some definitions amount at economics as the study of the same phenomenon, although Mises's definition seems to me easier to begin with in studying that phenomenon.

Of course, you have differences in the appreciation of such tools as mathematics, but this seems to me a solvable problem within the theory, given the method imposed by the study subject.

At the end, it's my appreciation that there's no insurmountable differences between the Austrian School and mainstream economics. The difference is rather on emphasis: Austrian scholars are particularly rigorous on methodology and being consequent on the use of definitions.


(1)MISES, Ludwig von. Epistemological Problems of Economics. Page 227.
(2) Idem. Page 175.
(3)ROBBINS, Lionel. An Essay on the Nature and Significance of Economic Science. Second edition. Page 16.
(3)MISES. Human Action. The scholar's edition. Page 3.
(4) Idem. Page 11.