The Economics of Ignorance and Coordination

The Economics of Ignorance and Coordination

Subjectivism and the Austrian School of Economics

New Thinking in Political Economy series

Thierry Aimar

This book clarifies the specific nature of the Austrian theory and restores the unity and open-mindedness of the Austrian school in general. The intention is not to offer a collection of different or parallel ideas, but rather to retrace, from a pedagogical and constructive perspective, the various stages of the construction of a well-founded theoretical edifice: from Ludwig von Mises to Murray Rothbard, from Friedrich Hayek to Israel M. Kirzner and from Lachmann to Lavoie. The book is a reconstitution of the way Austrian ideas and concepts organize themselves in a common structure.

Chapter 1: Mises and the Austrian Tradition

Thierry Aimar

Subjects: economics and finance, austrian economics


1 ____________________________________________________ Mises started his theoretical works studying monetary analysis (The Theory of Money and Credit, 1912 2 ), rapidly widening his investigations after World War 1 to the organisation of economic systems and planned economies. Ensuing controversies about collectivism (‘Economic Calculation in a Collectivist Regime’, 1920; Socialism, 1922) ensured Mises’ academic fame throughout Europe. To study Mises, one should start with his later epistemological contributions, although they admittedly come after these publications. Originally appearing as articles, most were then published in book form (Epistemological Problems of Economics, 1933, Theory and History, 1957, and The Ultimate Foundations of Economic Science, 1962a), 3 his major work, Human Action (last living edition 1966), 4 being the great summing up of the various aspects of his work. Mises’ epistemological approach may be analysed on three levels: opposition, rehabilitation and departure. Opposition corresponds to the refusal of an inductive approach to social phenomena, Mises rejecting the Vienna circle’s theses (Carnap, Wittgenstein, Neurath, Schlick, and so on), dominated by logical positivism (1). Rehabilitation is the theoretical approach, rejected by the historicists, who denied its relevance in social matters. However, for Mises, rehabilitation does not question the historical approach’s legitimacy but serves to define the respective roles of theory and history in both human sciences and social matters (2). The last level corresponds to a departure from the first Austrian school (Menger, Böhm-Bawerk, Wieser). Mises’ hostility towards an inductive approach in social practices is behind a number of departures from his predecessors, which all Austrian authors after...

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