An Historical Investigation
Chapter 10: The Subjectivist Challenge of the Austrian School
INTRODUCTION The Austrian school of economics is generally considered one of the three founding currents of the marginalistic revolution of the 1870s. However, with Streissler (1972) we may doubt whether the Austrian school was particularly ‘marginalist’ at all, despite the fact that it was Wieser who coined the term ‘Grenznutzen’, marginal utility. The last chapter showed that marginalism was a calculating technique borrowed from mathematics and applicable in various sciences. Austrian theory concentrated on the ‘Nutzen’, not on the ‘Grenze’. Its real essence was the subjectivist approach to economics, the doctrine that states that the subjective perception of wants and the capacity of commodities to satisfy those wants is a determining factor of economic value (O’Driscoll and Rizzo 1996). Austrian economists believe that the introduction of subjectivism was a more radical part of the marginalistic revolution than the application of marginal calculation. As far as they are concerned, the proper name of the revolution that occurred in the 1870s should be the subjectivist revolution. The subjectivist approach has had profound influences on the debates within the Austrian school about the meaning of economic equilibrium. First and foremost, it led the Austrians to reject the notion of equilibrium as a static proposition which states that all economic activity will cease when every individual feels himself fully content with his current and prospective options for production and consumption. In their vision, a state of this kind requires a degree of knowledge and foresight that is inconceivable to anyone who believes that people...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.