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The Alternative Austrian Economics

A Brief History

John E. King

For most economists, ‘Austrian economics’ refers to a distinct school of thought, originating with Mises and Hayek and characterised by a strong commitment to free-market liberalism. This innovative book explores an alternative Austrian tradition in economics. Demonstrating how the debate on the economics of socialism began in Austria long before the 1930s, it analyses the work and impact of many leading Austrian economists through a century of Austrian socialist economics.
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Subject index

John E. King

accelerator 87, 92, 93, 119, 120, 121

accumulation of capital 122

see also economic growth

Accumulation of Capital, by Rosa Luxemburg 3, 41, 548, 83, 100, 112

age and unemployment 108

agrarian programme of SDP 17

Agricultural University, Vienna 60

agriculture, problems of 49, 51, 53, 89

alienation 67, 69

alternative Austrian economics, defined 2

American Economics Association 133

American Economic Review 93, 167

Americanisation of economics 168

Anschluss (union of Austria with Germany in 1938) 5

Anti-Dühring, by Friedrich Engels 47

Antikritik, by Rosa Luxemburg 58

anti-Semitism 10, 116, 154

Arbeiterhochschule (Workers’ University), Vienna 12, 64, 81, 99

Arbeiterkammer (Chamber of Labour) 102, 103, 137, 158, 165

Arbeiterzeitung 70, 79, 81

Archiv für Sozialwissenschaft und Sozialpolitik (Archive of Social Science and Social Policy) 13, 68

aristocracy of labour 98

armaments expenditure 41, 47, 126, 127

Australia 76

Australia in the World Depression, by E.R. Walker 118

‘Austria’, various meanings of 79

Austrian Communist Party 10, 77

Austrian Consumer Cooperative Association 111

Austrian economics, liberal 12, 32, 6970

Austria, economy of 9, 8081

Austrian Institute of Economic Research (WIFO) 11516, 118, 136, 151, 154, 165

Austrian National Bank (OeNB) 152

Austrian Revolution, by Otto Bauer 4, 1718, 41, 634

Austrian Social Democratic Party 9, 1011, 13, 16, 18, 40, 71, 79

Austro-Hungarian Empire see Hapsburg Empire

Austro-Keynesianism 14950, 15960

Austro-Marxism

and Austrian politics 16, 1719

Bauer and 16, 17, 40, 42

and democracy 17

and the First World War 60

Hilferding and 22, 27

Marx, interpretation of 1516

origins of 1415, 22

and Red Vienna 18

Rothschild and 135, 140

as a school of thought 14

on socialism 72

Balfour Committee 87

banks 2930, 36

see also finance capital; financialisation

Bavaria, Soviet Republic of 612

BEIGEWUM 168

Bennington College 67

Berlin 23, 73, 155

Between Two World Wars?, by Otto Bauer 4, 80, 88, 8995

Bologna Process 167, 168

Bolshevism 9, 15, 19, 64, 79

breakdown of capitalism, theory of 512, 93, 100101

Britain 27, 52, 61, 86, 148

Brno (Brünn) 40, 79

bureaucratically directed monopoly capitalism, Otto Bauer on 91

business cycle, theory of

Austro-Marxists on 16, 19

Bauer (Helene) on 101

Bauer (Otto) on 424, 548, 8081, 86, 879, 915

Domar on 93

Grossmann on 101

Luxemburg on 548

Marx on 56, 86, 88

Steindl on 11821

Sweezy on 923

see also Capital

Canada 67

capacity utilisation 130

capital, accumulation of 122

see also economic growth

capital, export of 33, 46

capital, theory of 94, 132

Capital, by Karl Marx

Bauer on 41, 434, 479, 50, 56, 82, 83, 94

Böhm-Bawerk on 246

Hilferding on 256, 32

Kurz on 158

Luxemburg on 55

Rothschild on 135

volume I 43, 47, 50, 82, 83

volume II 25, 32, 37, 43, 44, 478, 50, 55, 56, 82, 83

volume III 24, 256, 32, 37, 478, 56, 823, 94

see also Theories of Surplus Value

Capital and Interest, by Eugen von Böhm-Bawerk 19, 24

capital levy 65, 745

Capitalism and Socialism after the World War, by Otto Bauer 4, 846

capitalism, economics of 4, 15, 16, 19, 28, 424, 57, 82, 978

see also crises, economic

capitalists, consumption of 55

Carnegie Foundation for International Peace 61

cartels 30, 33, 356, 42, 46, 53, 54, 61, 72

central planning 59, 61, 63, 65, 67, 70, 77, 154, 155

centralisation of capital 30, 323

Chamber of Labour (Arbeiterkammer) 102, 103, 137, 158, 165

Chartism 79

childcare 10910

Christian Social Party, Austrian 11, 71, 79

Christian Socialism 67

class forces, balance of 1718

class struggle 9, 46, 84

classical political economy 82, 157

Collected Works of Otto Bauer 42, 82

Columbia University 67

commodity fetishism 67, 69

communism 16, 142

Communist Manifesto, by Marx and Engels 83

Communist Party, Austrian 77

competition, decline of 28, 30, 356

concentration of capital 30, 323

Conservative Party, British 10

consumer cooperatives 534, 111

consumer preferences 72, 73

consumer theory 1667

contradictions of capitalism 27, 39

Conversations with Post Keynesians, by J.E. King 118

cooperatives 534, 68, 111

costs, social 6970

credit, theory of 35, 44, 51, 88

core and periphery 167, 168

crises, economic

Austro-Marxists on 16, 19

Bauer (Helene) on 101

Bauer (Otto) on 424, 548, 8081, 86, 879, 915

Domar on 93

Grossmann on 101

Luxemburg on 548

Marx on 56, 86, 88

Steindl on 11821

Sweezy on 923

see also Capital

critical realism 168

Critique of the Gotha Programme, by Karl Marx 17

Critique of Political Economy, by Karl Marx 43

cumulative process, Wicksellian 120

cyclical fluctuations see business cycle, theory of

Czech territory, German- and Czechspeaking areas of 46

Czechoslovakia 79, 80

debt, business 129

debt, household 164, 167

debt-led consumption boom 131

democracy 17, 47, 90, 91, 136

see also economic democracy

‘Der Heilige Leopold’ 14

Der Kampf 15, 41, 48, 50, 58, 70, 79, 99, 111, 112

Der Weg zum Sozialismus (The Road to Socialism), by Otto Bauer 64

Deutsche Worte 23

Development of Commodity Trade in Austria, by Helene Bauer 99

dictatorship 17

Die Neue Zeit 23, 41, 42, 47, 50

disproportionality, as cause of crises 32, 56, 87, 89, 100

distribution of income 1656, 167

see also rate of exploitation

distribution of wealth 1656, 167

DSGE (Dynamic Stochastic General Equilibrium) models 144

Durch die Kriegswirtschaft zur Naturwirtschaft) (From War Economy to Natural Economy), by Otto Neurath 61

ecological economics 63, 168

econometrics 1, 165

Economic Calculation in a Socialist Society, by Otto Leichter 712

economic crises, theory of

Austro-Marxists on 16, 19

Bauer (Helene) on 101

Bauer (Otto) on 424, 548, 8081, 86, 879, 915

Domar on 93

Grossmann on 101

Luxemburg on 548

Marx on 56, 86, 88

Steindl on 11821

Sweezy on 923

see also Capital

economic democracy 112, 1134

economic growth 55, 567, 58

economic history 67

Economic Papers, by Josef Steindl 117

economic planning 4, 59, 61, 63, 65, 67, 70, 77, 154, 155

economic policy

Otto Bauer on 534, 81

Egon Matzner on 156

Kurt Rothschild on 14650

economic sociology 168

Economics of Everyday Life, by Gertrude Williams 110

economics of socialism 34, 13, 5978, 112

economics of war 61

Economist, The 67

Egon Matzner Award 1556

Elgar Companion to David Ricardo 1578

Empire, Austro-Hungarian 79

endogenous money 130, 168

environmentalism 61, 127

Essays in the Theory of Employment, by Joan Robinson 120

ethics and economics 136, 1467

Ethics and Economic Theory, by Kurt Rothschild 136

European Union 148

evolutionary economics 156

excess capacity 128

expanded reproduction, theory of 43

export of capital 33, 46

Fabian socialism 68

falling rate of profit, theory of 43, 48, 49, 5051, 55, 56, 87

false rationalisation, Bauer on 856

fascism 5, 90, 91, 97, 116, 138, 142, 143

feminism 73, 110, 168

fetishism of commodities 67, 69

Fettered by Socialism, by Christian Fleck and Heinrich Berger 71

fictitious capital 28, 38

fictitious commodities, Polanyi on 68

Finance Capital, by Rudolf Hilferding 3, 22, 2639, 41, 45, 5051, 71, 83, 112

financial capital 2639, 50

financial crises 32, 164

see also economic crises

Financial Crisis of the State, by Joseph O’Connor 75

financial instability hypothesis, Minsky on 129

financialisation 38, 143, 160, 164

First World War 5, 39, 61, 75, 97, 113

fiscal sociology 74

fixed capital 43

forced saving 120

formal modelling in economics 1, 2, 142

Foundation for Scientific Economic Policy (WIWIPOL) 151

France 23, 27

Frankfurt Institute 14, 102

free market liberalism 12, 6970

free trade 148

Freie Vereinigung sozialistische Studenten und Akademiker 14

French regulation school 168

Friends of Nature 12

full employment 119, 126, 127, 14950, 159

game theory 138, 145

Gefesselt vom Sozialismus, by Christain Fleck and Hans Berger 71

gender inequality 165

‘general cartel’, Hilferding on 3031, 33, 36

general strike 23

General Theory of Employment, Interest and Money, by J.M. Keynes 119, 134, 135, 139

Germany 16, 223, 27, 31, 38, 46, 91, 97, 150

Glasgow, University of 135

global financial crisis of 20078

Bauer and 95

Hein on 130

Hilferding and 38

Kalecki and 95

Kapeller on 167

mainstream economics on 1312

Rothschild on 139, 143

Steindl and 5, 115, 130, 131

Stockhammer on 164

Unger on 160

Wray on 38

globalisation of economics 168

gold, economic role of 29, 53

Graz, University of 99, 117, 157

Graz Schumpeter Centre 162

Great Depression of the 1930s 76, 8081, 87, 89, 90

Great Transformation, The by Otto Neurath 66

growth regimes 129, 131

Guild Socialism 5, 64, 65, 67, 68, 11314

Habsburg Empire 79, 456, 80

Handbook of Women’s Work, by Käthe Leichter 103

Harrod-Domar model of economic growth 578

heterodox economics 2, 137, 139, 1534, 160, 1678

Heterodox Economics Newsletter 166

Heterodox Ökonomie, edited by J. Becker et al. 167

Hicks super-multiplier 121

historical materialism 16, 26, 16, 48, 74, 146

History of Economic Analysis, by Joseph Schumpeter 29

history of economic thought 823, 138, 162

History of Economic Thought Society of Australia 6

Hochschule für Bodenkultur (Agricultural University), Vienna 60

Hochschule für Welthandel (University of International Commerce) 155

housing, working-class 107, 109

How do Homeworkers in Vienna Live?, by Käthe Leichter 103

How Economics Makes the World Go Round, by Kurt Rothschild and Hans Bürger 15051

How We Live, by Käthe Leichter 1045

human rights 74

Hungary 7, 66

ideology 139, 1423

Illegal Party, The by Otto Bauer 79, 90

imperfect competition 122, 149

see also monopoly; oligopoly

imperialism

Adler on 978

Austro-Marxists on 15

Bauer (Helene) on 100

Bauer (Otto) on 467, 5051, 548

Bukharin on 37

Hilferding on 28, 334, 5051

Hobson on 27

Lenin on 37

Luxemburg on 548

Rothschild on 138

Sternberg on 100

Imperialism, by V.I. Lenin 37

Imperialism and World Economy, by Nikolai Bukharin 37

Independent Socialist Party (USPD), German 23

indexation of wages 53

India 155

individualism 69

inequality in income and wealth 1656, 167

inflation 23, 53, 119

innovation and economic growth 126

see also technical change

institutionalist economics 5, 137, 156, 168

Institutions of Private Law, by Karl Renner 112

‘integral socialism’, Otto Bauer on 656, 90

intensification of labour 86

inter-disciplinary cooperation 156, 161, 1689

inter-generational mobility 162

Interest and Prices, by Michael Woodford 144

interest, theory of 24, 289, 44, 51, 87

International Foundation for Visual Education 60

International Labour Organisation (ILO) 165

Introduction to the Theory of Employment, by Joan Robinson 135

investment, determinants of 119, 125, 130

Isotype system 60, 10310

Jews, in Austro-Hungarian Empire 10

see also anti-semitism

Kantian theory 96

Karl Renner Institute 152, 165

Kärnten, province of 8

Käthe Leichter State Prizes 110

Kathedersozialisten (Socialists of the Chair) 83

Keynesian economics 81, 116, 120, 155

see also Post Keynesian economics

knife-edge model of economic crises 87, 88

Kriegswirtschaftliches Museum (War Economy Museum), Leipzig 61

Kurt-Rothschild Award 152, 165

Kurt Rothschild Prize of the Austrian Parliament 166

labour aristocracy 98

labour, economics of 5, 10310

labour theory of value 4, 23, 246, 29, 45, 72, 77, 82, 162

laissez-faire 113

law, sociology of 111

Law of Accumulation, by Henryk Grossmann 101

Le movement sociale 22

League of Nations 87

Left Communism 69

liberal socialism 66, 76

liberalism 51, 6970

Linz, University of 136, 152, 161, 166

Linz programme of SDP (1926) 16, 79

logical-historical method 26

long waves 87, 89

machinery, Ricardo on 163

Macmillan Committee 87

macroeconomics, mainstream 1435

mainstream economics 1323, 139, 1435, 147, 154

Manuscript on the Economic Crisis, by Otto Bauer 4

marginalist economics 1516, 1920, 256, 77, 834

market failure 62

market socialism 4, 65, 68, 72, 149, 154

Marx-Studien 15, 20, 23, 41, 71, 96

Marxism 478, 140, 162

see also Austro-Marxism; Capital

materialism, theory of 16, 48, 74, 146

mathematics, use of in economics 142

Maturity and Stagnation in American Capitalism, by Josef Steindl 5, 115, 117, 1218, 1313

McGill University 67

media, economics of 168

Mensheviks 79

methodology of economics 256, 138, 1435

microfoundations of macroeconomics 130, 140, 1435

militarism 15, 27, 47, 54

military Keynesianism 54

military spending 41, 47, 126, 127

Minsky-Veblen cycles 167

mixed economy 75

modest economist, Kurt Rothschild as 1456

money, role of in socialism 61

money, theory of 289, 36, 889, 94

money economy, Otto Neurath on 62

money in a socialist society 689, 77

money laundering 160

‘money manager capitalism’, Hyman Minsky on 38

monism 74

monopoly, growth of 28, 61

monopoly, theory of 148

Monopoly Capital, by Paul Baran and Paul Sweezy 1, 93, 125, 140

monopoly capital, theory of 38

multiplier 119, 12021

Museum of Society and Economy, Vienna 103

Museum of War Economy, Leipzig 61

Narodniks, Russian 56

National Radical Bourgeois Party 66

nationalism, rise of 34, 457

nationalities in Hapsburg Empire 89, 23

natural costs, Otto Neurath on 6970

neoclassical economics

Austro-Marxist critics of 16, 246

Bauer on 834

Böhm-Bawerk and 1920, 246

Hilferding on 256, 161

Rothschild on 1379, 142

neoclassical-Keynesian economics 155

neo-Kantianism 14

neoliberalism 1, 5, 39, 146, 168

neo-Wicksellian economics 119, 120, 121

Neue Wiener Handelsakademie (New Vienna Business School) 60

New Deal 67

New Left 16

New Right 149

New School of Economics (New York) 95, 165

occupational distribution of the workforce 1034

oligopoly 115, 1223, 127, 134, 1378, 140, 146

organic composition of capital 44, 87, 101

see also falling rate of profit; technical change

Österreichische Volkswirt (The Austrian Economist) 67

Österreichische Werke 71

Our Place, by Mark Cocker 63

Oxford 60, 116, 117, 134

paradox of debt 129, 130

paradox of saving 94

paradox of thrift 129

Pareto improvement 86

Pareto optimality 150

Parliamentarianism 23

participatory democracy 67

see also Guild Socialism

peasantry 18

philosophy of science 97

planned economy 4, 59, 61, 63, 65, 67, 70, 77, 154, 155

Physiocracy 51, 82, 162

pluralism in economics 5, 13740, 168

pluralistic socialism, Otto Bauer on 656

Poland 154

policy, economic Otto Bauer on 534, 81

Egon Matzner on 156

Kurt Rothschild on 14650

Political Economy of Growth, by Paul Baran 125

positivism 14, 96

post-Communism 155

Post Keynesian economics

Bauer and 88

endogenous money, principle of 889

Kalecki and 945, 115

Lavoie on 12830

Minsky and 12930

Rehm on 165

Rothschild and 137

Steindl and 5, 115, 12930

Stockhammer and 168

on wage-led growth 94

Post-Keynesian Economics, by Marc Lavoie 128

power in economics 14043

Power in Economics, by Kurt Rothschild 134

Pre-conditions for Socialism, by Eduard Bernstein 27

primary products, prices of 88

see also agriculture

Production of Commodities by Means of Commodities, by Piero Sraffa 52

profit share in net output 119, 127

see also rate of exploitation

profit squeeze, Glyn and Sutcliffe on 127

profit-led growth 95, 164

proletariat, Max Adler on 978

promoter’s profit, Hilferding on 2930

Prosperity and Depression, by Gottfried Haberler 92

Quantity Theory of money 29

Question of Nationalities and Social Democracy, by Otto Bauer 3, 41, 457

racism 34

rate of exploitation 47, 92

rate of interest 44, 51, 87, 132

rate of profit 28, 29, 31, 43, 48, 87, 101, 123, 127

ratings agencies 160

rationalisation of industry 846, 98

rationing 1478

Red Vienna 3, 7, 1114, 18, 60, 147

Referat für Frauenarbeit (Women Workers’ Department) 102

reform, social 27, 31

see also revisionist Marxism

regulation of financial markets 163

Regulation School, French 168

reification 68

religion 17

rent, theory of 49, 73

res publica 157, 160

Research Institute for the Economics of Inequality 161

Review of Evolutionary Political Economy 164

revisionist Marxism 10, 1415, 1617, 18, 27, 323

revolution, socialist 17, 31, 42, 54, 55

Revolutionary Socialists, Austrian 79, 82

Rising Prices, by Otto Bauer 41

Risk Society, The by Ulrich Beck 141

risk-bearing, Rothschild on 14041

Road to Socialism, The by Otto Bauer 64

Russia 4, 9, 14, 56, 64, 656, 77, 79, 86

Russian Revolution of 1917 64, 91

Salzburg, province of 8

Say’s Law 42, 56

Schutzbund 12

Scotland 1356

Secession, Vienna 116

Second International 3, 7, 15

segmentation of the working class 98

shock therapy 155

simple commodity production 423, 82

Small and Big Business, by Josef Steindl 116, 122

social costs 6970, 856

social democracy 2, 4

see also Austro-Marxism

Social Democratic Party, Austrian 9, 1011, 13, 16, 18, 40, 79

Social and Economic Museum, Vienna 60

Social Revolutionaries, Russian 56

Social Science Centre (WZB), Berlin 155

Socialisation Commission 102

socialism, economics of

Bauer on 4, 636

Goldscheid on 4, 736

Hilferding on 347

Leichter (Otto) on 4, 7073

Marx on 15, 345

Neurath on 4, 6063, 1589

Polanyi on 4, 13, 6670

Renner on 11214

Schiff on 4, 768

see also Guild Socialism

socialist planning 4, 14, 59, 61, 63, 65, 67, 70, 77, 154, 155

socialist revolution 17, 31, 42, 54, 55

Socialist Student League 22

Socialists of the Chair (Kathedersozialisten) 83

Sociological Society, Austrian 73

sociology 73, 96, 97, 112, 168

sound finance 23, 81

Soviet Union 4, 14, 65, 66, 69, 77, 86

stagnation, economic 115, 1234, 126, 1313, 159

standard commodity, Piero Sraffa on 158, 163

state, class neutrality of 1718

state, economic role of 28, 64, 11214, 14950

state capitalism 4, 23, 756, 11214

state socialism 75

Stolper-Samuelson theorem 164

subjective theory of value 834

see also neoclassical economics

super-multiplier 12021

surplus value, theory of 49

see also Capital; labour theory of value

Swabian housewife logic 154

System des Marxismus, by Georg von Charasoff 41

Tableau Économique 162

tariffs 23, 33, 45, 467, 53, 54, 89

tax avoidance and evasion 160

taxation, principles of 745

Taylorism 85

technical change 49, 53, 856, 98, 124, 125, 126

Theories of Surplus Value, by Karl Marx 41, 48, 50, 54

Theory of Capitalist Development, by Paul Sweezy 27, 92, 95, 122

Theory of Production, by Heinz Kurz and Neri Salvadori 157

theory of value see neoclassical economics; labour theory of value

Theory of Wages, by Kurt Rothschild 134

Third International 7, 15, 37

Through War Economy to Natural Economy, by Otto Neurath 61

time preference, social rate of 78

Tobin tax 160

Trade Cycle, The by Roy Harrod 116, 11819, 120, 121

trade cycle, theory of see business cycle, theory of

trade unions 53, 98

Trieste summer school 118

trusts 42, 46, 61

Two-and-a-half International 16

Tyrol, province of 8

ultra-imperialism 39

underconsumption 32, 43, 76, 86, 88, 925

unemployment 57, 86, 1058, 151, 165

unequal exchange 456

Union of Soviet Socialist Republics (USSR) see Soviet Union

United Kingdom 27, 52, 61, 86, 148

United States 15, 31, 38, 71, 75, 85, 95, 115

University of Berlin 73

University of Budapest 76

University of Duisburg-Essen 165, 166

University of Economics and Business Administration, Vienna (WU) 115, 161, 163, 165, 167

University of Glasgow 5, 135

University of Graz 99, 117, 157

University of Heidelberg 102

University of Linz 136, 152, 161, 166

University of Massachusetts, Amherst 163

University of Technology, Vienna (WUT) 155

University of Vienna 19, 40, 73, 76, 96, 99, 101, 116, 135

University of Zürich 99

use value 256

USPD (Independent Socialist Party), German 23

utopianism 63, 77

value, theory of see labour theory of value; marginalist economics

Vienna 8, 10, 1114, 60

Vienna Business School 115

Vienna Circle 13, 14, 16, 60, 61, 64

Vienna Institute for International Economic Studies (wiiw) 154

‘Vienna Union’ 16

Vienna University of Technology (WUT) 155

Vorarlberg, province of 8

Vorwärts 23

vulgar Marxism 47

wage-led growth 945, 164

wages

differentials in 73

indexation of 53

real 47, 52, 53

share in net output 119, 123, 164

theory of 134, 14041, 149

see also rate of exploitation

war economy 61, 61, 112

wealth, distribution of 1656, 167

wealth tax 65, 745

welfare, economic and social 147

Werkausgabe (Collected Works) of Otto Bauer 42, 82

WIFO (Austrian Institute of Economic Research) 11516, 118, 136, 151, 154, 165

Wirtschaft und Gesellschaft (Economy and Society) 158

Wirtschaftsrechnung in der sozialistischen Gesellschaft, by Otto Leichter 712

Wissenschaftszentrum (WZB), Berlin 155

WIWIPOL (Foundation for Scientific Economic Policy) 151

women, economic role of 10210

women’s housing 1079

women in academic economics 153

Women and Work, by Gertrude Williams 110

Women’s Work, by Käthe Leichter 103

Workers’ University, Vienna 64, 99

working class, imperialism and 34, 467

World of Labour, by G.D.H. Cole 64

Yale University 123

Zukunft (workers’ school in Vienna) 111

Zwischen Zwei Wertkriegen? (Between Two World Wars?), by Otto Bauer 4, 80, 88, 8995