Chapter 13: Austrian Critiques Questions for Review, Discussion and Research 7

Capitalist System Economic discussion making by individuals and households in theory roles as Consumers Owners of factors of production Land Labour (includes management) Capital Entrepreneurship

Capitalist System Cont’d Private ownership of the means of production pp. 359-60 One essential ingredient is liberty where people are free to buy and sell in all markets The catalysts for the system have been: capitalists – first 125 years entrepreneurs – last 125 years

Capitalist System Cont’d Liberal democracy permits economic change at the same time it preserves the underlying political and institutional structures Markets coordinate economic exchanges within a given structure of institutions and property rights that have been modified

Austrian School First four generations were adherents of mainstream economics but did not concern themselves with mathematical concepts such as the relative maxima and minima of functions They always incorporated laws, institutions, markets processes and disequilibrium

Austrian approach only emerged as a separate heterodox doctrine in the second half of the 20th century skip pp. 361-377

Gestalt of Austrian School Radical subjective Methodological individualism Purposeful human action Causal – geneticism emphasis on the “essence’ of an action or event rather than functional relationships

Gestalt of Austrian School Cont’d Methodological essentialism Claim to be scientific with modest claims for insights and understanding of human society No concern for prediction