Enterprise 318
Professor Peter J. Boettke
Department of Economics
324 Enterprise Hall
703-993-1149
Office Hours: Tuesday 10:30-12:00; Thursday
1:00-3:00
This is the second course in a two-course sequence in the field of Austrian economics. The course has been designed for those who hope to pursue a teaching and research career in which the insights of the Austrian School of Economics will play a significant role. In other words, this course is for those who hope to pursue Austrian economics as a vocation not as an avocation.
We
will read in and critically discuss the contributions of the Austrian School of
Economics in the areas of methodology, monetary and macroeconomic theory, and
market theory and the price system. We
will spend roughly four weeks in each area – the first week we be reading the
“founding” arguments by Menger and Böhm-Bawerk, the second week will be devoted
to reading the “classic” statements of the argument provided by Mises and
Hayek, the third week we will be reading the “contemporary” statements made by
the post-resurgence generation of Austrian economics, and the fourth week we
will focus on reading “critical appraisals” of the Austrian tradition which
exist in the literature today. You will
be expected to do all the readings before class so you can contribute to
the discussion.
Your
course grade will be based on [a] your participation in class discussions
(10%), [b], essays after each course section (10%), [c] a take-home final exam
(30%), and [d] an original research paper (50%). Examples of my previous final exams can be found on-line from
similar courses I have taught in the past.
This exam is designed to be comprehensive and to prepare you for the
field exam in Austrian economics. In an
ideal professional world, a field in Austrian economics would not be necessary
because Austrian economics is not really a field but a research program in
economics similar in this regard to game theory or experimental economics. The insights of the Austrian school can be
applied to any area of research within the field of economics, political
economy and social theory in general.
Unfortunately, we do not yet live in this ideal professional world and
thus the field in Austrian economics is necessitated in order to provide
curricular space for the advanced study of the Austrian school.
I
am committed to the position that the Austrian school cannot afford to be
either primarily, let alone exclusively, critical of mainstream economics or
historical in research orientation. As
contemporary scholars and teachers in the Austrian school tradition we must be
cognizant of our differences from the mainstream of economic thought and
respect the intellectual history of the disciplines of economics and political
economy. Too often, in my opinion,
contemporary work in the Austrian tradition is content with criticism and
historical essays. I hope to encourage
young scholars to pursue a more progressive research agenda in Austrian
economics. This requires 3 things: [1]
focus less on critique and more on positive theoretical construction; [2]
concentrate on the world, not necessarily the literature – seek to explain
events that spark your curiosity and that of other scholars, policy makers, and
intellectuals in the world and do not limit yourself to only those areas
discussed in the existing literature within the economics profession; and [3]
recognize that while understanding methodological issues is a necessary
condition for advancing economic knowledge it is far from sufficient –
economists must provide positive theoretical advancements and better
explanations of the world around us otherwise their insights will be appropriately
ignored by their peers. Methodology
does indeed matter, but it matters far less than what most critics of
mainstream economics think it does in terms of advancing knowledge. Accordingly, I do not encourage
methodological papers for your research paper for this course. Instead, I want you to decide on a topic
early and work hard to make a contribution to theory or applied economics. The methodological strictures in the
Austrian tradition should be respected, but should not be the focus of your
research endeavor. Your papers will be
judged by the only standard you should be writing for at this stage of your
education --- can this paper be published in a professional journal? In the field of Austrian economics, that
means your paper could be published in either The Review of Austrian
Economics or The Quarterly Journal of Austrian Economics. In order to facilitate that judgment, your
final draft of your paper will be due on April 29th and I will
submit your papers (blind) to external referees as well as myself for
assessment, an A grade will be limited to those papers, and only those papers,
that are recommended for acceptance or conditional acceptance, a B grade will
be assigned to those papers that receive a recommendation of revise and
resubmit, and a C grade will be assigned to those papers that are rejected by
the external referees and myself. I
will be available throughout the semester to discuss and read your drafts, so
don’t be a stranger.
January 28, 2002 The Place of Austrian Economics
in Contemporary Economic Thought
I. Primary Reading
Peter Boettke, “Where Did Economics Go Wrong?,” Critical
Review, 11 (Winter 1997): 11-64.
F. A.
Hayek, “Economic Thought VI: The Austrian School of Economics,” International
Encyclopedia of the Social Sciences (New York: Macmillan, 1968).
Israel
Kirzner, “The Austrian School of Economics,” New Palgrave Dictionary of
Economics (New York: Macmillan, 1986).
Fritz
Machlup, “Austrian Economics,” Encyclopedia of Economics (New York:
McGraw-Hill, 1982).
II. Secondary Reading
Peter
Boettke, “Formalism and Contemporary Economics," Critical Review, 12
(1998).
Peter
Boettke, “Is There an Intellectual Market Niche for Austrian Economics?,” Review
of Austrian Economics, 11 (1999): 1-4.
Daniel
Hausman, “The Faults of Formalism and the Magic of Markets,” Critical Review,
12 (1998).
Robert
Heilbroner, “The Self-Deception of Economics,” Critical Review, 12
(1998).
Thomas
Mayer, “Boettke’s Austrian Critique of Mainstream Economics: An Empiricist’s
Response,” Critical Review, 12 (1998).
I. Primary Reading
Carl
Menger, Principles of Economics (New York: New York University Press,
1976[1871]): 51-113; 286-288.
Carl
Menger, Investigations into the Method of the Social Sciences with Special
Reference to Economics (New York: New York University Press, 1985[1883]):
35-94; 129-159.
II. Secondary Reading
Samuel
Bostaph, “The Methodological Debate Between Carl Menger and the German
Historicists,” Atlantic Economic Journal, 6 (September 1978): 3-16.
A. M.
Endres, Neoclassical Microeconomic Theory: The Founding Austrian Version
(New York: Routledge, 1997): 1-23.
I. Primary Reading
F. A.
Hayek, Individualism and Economic Order (Chicago: University of Chicago
Press, 1980[1948]): 33-76.
Ludwig
von Mises, Human Action (Chicago: Henry Regnery, 1966[1949]): 1-176.
II. Secondary Reading
Israel
M. Kirzner, Ludwig von Mises: The Man and His Economics (Wilmington,
Del: ISI Books, 2001): 69-92.
Fritz
Machlup, “The Problem of Verification in Economics,” Southern Economic
Journal, 22 (1955): 1-21.
Fritz
Machlup, “If Matter Could Talk,” in Sidney Morgenbesser, Patrick Suppes, and Morton
White, eds., Philosophy, Science, and Method: Essays in Honor of Ernest
Nagel (New York: St. Martin’s Press, 1969):
Fritz
Machlup, “The Inferiority Complex of the Social Sciences,” in Mary Sennholz,
ed., On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises
(Princeton: Van Nostrand, 1956): 161-172.
Fritz
Machlup, “Friedrich von Hayek’s Contributions to Economics,” Swedish Journal
of Economics, 76 (December 1974): 498-531, especially 520-524.
Stephen
Parsons, “Mises, The Apriori and The Foundations of Economics: A Qualified
Defense,” Economics & Philosophy, 13 (October 1997): 175-196.
I. Primary Reading
Israel
Kirzner, “On the Method of Austrian Economics,” in Edwin Dolan, ed., The
Foundations of Modern Austrian Economics (Kansas City: Sheed & Ward,
1976): 40-51.
Ludwig Lachmann,
“The Significance of the Austrian School in the History of Ideas,” in Walter
Grinder, ed., Capital, Expectations and the Market Process: Selected Essays
of Ludwig Lachmann (Kansas City: Sheed, Andrews and McMeel, 1977): 45-64.
Don
Lavoie, “Euclideanism versus Hermeneutics: A Reinterpretation of Misesian
Apriorism,” in Israel M. Kirzner, ed., Subjectivism, Intelligibility and
Economic Understanding (New York: New York University Press, 1986):
192-210.
Gerald
O’Driscoll and Mario Rizzo, “Static versus Dynamic Subjectivism,” in The
Economics of Time and Ignorance (New York: Basil Blackwell, 1985): 17-34;
52-70.
Mario
Rizzo, “Mises and Lakatos: A Reformulation of Austrian Methodology,” in Israel
M. Kirzner, ed., Method, Process, and Austrian Economics: Essays in Honor of
Ludwig von Mises (Lexington, Mass.: D.C. Heath, 1982): 53-73.
Murray
N. Rothbard, “Praxeology: The Methodology of Austrian Economics,” in Edwin
Dolan, ed., The Foundations of Modern Austrian Economics (Kansas City:
Sheed & Ward, 1976): 19-39.
II. Secondary Reading
Nicolai
Foss, The Austrian School and Modern Economics: Essays in Reassessment
(Copenhagen: Handelshøjskolens Forlag, 1994): 181-203.
Karl
Mittermaier, “Mechanomorphism,” in Israel M. Kirzner, ed., Subjectivism, Intelligibility
and Economic Understanding (New York: New York University Press, 1986):
236-251.
Stephen
Parsons, “The Philosophical Roots on Modern Austrian Economics: Past Problems
and Future Prospects,” History of Political Economy, 22 (Summer 1990): 295-319.
Pierluigi
Barrotta, “A Neo-Kantian Critique of Von Mises’s Epistemology,” Economics
& Philosophy, 12 (April 1996): 51-66.
Mark
Blaug, The Methodology of Economics (New York: Cambridge University
Press, 1992): 51-82.
Theodore
Burczak, “The Postmodern Moments of F. A. Hayek’s Economics,” Economics
& Philosophy, 10 (1994): 31-58.
Theodore
Burczak, “Can Subjectivism be Non-Hermeneutic?,” Economics & Philosophy,
10 (1994): 315-317.
Bruce
Caldwell, Beyond Positivism: Economic Methodology in the Twentieth Century
(London: Allen & Unwin, 1982): 99-138.
Bruce
Caldwell, “Praxeology and Its Critics: An Appraisal,” History of Political
Economy, 16 (Fall 1984): 363-379.
Bruce
Caldwell, “Hayek’s Scientific Subjectivism,” Economics & Philosophy,
10 (1994): 305-314.
T. W.
Hutchison, The Politics and Philosophy of Economics (New York: New York
University Press, 1984): 176-232.
D. N.
McCloskey, Knowledge and Persuasion in Economics (New York: Cambridge
University Press, 1994): 27-52; 313-323.
Robert
Nozick, “On Austrian Methodology,” Synthese, 36 (1977): 353-392.
I. Primary Reading
Eugen
Böhm-Bawerk, , Capital and Interest, 3 volumes (South Holland, IL:
Libertarian Press, 1959[1884]): Vol. 2, 3-118; 161-176.
Carl
Menger, Principles of Economics (New York: New York University Press,
1976[1871]): 149-174; 257-285.
Carl Menger, “On the Origin of Money,” Economic Journal,
June (1892): 239-255.
Knut
Wicksell, Interest and Prices (New York: Augustus M. Kelley, 1965[1898]:
81-121; 223-239.
Friedrich
von Wieser, “On the Relationship of Costs to Value,” in Israel M. Kirzner, ed.,
Classics in Austrian Economics, 3 volumes (London: Pickering and Chatto,
1994): Vol. 1, 207-234.
II. Secondary Reading
A. M.
Endres, Neoclassical Microeconomic Theory: The Founding Austrian Version
(New York: Routledge, 1997): 146-178.
I. Primary Reading
F. A.
Hayek, Monetary Theory and the Trade Cycle (New York: Augustus M.
Kelley, 1966[1928]): 101-192.
F. A. Hayek, Prices and Production (New York:
Augustus M. Kelley, 1967[1931]): 1-104.
F. A.
Hayek, “Price Expectations, Monetary Disturbances and Malinvestments” [1933] in
ibid., Profits, Interest and Investment (New York: Augustus M. Kelley,
1975[1939]): 135-156.
F. A.
Hayek, Individualism and Economic Order (Chicago: University of Chicago Press,
1980[1948]): 220-254.
Ludwig
von Mises, The Theory of Money and Credit (Indianapolis: Liberty
Classics, 1980[1912]): 41-62; 129-177; 225-243; 377-404.
Ludwig
von Mises, Human Action (Chicago: Henry Regnery, 1966[1949]): 398-586.
II. Secondary Reading
Israel
M. Kirzner, Ludwig von Mises: The Man and His Economics (Wilmington,
Del.: ISI Books, 2001): 121-162.
G. R.
Steele, The Economics of Friedrich Hayek (New York: St. Martin’s Press,
1996): 129-227.
I. Primary Reading
Roger Garrison, Time and Money (New York:
Routledge, 2001): 1-122; 221-255.
Steve
Horwitz, Microfoundations and Macroeconomics: An Austrian Perspective
(New York: Routledge, 2001): 1-14; 40-61;65-202.
Axel
Leijonhufvud, Information and Coordination (New York: Oxford University
Press, 1981): 131-202.
Murray
Rothbard, Man, Economy and State, 2 volumes (Princeton: Van Nostrand,
1962): 273-559; 661-764; 850-878.
George
Selgin, Less Than Zero: The Case for a Falling Price Level in a Growing
Economy (London: IEA, 1997).
Lawrence
White, The Theory of Monetary Institutions (London: Basil Blackwell,
1999): 1-25; 53-69; 88-137; 180-192; 227-239.
II. Secondary Reading
Nicolai
Foss, The Austrian School and Modern Economics: Essays in Reassessment
(Copenhagen: Handelshøjskolens Forlag, 1994): 13-56.
Tyler
Cowen, Risk and Business Cycles: New and Old Austrian Perspectives (New
York: Routledge, 1997): 1-12; 76-114.
Richard
Wagner, “Austrian Cycle Theory: Saving the Wheat while Discarding the Chaff,” Review
of Austrian Economics, 12 (1999): 65-80.
I. Primary Reading
Eugen
Böhm-Bawerk, Capital and Interest, 3 volumes (South Holland, IL:
Libertarian Press, 1959[1884]): Vol. 2, 205-256.
Franz Čuhel,
“On the Theory of Needs” [1906], in Israel M. Kirzner, ed., Classics in
Austrian Economics, 3 volumes (London: Pickering and Chatto, 1994): Vol. 1,
305-337.
Carl
Menger, Principles of Economics (New York: New York University Press,
1976[1871]): 175-225.
II. Secondary Reading
A. M.
Endres, Neoclassical Microeconomic Theory: The Founding Austrian Version
(London: Routledge, 1997): 60-145.
Israel
M. Kirzner, “The Entrepreneurial Role in Menger’s System,” Atlantic Economic
Journal, 6 (September 1978): 31-45.
Laurence
Moss, “Carl Menger’s Theory of Exchange,” Atlantic Economic Journal, 6
(September 1978): 17-30.
I. Primary Reading
F. A.
Hayek, Individualism and Economic Order (Chicago: University of Chicago
Press, 1980[1948]): 33-56; 77-208.
F. A.
Hayek, “Competition as a Discovery Procedure” [1969], in ibid., New Studies
in Philosophy, Politics, Economics and the History of Ideas (Chicago:
University of Chicago Press, 1978): 179-190.
Arthur
Marget, “Stream Equations and Process Analysis” [1942], in ibid., The Theory
of Price (New York: Augustus M. Kelley, 1966): 346-403.
Hans
Mayer, “The Cognitive Value of Functional Theories of Price” [1932], in Israel
M. Kirzner, ed., Classics in Austrian Economics, 3 volumes (London:
Pickering and Chatto, 1994): Vol. 2, 55-168.
Ludwig
von Mises, Human Action (Chicago: Henry Regnery, 1966[1949]): 232-397;
689-715.
II. Secondary Reading
Israel
M. Kirzner, Ludwig von Mises: The Man and His Economics (Wilmington,
Del.: ISI Books, 2001): 93-120.
I. Primary Reading
Jack
High, Maximizing, Action and Market Adjustment (München: Philosophia
Verlag, 1990): 125-69.
Israel
M. Kirzner, The Meaning of Market Process (New York: Routledge, 1992):
38-56.
Ludwig
Lachmann, “On the Central Concept of Austrian Economics: Market Process,” in
Edwin Dolan, ed., The Foundations of Modern Austrian Economics (Kansas
City: Sheed and Ward, 1976): 126-132.
Don
Lavoie, Rivalry and Central Planning (New York: Cambridge University
Press, 1985): 48-116; 145-178.
Don
Lavoie, National Economic Planning: What is Left? (Washington, DC: CATO,
1985): 25-92.
Peter
Lewin, Capital in Disequilibrium: The Role of Capital in a Changing World
(New York: Routledge, 1999): 15-28; 160-174; 202-212.
Gerald
O’Driscoll and Mario Rizzo, The Economics of Time and Ignorance (Oxford:
Basil Blackwell, 1985): 71-159.
Murray
N. Rothbard, Man, Economy and State, 2 volumes (Princeton: Van Nostrand,
1962): 560-660.
Frédéric
Sautet, An Entrepreneurial Theory of the Firm (New York: Routledge,
2000): 4-54.
Esteban
Thomsen, Prices and Knowledge: A Market-Process Perspective (New York:
Routledge, 1992).
II. Secondary Reading
Peter
Boettke and David Prychitko, “Varieties of Market Process Theory,” in Peter
Boettke and David Prychitko, eds., Market Process Theories, 2 volumes
(Cheltenham: Edward Elgar, 1998): ix-xxvii.
Sanford
Ikeda, “Market-Process Theory and ‘Dynamic’ Theories of the Market,” Southern
Economic Journal, 57 (1990): 75-92.
Frank
Machovec, Perfect Competition and the Transformation of Economics (New
York: Routledge, 1995): 14-51; 159-200; 268-293.
Peter
Boettke, David Prychitko, and Steven Horwitz, “Beyond Equilibrium Economics”
[1986], reprinted in Peter Boettke and David Prychitko, eds., The Market
Process: Essays in Contemporary Austrian Economics (Cheltenham, UK: Edward
Elgar, 1994): 62-79.
James
Buchanan and Viktor Vanberg, “The Market as a Creative Process,” Economics
& Philosophy, 7 (1991): 167-86.
Andrei
Shleifer, Inefficient Markets (New York: Oxford University Press, 2000):
1-27; 175-197.