The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school theorists hold that economic theory should be exclusively derived from basic principles of human action.
The economic calculation problem is a criticism of using economic planning as a substitute for market-based allocation of the factors of production. It was first proposed by Ludwig von Mises in his 1920 article "Economic Calculation in the Socialist Commonwealth" and later expanded upon by Friedrich Hayek.
Friedrich August von Hayek, often referred to by his initials F. A. Hayek, was an Austrian-British economist and political philosopher who made contributions to economics, political philosophy, psychology, intellectual history, and other fields. Hayek shared the 1974 Nobel Memorial Prize in Economic Sciences with Gunnar Myrdal for work on money and economic fluctuations, and the interdependence of economic, social and institutional phenomena. His account of how prices communicate information is widely regarded as an important contribution to economics that led to him receiving the prize.
In the social sciences, unintended consequences are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by American sociologist Robert K. Merton.
Distributive justice concerns the socially just allocation of resources, goods, opportunity in a society. It is concerned with how to allocate resources fairly among members of a society, taking into account factors such as wealth, income, and social status. Often contrasted with just process, which is concerned with the administration of law, distributive justice concentrates on outcomes. This subject has been given considerable attention in philosophy and the social sciences. Theorists have developed widely different conceptions of distributive justice. These have contributed to debates around the arrangement of social, political and economic institutions to promote the just distribution of benefits and burdens within a society. Most contemporary theories of distributive justice rest on the precondition of material scarcity. From that precondition arises the need for principles to resolve competing interest and claims concerning a just or at least morally preferable distribution of scarce resources.
Dispersed knowledge in economics is the notion that no single agent has information as to all of the factors which influence prices and production throughout the system. The term has been both expanded upon and popularized by American economist Thomas Sowell.
In the social sciences, methodological individualism is a framework that describes social phenomena as a consequence of subjective personal motivations by individual actors. Class or group dynamics, which operate on systemic explanations, are deemed illusory, and, thus, rejected or de-prioritized. With its bottom-up micro-level approach, methodological individualism is often contrasted with methodological holism, a top-down macro-level approach, and methodological pluralism.
An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed to illustrate complex processes. Frequently, economic models posit structural parameters. A model may have various exogenous variables, and those variables may change to create various responses by economic variables. Methodological uses of models include investigation, theorizing, and fitting theories to the world.
The Road to Serfdom is a book written between 1940 and 1943 by Austrian-British economist and philosopher Friedrich Hayek. Since its publication in 1944, The Road to Serfdom has been popular among liberal and conservative thinkers, and remains referenced in modern discourse. It has been translated into more than 20 languages and sold over two million copies. The book was first published in Britain by Routledge in March 1944, during World War II, and was quite popular, leading Hayek to call it "that unobtainable book", also due in part to wartime paper rationing. It was published in the United States by the University of Chicago Press in September 1944 and achieved great popularity. At the arrangement of editor Max Eastman, the American magazine Reader's Digest published an abridged version in April 1945, enabling The Road to Serfdom to reach a wider non-academic audience.
Extended order is an economics and sociology concept introduced by Friedrich Hayek in his book The Fatal Conceit. Hayek describes an extended order as the outcome of a system that embraces specialization and trade, and he claims that it "constitutes an information gathering process, able to call up, and put to use, widely dispersed information that no central planning agency, let alone any individual, could know as a whole, possess or control." The result is an interconnected web where people can benefit from the actions and knowledge of those they don't know. This is possible and efficient, in Hayek's view, because a proper legal framework replaces trust, which is only practical in small circles of people who know each other socially. The extended order is at the heart of Hayek's thesis, in The Fatal Conceit, where he argues that "our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleading, known as capitalism."
Spontaneous order, also named self-organization in the hard sciences, is the spontaneous emergence of order out of seeming chaos. The term "self-organization" is more often used for physical changes and biological processes, while "spontaneous order" is typically used to describe the emergence of various kinds of social orders in human social networks from the behavior of a combination of self-interested individuals who are not intentionally trying to create order through planning. Proposed examples of systems which evolved through spontaneous order or self-organization include the evolution of life on Earth, language, crystal structure, the Internet, Wikipedia, and a free market economy.
Criticism of socialism is any critique of socialist economics and socialist models of organization and their feasibility, as well as the political and social implications of adopting such a system. Some critiques are not necessarily directed toward socialism as a system but rather toward the socialist movement, parties, or existing states. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds, such as in the economic calculation problem and the socialist calculation debate, while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many types of socialism, most critiques are focused on a specific type of socialism, that of the command economy and the experience of Soviet-type economies that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.
Criticism of Marxism has come from various political ideologies and academic disciplines. This includes general intellectual criticism about dogmatism, a lack of internal consistency, criticism related to materialism, arguments that Marxism is a type of historical determinism or that it necessitates a suppression of individual rights, issues with the implementation of communism and economic issues such as the distortion or absence of price signals and reduced incentives. In addition, empirical and epistemological problems are frequently identified.
EconTalk is a weekly economics podcast hosted by Russ Roberts. Roberts, formerly an economics professor at George Mason University, is a research fellow at Stanford University's Hoover Institution. On the podcast, Roberts typically interviews a single guest—often professional economists—on topics in economics. The podcast is hosted by the Library of Economics and Liberty, an online library sponsored by Liberty Fund. On EconTalk Roberts has interviewed more than a dozen Nobel Prize laureates including Nobel Prize in Economics recipients Ronald Coase, Milton Friedman, Gary Becker, and Joseph Stiglitz as well as Nobel Prize in Physics recipient Robert Laughlin.
"The Use of Knowledge in Society" is a scholarly article written by economist Friedrich Hayek, first published in the September 1945 issue of The American Economic Review.
The Fatal Conceit: The Errors of Socialism is a book written by the economist and political philosopher Friedrich Hayek and edited by the philosopher William Warren Bartley. The book was first published in 1988 by the University of Chicago Press.
In management, Joy's law is the principle that "no matter who you are, most of the smartest people work for someone else,” attributed to Sun Microsystems co-founder Bill Joy. Joy was prompted to state this observation through his dislike of Bill Gates' view of "Microsoft as an IQ monopolist." He argued that, instead, "It's better to create an ecology that gets all the world’s smartest people toiling in your garden for your goals. If you rely solely on your own employees, you’ll never solve all your customers' needs." Core to this principle is the definition of smart within the context of the quotation. Smart "refers to capability but not willingness to work for someone." Furthermore, "the fact that you are smart for one company does not make you smart for another." Richard Pettinger, Director of Information Management for Business, UCL The law highlights an essential problem that is faced by many modern businesses, "that in any given sphere of activity most of the pertinent knowledge will reside outside the boundaries of any one organization, and the central challenge [is] to find ways to access that knowledge."
Economic Calculation in the Socialist Commonwealth is an article by Austrian School economist Ludwig von Mises. Its critique against economic calculation in a planned economy triggered the decades-long economic calculation debate.
Throughout modern history, a variety of perspectives on capitalism have evolved based on different schools of thought.
The Denationalisation of Money is a 1976 book by Friedrich Hayek, in which the author advocated the establishment of competitively issued private moneys. In 1978 Hayek published a revised and enlarged edition entitled Denationalisation of Money: The Argument Refined, where he speculated that rather than entertaining an unmanageable number of currencies, markets would converge on one or only a limited number of monetary standards, on which institutions would base the issue of their notes.
