Austrian School of Economics: Experience for Russia. Austrian School of Economics: main representatives, history of development and current state Austrian theory

(the teachings of K. Menger, F. Wieser and O. Böhm-Bawerk).

Carl Menger(1840–1921), world-famous economist, head of the "Austrian school" of marginalism. At the age of 27, having defended his dissertation in Krakow, he worked as a journalist, then as an economic observer for the Austrian government in Vienna. The publication of the "Fundamentals of Political Economy" served as a recommendation to invite K. Menger to teach at the University of Vienna in the discipline "political economy".

Together with his colleagues and like-minded people, who began to call themselves students of the school of K. Menger, he creates a serious “opposition” in the fight against the paradigms of classical political economy that dominated economic science about the unconditional priority of the sphere of production and about the costly nature of the origin of the cost (value) of the goods.

Menger believed that economic behavior is determined by a person's needs (unsatisfied desires and aspirations). Things or actions that satisfy (satisfy) our needs are called goods. The most essential goods are consumer goods (goods of the first order). Goods of the second and higher order are used for the production of consumer goods. This gives value to the production resources used to produce consumer goods. These arguments form the content of the theory of imputation of the Austrian school.

Utility is what people attribute to goods, depending on the relationship between the amount of supply and the degree of satisfaction of needs. Each additional unit of a given good therefore receives less and less value.

The desire for exchange occurs when the benefits that a certain first subject has are less desirable for him than for a certain second subject. At the same time, the second subject prefers the benefits of the first to his own. That. the exchange is not equivalent, but mutually beneficial. The proportions of the mutual exchange of two goods are determined by the ratio of their marginal utilities.

The mathematical formulation of the provisions of Menger's theory reduced any economic activity to a conditional extremum problem. Always looking for a maximum (income, output) or minimum (costs) for a given limited amount of resources.

Eugen von Böhm-Bawerk(1851-1914) - student and follower of K. Menger. His main work, translated into Russian, is called Fundamentals of the Theory of the Value of Economic Goods, published in 1886.

From 1880 to 1889 worked as a Privatdozent of political economy at the Vienna University, and then as a professor at the University of Innsbruck. Since 1905 he has been a professor at the University of Vienna. A significant period of O. Böhm-Bawerk's life was associated with service in a number of higher state authorities in Austria: he was honored three times with the post of Minister of Finance; appointed by the Chairman of the Supreme Court of Appeal and the President of the Academy of Sciences; receives the status of a life member of the upper house of parliament.

Böhm-Bawerk, like Menger, believes that value is subjective utility, the value of which depends on the subject and the circumstances in which he is (a glass of water at a fountain and in a desert has a different value). All goods have abstract utility, but only limited goods have qualified utility, or value (value). Such goods have exchange power in accordance with the value attached to the good by the persons participating in the exchange.

To assess subjective usefulness, Böhm-Bawerk proposes to use a scale of needs ordered by their degree of importance for an individual - these are needs, the dissatisfaction of which leads to:

Ø to death;

Ø to illness;

Ø to brief suffering;

Ø to small troubles.

In the Fundamentals, O. Böhm-Bawerk gives an abstract example, which has become a textbook, on how to determine the total “marginal benefit” of a good that is consumed by a person.

We are talking about a lone settler who is calculating how to use the five bags of grain collected from his field. The settlement of the settler is as follows: he needs the first bag, “so as not to die of hunger until the next harvest”; the second - to "improve your diet so as to preserve your health and strength"; the third - to "add some meat food to the grain food ... he intends to fatten the bird"; the fourth - "must go ... to prepare bread vodka"; the fifth - to "use it for food for several pieces of parrots, whose chatter he likes to listen to."

To determine what the subjective value of one sack of grain is equal to, one must use the constructed scale and find the marginal utility of one sack. In this case, it is the utility of the last fifth bag.

So, the marginal utility of any good coincides with the utility that brings the last unit of this good that satisfies the least important need. The fewer bags, the more valuable the last unit of this good. If a hermit has only one bag, then its value is equal to infinity for him, since his whole life depends on him.

Analyzing the exchange, Böhm-Bawerk concludes that "The exchange is economically possible only between two persons who determine the value of the thing offered for exchange and the thing received in exchange in an unequal, even opposite way." This is due to the division of labor, because. "Each manufacturer will give his own product little subjective value, and others' products relatively high subjective value."

In accordance with the views of the Austrian school, due to the presence of value in consumer goods and the process of imputation, estimates of production resources (factors of production) are formed that form costs and thus values ​​and prices. Consider from this point of view the concept of profit. Profit is income minus costs. But what exactly is included in the costs?

If the entrepreneur himself works as a manager, then he saves on the salary of the manager. Subjectively, he is ready to include the corresponding amount in the profit, but in fact these are opportunity costs. Similarly, since he does not pay for the rent of his own premises, he subjectively includes the amount of payment in profit, although these are also opportunity costs. If we fully take into account the value of all opportunity costs, then in the remainder we get the interest on capital.

Two conclusions follow from this.

Ø Capital gains are, by their nature, interest.

Ø Profit on capital in equilibrium is zero, since the interest on capital is also an opportunity cost.

The emergence of profit (interest) on capital is the central idea of ​​the "expectancy theory", which was developed in its entirety by O. Böhm-Bawerk in the book "Positive Theory of Capital". This theory engages the reader with the formal idea of ​​refusing the origin of interest on capital due to the productivity of the latter. According to the author, workers, unlike capitalists, underestimate their future, not striving to wait for the fruits of their labor. Capitalists, on the other hand, prefer "roundabout" rather than "direct" methods of production, requiring a relatively longer time during which the increase in the total product from the influence of the "primary" factors of production decreases. Thus, according to Böhm-Bawerk, unlike K. Marx, it is not the uncertainty of the monetary "cost of labor" that creates "surplus value" with the participation of capital, but, on the contrary, a specific resource "capital" that participates in the production process in time , is not amenable to exact monetary measurement, and therefore, depending on the size of the capital and the duration of the production process, a greater or lesser percentage of the capital is added as a merit to those who allow themselves such an "expectation".

Friedrich von Wieser(1851-1926) - baron, one of the closest associates of K. Menger. Having received a university education, he devoted himself almost entirely to research and teaching. In 1917–1918 was Minister of Trade (Commerce) of Austria-Hungary. Like O. Böhm-Bawerk, he was honored with a lifetime membership in the upper house of parliament.

Propaganda, improvement and popularization of the teachings of the “Austrian school” were carried out by F. Wieser in all his publications, including such as: “On the Origin and Basic Laws of Economic Value” (1884), “Natural Value” (1899) and “Theory of Social Economy” (1914). The notable merits of the scientist in the field of economic science include the "introduction" into the scientific circulation of the terms marginal utility, imputation. The subjective perception of value, price, production costs and profits, the priority attitude to microeconomic analysis, the rejection of mathematical methods for solving economic problems and other theoretical and methodological positions of Menger's teaching F. Vizer brought to life from the professorial department for 42 years at the beginning (1884–1902) in Prague, and then (1903–1926) at the department of K. Menger inherited by him in Vienna.

In The Theory of the Social Economy, F. Wieser substantiates his concept of the private organization of the economy. According to the author, private property derives its meaning from the logic of management. At the same time, three arguments in favor of such a judgment are called: the need for a careful attitude to the expenditure of economic benefits in order to protect one's property from other contenders; the importance of the question of "mine" and "yours"; legal guarantees for the economic use of the property.

As for the "socialist slogans" that land and capital, as auxiliary means of labor, cease to be in private ownership and belong to "workers organized on a social scale", and that the shares of income brought by these factors should not go to "non-workers as personal income," the scientist argues, it will still be required that these shares be accurately calculated "and in a socialist economy, if this economy is regulated systematically."

F. Vizer is convinced that the theoretical defense of private property “would hardly have any chance of success” if the proposition that all income is created by labor were confirmed. He believes that society should not reject the right of private ownership, otherwise "very soon the state would become the sole owner of all the means of production, which, however, should by no means happen, since it is not able to manage these means of production as effectively like private individuals do.

The Austrian School of Economics, the market and entrepreneurial creativity - all these things are incredibly dear to modern libertarians and some neo-liberals. The school itself originated in Vienna in the late 19th and early 20th century through the work of Carl Menger, Eugen Böhm von Bawerk, Friedrich von Wieser, and others. She was the methodological opposite of the Prussian historical school (in a dispute known as Methodist Street).

Modern economists working in this tradition live in many different countries, but their school is still called Austrian. In short, we owe the Austrian school of economics such theoretical concepts as the subjective theory of value, marginalism, pricing theory and the formulation of the problem of economic calculation. Each of these developments has been accepted by modern economic science, while all the other theses of the AES are fiercely contested in academic circles.

Criticism of the Austrian School of Economics

Since the middle of the 20th century, serious economists have criticized the Austrian school and believe that its rejection of mathematical modeling, econometrics and macroeconomic analysis is beyond the scientific methods accepted in this discipline. Although the Austrian School has been considered unorthodox since the late 1930s, it sparked a new influx of interest in the 1970s, after Friedrich Hayek won the 1974 Nobel Prize in Economics, and also after the 2008 global financial crisis.

origin of name

The Austrian school owes its name to the German economists who opposed the Austrians, criticizing their methodology (end of the 19th century). At that time, the Austrians advocated the role of theory in economics, in contrast to the Germans, who considered various historical circumstances to be the key economic factor.

In 1883, Menger published "Studies in the Methods of the Social Sciences with a Particular Appeal to Economics" in which he criticized the then dominant historical school. Gustav von Schmoller, head of the historical school, responded to this criticism with an unfavorable review, in which he introduced the term "Austrian school" in an attempt to characterize Menger's adherents as outcasts and provincials. The label endured and was accepted by the adherents themselves.

Story

The school originated in Vienna, the capital of the Austrian Empire. The work of 1871 "Principles of Economics" is usually considered the beginning of the birth of the Austrian school of economics. The book stands as one of the first modern treatises on the promotion of the theory of marginal utility.

The AES was one of the three founding currents of the marginalist revolution of the 1870s, and its main contribution was to introduce a subjectivist approach to economics. Although marginalism was an influential current at the time, for the first time in the 19th century a specific school of economics arose that shared marginalist views and united around Menger's ideas. Over time, it became known as the psychological school, the Viennese school, or the Austrian school.

Main Representatives

Menger's contribution to economic theory is closely related to the figures of Eugen Böhm von Bawerk and Friedrich von Wieser. These three economists became the so-called first wave of the Austrian school of economics. Böhm-Bawerk wrote extensive critical pamphlets on Karl Marx in the 1880s and 1890s, which are considered a characteristic example of the traditional "Austrian" attacks on the Hegelian doctrines of the historical school.

Frank Albert Vetter (1863-1949) was the most prominent representative of "Austrian thought" in the United States. He received his Ph.D. in 1894 from the University of Halle and then became professor of political economy and finance at Cornell in 1901. Several important Austrian economists were trained at the University of Vienna in the 1920s and later participated in private seminars taught by Ludwig von Mises. These included Gottfried Haberler, Fritz Machlup, Karl Menger Jr. (son of the aforementioned Karl Menger), Oskar Morgenstern, Paul Rosenstein-Rodan, and Abraham Wald.

By the mid-1930s, most economists had adopted many of the ideas of the early "Austrians". Fritz Machlup proudly quoted Hayek as saying that "the greatest success of our school is that it gradually ceases to exist, because its fundamental ideas have become part of mainstream economic thought."

Once upon a time, in the middle of the 20th century, Austrian economics was ignored or ridiculed by mainstream economists because it rejected modeling, mathematical and statistical methods in the study of economics. Mises' student Israel Kirzner recalled that in 1954, when he wrote his Ph.D. thesis, there was no separate Austrian school. When Kirzner was deciding which graduate school to attend, Mises advised him to accept an offer to join Johns Hopkins because it was a prestigious university where his like-minded Fritz Machlup had attended.

Further development

After the 1940s, the Austrian School of Economics split into two separate schools of economic thought, and at the end of the 20th century it split altogether. One camp of Austrians, exemplified by Mises, considers neoclassical methodology an unreasonable error, while another camp, exemplified by Friedrich Hayek, accepts much of the neoclassical methodology and, moreover, accepts government intervention in the economy. Henry Hazlitt wrote economic columns and editorials for a number of publications, as well as numerous books on the subject of the Austrian economy from the 1930s to the 1980s. Mises influenced Hazlitt's thinking. His book Economics in One Lesson (1946) sold over a million copies, and another notable work by the economist is The Failure of the New Economics (1959), a staged critique of John Maynard Keynes's general theory.

The Austrian School's reputation grew in the late 20th century, thanks in part to the work of Israel Kirzner and Ludwig Lachmann at New York University and renewed public awareness of Hayek's work after he won the 1974 Nobel Prize in Economics. Hayek's work was influential in reviving laissez-faire thought in the 20th century.

Criticism of the split

Economist Leland Yeager discussed the split at the end of the 20th century and referred to a textual escapade written by Murray Rothbard, Hans-Hermann Hoppe, Joseph Salerno and others in which they attack and humiliate Hayek. Yeager stated: "The attempt to drive a wedge between Mises and Hayek (the role of knowledge in economic calculation), and especially the humiliation of the latter, is unfair to these two great men."

Association with libertarianism

In a 1999 book published by the Ludwig von Mises Institute (Mises Institute), Hoppe argued that Rothbard was the leader of "dominance in the Austrian economy" and contrasted Rothbard with the Nobel laureate Friedrich Hayek, whom he called a British empiricist and opponent of the thought of Mises and Rothbard. Hoppe acknowledged that Hayek was the most famous Austrian economist in academia, but stated that Hayek was opposed to the Austrian tradition, which went from Karl Menger and Böhm-Bawerk through Mises to Rothbard.

The Austrian economist Walter Block says that the Austrian school can be distinguished from other schools of economic thought by two features - economic and political theory. According to Block, if Hayek can be generally considered an "Austrian" economist, then his views on political theory contradict the libertarian political thought that Block sees as an integral part of the AES. The economic theory of the Austrian school in some studies receded into the background, giving way to the political one.

By saying that libertarian political theory is an integral part of the AES, and believing that Hayek is not a libertarian, Block unwittingly excludes from the Austrian school and its founder, Carl Menger, because he seems to justify a larger-scale state intervention than that which Hayek meant. For example, Menger favored progressive taxation and extensive labor laws. Thus, the following conclusions belong to the Austrian school of economics:

1. Economic freedom cannot exist apart from political freedom.
2. The state should not interfere in economic processes.
3. The government should be cut and taxes should be reduced.
4. Free entrepreneurs are the main driving force of market processes.
5. The economy must self-regulate without outside interference.

Confession

Many of the theories developed by Austrian "first wave" economists have long been absorbed into mainstream economics. These include Carl Menger's theories on marginal utility, Friedrich von Wieser's theories on opportunity cost, and Eugen Böhm von Bawerk's ideas on the role of time, and Menger's and Böhm-Bawerk's critiques of Marxist economics.

Former U.S. Federal Reserve Chairman Alan Greenspan said that the founders of the Austrian School "reached far into the future, as most of them had a profound and, in my opinion, irreversible effect on the way most mainstream economists think in this country."

In 1987, Nobel laureate James M. Buchanan told an interviewer, “I don't mind being called 'Austrian'. Hayek and Mises may consider me an "Austrian", but perhaps others will not agree with this. Chinese economist Zhang Weiying supports some "Austrian" theories, such as the real business cycle theory.

Impact on economics departments and worldwide distribution

Currently, universities with significant "Austrian" influence exist all over the world: George Mason University, New York University, Loyola University in New Orleans and Auburn University in the United States, King Juan Carlos University in Spain and Francisco Marroquin University in Guatemala. But in addition to them, private organizations such as the Mises Institute and the Cato Institute also contribute to the dissemination of AES ideas.

If we talk about the experience of the Austrian school of economics for Russians, then we can recall the convinced "Austrian" Pavel Usanov, who teaches at the Higher School of Economics, or the former Russian Prime Minister and Finance Minister Yegor Gaidar, who was known as a big fan of the ideas of Mises and Hayek.

Connection with monetarism

After studying the history of business cycles in the United States, he wrote that there seemed to be no systematic relationship between expansion and subsequent contraction of cycles, and that further analysis might cast doubt on this "Austrians" theory. Referring to Friedman's critique of business cycle theory, "Austrian" economist Roger Garnison argued that Friedman's empirical findings "are broadly consistent with both monetarist and 'Austrian' views," believing that although Friedman's model does describe the efficiency of an economy high level of aggregation, Austrian theory offers an insightful account of the market process that may underlie these aggregations.

Austrian school economy - the theoretical direction of economic science, emphasizing the role of the self-organizing force of the market price mechanism.

Traditional economics uses mathematical models and statistical methods to model and evaluate economic behavior.

Austrian school economy Austrian SchoolEconomy

Another hallmark of the Austrian school is the emphasis on the individual entrepreneur, taken as the basic unit in economic analysis.

Most of the views of the Austrian school seem too radical, or at least cynical (perhaps that is why they have Stepan Demura among their supporters). They represent the antithesis of the Keynesian vision.

Austrian(Viennese) school, perhaps more than all areas of marginalism deserves the name " school". It arose around the department of the University of Vienna, which for many years was headed by Carl Menger. The main representatives of the Austrian school, in addition to Menger, are his followers F. Wieser and E. Böhm-Bawerk.

• methodological individualism in the interpretation of economic events
• the theory that money is not neutral
• the theory that the capital structure economy consists of heterogeneous (heterogeneous) goods that have polyspecific uses ( Austrian business cycle theory)
• limiting force of the pricing mechanism
• The principle of Laissez faire, which is translated from French. means the principle of non-intervention of the state in the economy.

Traditional economics uses mathematical models and statistical methods to model and evaluate economic behavior.

Austrian school economy believes that the mat models and statistics are imperfect, unreliable and insufficient. Instead of this Austrian SchoolEconomy uses logical conclusions from human behavior - a science called praxeology.

The main representatives of the Austrian school:
* first generation - Carl Menger (1840−1921) (founder)

* second generation - Eigen von Böhm-Bawerk (1851−1914), Friedrich von Wieser (1851−1926), Eugen von Filippovich von Philippsberg (1858−1917), Emil Sachs (1845−1927);

* third generation - Ludwig von Mises (1881-1973), Karl Schlesinger (1889-1938), H. Mayer (1879-1955), Richard von Strigl (1891-1942), Leo Illy (nee Senfeld) (1888-1952 ), Benjamin Anderson (1886-1949), Frank Fetter (1863-1949);

* fourth generation - Friedrich von Hayek (1899-1992), Oskar Morgenstern (1902-1977), Fritz Machlup (1902-1983), Paul Rosenstein-Rodan (1902-1985), Gottfried von Haberler (1900-1995), Henry Hazlitt (1894−1993), Friedrich Lutz (1901−1975), Felix Kaufmann (1895−1949), Alfred Schütz (1899−1959);

* fifth generation - Murray Rothbard (1926-1995), Israel Kirzner (born 1930), Ludwig Lachmann (1906-1990), George Shackle (G.L.S. Shackle) (1903-1992);

* sixth generation - Hans-Hermann Hoppe (b. 1949), Jörg Guido Hulsman (b. 1966), Jesus Huerta de Soto (b. 1956), Peter Boettke (b. 1960), Chris Coyne (Chris Coyne) , Steven Horwitz (Steven Horwitz, b. 1964), Peter Leeson (Peter T. Leeson), Frederic Saute (Frederic Sautet), Roger Garrison (b. 1944)

Sources:
Nouriel Roubini, Stephen Mime: "Nouriel Roubini: how I predicted the crisis"

In the XX century. the greatest contribution to the development of the Austrian school was made by Ludwig von Mises(1881 - 1973) and Friedrich von Hayek(1899-1992) . Thanks to them, the ideas of the Austrian school went far beyond the University of Vienna.

The most complete views of L. Mises are presented in the works “Public economy. Studies of socialism"(1922), " Liberalism"(1927)," Criticism of interventionism"(1929), " Epistemological problems of economics» (1933), "Human activity", a treatise on economics"(1949), " Foundations of economic science: methodology essays" (1962).

Works by F. Hayek "Monetary Theory and the Trade Cycle"(1929), "Prices and Production"(1931), " Profit, interest and investments»(1939), " Pure theory of capital"(1940). The last major work of the scientist " Pernicious arrogance. Mistakes of socialism" published in 1988. Dedicated to the economic problems of the 20th century.

Methodology and methods. Denying the suitability of using the methods of the natural sciences in the study of social phenomena, L. Miss developed a general theory of human activity - praxeology and determined the place of economic science in the system of scientific knowledge. The branch of economics that studies the theory of a market society, he called catallactic).

F. Hayek developed the concept of scattered knowledge. According to one hundred opinion, a researcher who studies natural phenomena deals with objective facts, i.e. independent of the opinions of people, the social sciences study human actions, therefore things are as they are imagined by a person. Individual, subjective opinions for the researcher are final. The social sciences deal with knowledge of a subjective nature, and knowledge itself cannot exist in a concentrated form, since it is scattered among many individuals. The concept of dispersed knowledge is directed against supporters of centralized control, who justify their claims to control and manage social processes by the fact that it is possible to use the entire body of knowledge in a systematically integrated form.

Given the dissemination of knowledge and their subjective nature, it is useless to use such methods of the natural sciences as measurements and experiments in the study of social processes, according to F. Hayek. The macroeconomic method, which attempts to establish causal relationships between hypothetically measured entities or statistical aggregates with the help of mathematics and does not take into account the subjective nature of economic values, was rejected by him.

Theory of social development. In his works, F. Hayek argued that the use of special methods in the study of social phenomena is due to the characteristics of the subject and object of study, so he paid considerable attention to explaining the process of the emergence and development of world civilization. In his opinion, its formation was the result of spontaneous cultural evolution. Spontaneous, or spontaneous, evolutionary process, which lasted for millennia, in which a huge number of different factors participated, was the process of forming a complex structure - extended order, which is often not quite aptly called capitalism.

The extended order was formed from the inadvertent adherence of people to certain moral traditions that underlie the competitive market order. Thanks to tradition, learning, imitation, which consisted mainly of prohibitions, the permissible limits of freedom in making individual decisions were established. The new rules were spread and consolidated because the groups that adhered to them began to reproduce more successfully and include the lagging behind in their composition.

F. Hayek argued that spontaneously formed institutions, not being the result of deliberate human actions, became the basis for the development of civilization, and any attempt to establish control or replace spontaneous processes with conscious leadership would inevitably put a limit to this development.

The concept of order. The central place in the reasoning of F. Hayek was occupied by order concept. He noted that the closest equivalents of the concept of "order" are "system", "structure" and "model". The main thing in the concept of "order" was assigned to "ordering".

Classifying orders according to the principle of their occurrence, he distinguished two types of orders - arranged and originated. It was assumed that the arranged order was created by someone as a result of deliberate ordering, i.e. purposeful construction of the elements of society. This is where constructivist rationalism comes from. The resulting order is created by forces within the system. It is a self-perpetuating, spontaneous order. The task of economic theory is to study the emerging order.

Arranged orders are relatively simple and always serve the purposes of their creator. The spontaneous orders are more complex; they do not have a direct purpose. Their actions are aimed at maintaining or restoring this order.

The theory of the market and market economy. L. Mises developed a dynamic theory of the market, which is based on the concept of purposeful human activity. This theoretical development opposed the theory of the market, developed by the neoclassical school and based on the statics of the concept of economic equilibrium.

The scientist believed that the market economy is a public system of division of labor under conditions of private ownership of the means of production. The market controls this system. The market is a process driven by the efforts of many individuals. The market process is a set of individual actions of many members of the market community. The state of the market at any given time is determined by the price structure. Market prices help producers figure out what to produce, how and in what quantity. The market directs the actions of individuals so that they best meet consumer demand, fulfill the desires of others. Under these conditions, the state, as a social apparatus of restraint and coercion, creates, preserves and preserves the environment in which the market economy can function successfully.

Theory of Entrepreneurship. L. Mises developed the theory of entrepreneurship. For him, an entrepreneur is a person operating in conditions of uncertainty, which is inherent in any activity. No material wealth or money guarantees against the influence of uncertainty in the future, therefore, the use of any material wealth or money for production, i.e. to secure the future, is in itself an entrepreneurial activity.

Entrepreneurs are the main driving and coordinating force of the market process. L. Mises developed a principle that makes it possible to distinguish an entrepreneur from a non-entrepreneur. An entrepreneur is a person who bears the losses from the capital employed. His job is to make decisions. In an effort to satisfy consumer demand in the cheapest possible way, he decides for what purposes the factors of production should be used. Thus, the decisions of entrepreneurs determine the distribution of capital between various branches of production, and thus coordination is carried out in a market economy.

Price theory. The price theory developed by L. Mises is based on the concept of individualism and subjectivism. The essence of the theory can be reduced to two provisions.

• Firstly, flails are a market phenomenon. They are generated by the market process and are the spinal cord of the market economy. There are no prices outside the market. Prices cannot be arbitrarily constructed. They are the resultant confluence of certain market factors, actions and reactions of members of the market community.
• Secondly, the source of price determination is the subjective assessments of consumers. Prices are a social phenomenon, as they are formed as a result of the interaction of the assessments of all market participants. Each individual, buying or not buying, selling or not selling, contributes to the establishment of market prices. But the larger the market, the less weight an individual's contribution has. The price is not the result of equality of valuations, but, on the contrary, of the difference in valuations.

The theory of monopoly. Exploring the process of pricing, L. Mises developed the theory of monopoly.

Its main criterion is the monopoly price. There are only two categories of prices - competitive and monopoly. Accordingly, the market can be either competitive or monopoly. In a competitive market, there is no price policy of sellers. Sellers sell as much as they can sell at the market price. Competitive prices to the maximum extent correspond to the interests of consumers. The monopolist pursues its own pricing policy. It is more profitable for him to withdraw part of the supply from the market in order to receive a specific monopoly income, until, as a result of a fall in demand, the proceeds from the sale of the total stock at a price exceeding the competitive price become less than the total proceeds from the total sales at the competitive price. Monopoly prices violate consumer dominance and market democracy. They have a negative impact on consumption because increased spending on the monopoly product reduces spending on other goods. The exception is patent and copyright law, so inventors and writers have an incentive and opportunity to be creative, and the public gets the corresponding product.

Monopoly prices arise when supply is monopoly. The condition for its formation is the difference in the fertility of different plots of land or the efficiency of individual factors of production. But most often, a monopoly is the result of a purposeful activity of state power: customs barriers; contractual cartels that entrepreneurs enter to take advantage of the opportunities offered by protectionist tariffs; licenses that the law defines as a prerequisite for serving consumers; duties.

Theory of economic equilibrium. The theory of economic equilibrium, which became the basis for the study of economic phenomena by representatives of the neoclassical direction, was established as a result of the "marginalist revolution". According to L. Mises, its drawback is that mathematical economists use analogies and methods from classical mechanics when solving economic problems. The static mathematical model of economic equilibrium does not take into account the role of the entrepreneur in the dynamic market process. In a real economy, it is the actions of the entrepreneur that do not allow the economic system to reach a static state of equilibrium.

The scientist believed that the model of equilibrium prices is appropriate only for visual presentation of problems and is of little use in practice. Price theory is based on the unrealistic assumption that all participants have full market information and are therefore able to make the most of the most favorable buying and selling opportunities. In building the model, known past prices are used; future prices can only be predicted. In their daily activities, entrepreneurs are not guided by equilibrium prices.

The theory of interventionism or deformed market economy. Since the beginning of the XX century. the concept of state regulation of economic processes, called " dirigisme" (from the French. dinger- manage), or "statism"(from the French etat- state). L. Mises used the term " interventionism"(from lat. intervention - intervention). He defined the system of interventionism as a deformed market economy. Its peculiarity is that, while remaining a market economy, it represents the third way of economic development, located between capitalism and socialism.

Considering the methods of interventionism in terms of their effectiveness and impact on the functioning of a market economy, L. Mises came to the conclusion that a number of measures of interventionism, for example, “fair” taxation, minimum and maximum prices, minimum wage rates, minimum interest rates, credit expansion , protectionist barriers, etc., generally negatively affect the functioning of the market. Since they always limit the volume of production and the amount of goods available for consumption, there is, as a rule, a worse situation than the previous one, which they wanted to change. And most importantly, interventionism seeks to confiscate the "surplus" from one part of the population and give it to another part.

Theory of the economic crisis. In the 1930s L. Mises, together with F. Hayek, actively opposed Keynesianism. They argued that the long depression of the 1930s was entirely caused by the misguided monetary policies of governments before and after the crisis of 1929.

According to the scientist, the credit expansion carried out by the US government at that time was the cause of the economic recovery and crisis. Its essence was that banks, seeking to make a profit, expanded lending by issuing banknotes or opening current accounts that were not fully backed by gold reserves and significantly exceeded the limit due to their own assets, as well as funds entrusted to them by banking institutions. clients. By doing this, the banks contributed to lowering the interest rate below the level that would have been established in the market without their intervention.

The artificial lowering of the interest rate increased investment demand. The rate cut played a decisive role in economic growth. The money received by entrepreneurs at low interest rates was invested in projects that were not profitable before the reduction in the interest rate. Economic problems arose because the increase in the money supply was not accompanied by an increase in material resources and labor. As a result of the growth in demand for means of production and labor, wages increased, and the increased demand for consumer goods led to an increase in their price.

As long as lending continues, both prices and wages continue to rise. But this inflationary process cannot continue indefinitely.

The period of depression that comes after the rise, L. Mises described as restorative: the pricing system is being restored; disproportions that have arisen in the production of goods for both industrial and consumer purposes are being eliminated. L. Mises believed that under conditions of depression, attempts to “stimulate” economic activity by a new expansion of credit, if they solve “the difficulties of the current moment, then in the very near future this will cause an even worse situation” . During such a period, inflation should be stopped, price regulation and wage rates should be abandoned.

According to F. Hayek, the main source of failures of the market mechanism is inflation. The scientist believed that economists constantly misuse the term "inflation". In its original and true meaning, it is an excessive increase in the amount of money, leading to an increase in prices. At the same time, the rise in prices caused by the lack of food due to crop failure cannot be considered inflation. It would also be wrong to call inflation a general rise in prices due to a shortage of oil and other energy sources, leading to an absolute decrease in the level of consumption, unless the mentioned shortage of fuel was a pretext for a further increase in the money supply. It is possible, however, that inflation will seriously damage the functioning of the market without any rise in prices, if this growth is hindered. In fact, such "suppressed" inflation is fraught with even greater disorganization of economic activity than open inflation.

F. Hayek proved that inflation has only a negative impact on the economy, even moderate inflation ultimately gives rise to recurring periods of depression and unemployment. He explained the ego by the fact that, firstly, in order to solve the problem of full employment with the help of inflation, it must constantly gain momentum, and this can eventually lead to a disruption in the functioning of the market economy. Secondly, such inflation generates even more unemployment than the one that they wanted to prevent.

Inflation disrupts the market process of coordination. It disorients the allocation of labor resources. As a result, resources are diverted to activities that can only be supported by additional investment financed by the continued expansion of the money supply. An additional influx of money leads to changes in the relative intensity of demand for various types of goods and services, to further changes in price ratios and corresponding changes in the orientation of production and the allocation of factors of production, including labor. The longer the inflation, the more jobs will depend on it.

besides, in the past, the decline in the value of money has invariably gone hand in hand with economic decline.

Economic Stabilization Program. To overcome the crisis and the smooth functioning of the market economy in the long term, F. Hayek considered it necessary:

• - abandon the term "full employment", since the level of employment depends on inflation. Maximum employment can be achieved only with a properly functioning market, which, through the free play of prices and wages, will establish a correspondence between supply and demand in every sector of the economy. Therefore, the primary task is the stabilization of money, and not the stabilization of full employment;
• - in a crisis state of the economy, to prevent an increase in the money supply or, at least, to reduce the rate of its growth to a rate corresponding to the real growth of production. These measures will increase unemployment, but they will reveal all the defects in the placement of labor caused in the past by inflation. It is unacceptable to establish control over wages and prices. A gradual reduction in the rate of inflation will not bring benefits;
• - deprive trade unions of the opportunity to influence the growth of wages. “Until wages, and in particular the relative wages in the various spheres of production, are again subject to the laws of the market and become truly flexible (lower for some groups, higher for others), there will still be no possibility of non-inflationary policy,” wrote F. Hayek;
• - reorganize the system of public finances: reduce public spending; establish control over the growth of the money supply, give the central bank the right to refuse government loans through additional money emission;
• - having finally lost faith in the ability and desire of governments to create a stable monetary system, he demanded "to replace the government's currency monopoly and national currency systems with free competition between private issuing banks." Thus, in his opinion, governments will lose their monopoly on the issue of money and a system of competitive currencies will be created.

The concept of decentralized systems. The economic process, according to F. Hayek, is accompanied by unforeseen changes. Therefore, there is a need to explain how the economic system adapts to continuous changes or how the process of coordination is carried out. The coordination of economic activity on the scale of the economic system is inextricably linked with the processes of reproduction of information and its rapid distribution among the participants in the economic process. In solving this problem, a spontaneous, competitive mechanism has advantages over a centralized system, i.e. planned management.

A person making an economic decision, first of all, is concerned about how much more expensive or cheaper the cost of the items he needs has become. It is here that economic calculation arises, or, as the scientist defined, pure logic of choice - a mechanism for classifying possible human attitudes, a technique for describing the interrelationships of various parts of one plane. Decisions are determined from given premises (desire and known facts). Prices play an important role here. The main function of the price system is the transmission of information on the basis of which individuals coordinate their activities and adapt production activities to changed circumstances. This is the essence of the market, i.e. a competitive mechanism of coordination that makes it possible, with the help of prices, to use "knowledge scattered among many individuals." Accordingly, any attempt to artificially correct the price mechanism (regulate prices) violates this natural process of adaptation of the economic system.

In a market system, the continuous process of change and coordination is primarily associated with competition. The history of civilization confirms that societies that live according to the laws of competition achieve prosperity more quickly. Competition is especially necessary for undeveloped societies, for which the main task is to identify untapped opportunities.

The concept of a socialist economy. Linking the progress of civilization with the process of spontaneous self-organization, F. Hayek proved that the replacement of a competitive system with a centrally controlled (socialist) one would lead to a drop in productivity and economic decline. He did not deny the need for planning - a set of interrelated decisions about the allocation of available resources. Every economic activity is planning. It is only necessary to understand whether it is necessary or not, whether planning should be carried out centrally, by a single authority, or whether it should be divided among many individuals.

First of all, the scientist drew attention to the role of prices in coordinating the economic process. Prices are not objective signs of things, but only a reflection of a particular situation in society at a given time and place. The elimination of the market pricing mechanism deprives the center of the information function of prices, as a result, it can no longer fully possess the information necessary for drawing up a plan. In a market system, this problem is solved automatically by the price system. “... The fact that a single central government must solve the economic problem of distributing a limited amount of resources between an almost infinite number of competing goals is the problem of socialism as a method,” wrote F. Hayek.

In such a situation, the center cannot promptly transmit information about the need to adjust activities due to the lack of a mechanism for exchanging information between the center and participants in the economic process. Creating a variety of ways to communicate information to people who build their plans based on it is the central problem of any theory that explains the economic process. The question of the best way to use knowledge, of building an effective economic system is one of the main ones for economic policy as well.

J. Kornai, who commented on the course of the discussion between L. Mises and F. Hayek on the problems of socialism and F. Hayek with O. Lange, wrote: “Hayek turned out to be right on every point of the dispute. The reformers who are trying to follow in the footsteps of Lange towards market socialism are constantly convinced by the bitter experience of their countries of the illusory nature of his hopes.

• L yul wig Edler von Mises rolled and lea in 1881 in the city of Lemberg (now the city of Lvov). Educated at the University of Vienna. Since 1913 - professor at the University of Vienna. In the first post-war years, develop anti-inflationary measures. In 1926 he created the Austrian Institute of Business Cycles. From 1934 he worked as a professor at the Higher Institute for International Studies in Geneva. In 1940 he emigrated to the USA, taught at the Graduate School of Business Administration, and then at the University of New York. Died in 1973
• Friedrich August von Hayek was born in 1899 in Vienna. In 1918 he entered the University of Vienna, where he studied law, economics, philosophy and psychology. In 1921 he received a doctorate in law, and in 1923 a doctorate in economics. From 1927 to 1931 - Director of the Austrian Institute for Economic Research. In 1931 he left for England. Since 1950 he has been working at the University of Chicago. In 1962 he returned to Europe, teaching at the universities of Freiburg and Salzburg. In 1974, "for his pioneering work on the theory of money and the theory of economic fluctuations, as well as for his deep analysis of the interdependence of economic, social and institutional phenomena," he was awarded the Nobel Prize in Economics. Passed away in 1992
• The modern Austrian school of economics is closely connected with the activities of the Ludwig von Mises Institute established in 1982. The Institute publishes the works of economists of the Austrian School and conducts scientific research.

Peculiarities Austrian school:

Refusal to use mathematical research methods;

extreme subjectivism as a characteristic feature of almost all representatives of the school;

Emphasis on the study of the psychological characteristics of consumer behavior;

· Emphasis on heterogeneity and its time structure of capital in the study of macroeconomic problems, including the study of the nature of the money cycle.

first generation - Carl Menger (1840−1921) (founder)

second generation - Eigen von Böhm-Bawerk (1851−1914), Friedrich von Wieser (1851−1926), Eugen von Philippovich von Philippsberg (1858−1917), Emil Sachs (1845−1927);

third generation - Ludwig von Mises (1881-1973), Karl Schlesinger (1889-1938), H. Mayer (1879-1955), Richard von Strigl (1891-1942), Leo Illi (nee Senfeld) (1888-1952 ), Benjamin Anderson (1886-1949), Frank Fetter (1863-1949);

In Russia, one of the representatives of the Austrian school was G. V. Lebedev (1957−2004), today - Boris Lvin, Yuri Kuznetsov, Vadim Novikov, Grigory Sapov, Alexander Kuryaev, in Belarus - Yaroslav Romanchuk.

THE THEORY OF MARGINAL UTILITY, a branch of political economy that arose in the last third of the 19th century. Developed by representatives of the Austrian school: W. Jevons, L. Walras, K. Menger, E. Böhm-Bawerk and others. According to the marginal utility of the theory, the value of goods is determined by their "marginal utility" based on subjective assessments of human needs. The marginal utility of a good denotes the utility of the last unit of that good, the last good having to satisfy the least important needs. In this case, the rarity of the goods is declared a cost factor. Subjective value is a personal assessment of the goods by the consumer and the seller; objective value is exchange proportions, prices that are formed in the course of competition in the market. As the subject's needs gradually become saturated, the usefulness of the thing decreases. Marginal utility theory attempts to give advice on how best to allocate funds to meet needs when resources are limited. Modern economists use marginal utility theory, focusing on the study of patterns of consumer demand, supply analysis, market research and pricing at the microeconomic level.

Bohm-Bawerk (Bohm-Bawerk) Eigen (1851-1914), Austrian economist. He made a justification of the marginal utility of the theory.

1) the value of a thing is measured by the value of the marginal utility of this thing

2) the basis of value is the smallest benefit that allows, under specific conditions, to consume this thing in a rational way

3) the price of the goods as a result of subjective assessments of material goods by the participants in the exchange

4) expectation theory (workers, unlike capitalists, underestimate their future, not striving to wait for the fruits of their labor)

5) recognizes the emergence of surplus value in the process of capital transferring its value to the product, but the self-increase of value is based on the time during which capital is turned over

6) interest on capital is a general economic category where there is an exchange of current and future consumption

VISER(Wieser) Friedrich Freiherr von (July 10, 1851, Vienna - July 23, 1926, St. Gilgen), Austrian economist, representative of the Austrian school, most of all contributed to its organizational design.

Contribution to science

Wieser is known for a number of works devoted to the presentation of the main ideas of the Austrian school. He became famous for giving vivid catchy names and formulations to many of the ideas of marginalism. It was he who first used the terms "marginal utility" (Grenznutzen), "imputation" (Zurechnung), "Gossen's first law".

Wieser was also attracted by the problems of economic development. He viewed it as a social process in which the decisive role belongs to outstanding personalities - leaders (Fuhrer), pioneers (Pionier), or innovators (Neuerung). It should be noted that J. Schumpeter, being a student of Wieser, used all this terminology in his theory of economic development, the driving force of which he also considered the individual activity of individual individuals capable of risk and innovation.

JEVONS(Jevons) William Stanley (September 1, 1835, Liverpool - August 13, 1882, Hastings), English logician, economist, one of the founders of the neoclassical trend in economic theory.

Scientific contribution

Jevons entered the history of economic thought primarily as the author of The Theory of Political Economy, the publication of which in 1871, simultaneously with the main works of the Austrian economists C. Menger and L. Walras, marked the beginning of the marginalist revolution. In this work, as well as in The Principles of Science: A Treatise on Logic and Scientific Method, published in 1874, Jevons formulated his famous thesis that "our science should be mathematical, if only because it deals with quantities. Although economic dependencies can be described in words, but the mathematical language, in his opinion, is more accurate and easier to perceive. In order for economics to really become accurate, it needs to expand and improve statistical data that will make it possible to give formulas quantitative certainty. Jevons characterized his theory as a combination of "the mechanics of utility and self-interest."

Jevons was in principle a supporter of non-intervention of the state in the economy. Like most of his contemporaries, he believed that if the parties involved in economic bargaining have equal positions, equal access to information, the state is obliged to provide only the rules and methods for fulfilling contracts. But in no case do not interfere in the bargaining process. However, if these conditions are violated, the intervention of the state, in his opinion, is mandatory. In particular, he defended the "factory laws" that limited the length of working hours and regulated working conditions, not only in industry, but also in agriculture and trade. He considered it possible for the state to provide certain types of public services (security, law enforcement, education, culture, etc.). However, he believed that state forms of entrepreneurship are always more expensive than private ones, due to bureaucratic regulation and lack of competition. And only practice, according to him, could "in most cases determine what is more profitable for society: to entrust the performance of certain services to the collective actions of the state or to private interests."

8. Anglo-American (Cambridge School)

Alfred Marshall MARSHALL (Marshall) Alfred (July 26, 1842, London - July 13, 1924, Cambridge), English economist, founder of the Cambridge School. In his influence on the development of economic theory in the 20th century, he can be compared with Walras, and his book Principles of Economics (Principles of Economics) is perhaps the only book on economics of the 19th century that can be recommended to students of microeconomics even at the end of the 20th century.

Main labor

Marshall's fame as a leading theoretical economist has long been based on his lectures, because, striving for perfection, he painfully long (about twenty years) wrote and prepared for publication his main work, Principles of Economic Science (1890). It is in this book that for the first time the term "political economy" is reasonably replaced by the term economics (although the word itself was used before). Through his active teaching and the influence of The Principles, Marshall dominated British economics from the 1890s to the early 1930s.

Scientist's contribution

Although Marshall published more than 80 works during his long scientific life, his main contribution to economic theory is contained in the above-mentioned "Principles of Economic Science", which became the "bible" of economists in the first half of the 20th century.

The semantic center of his work, the core around which his structure has developed, is book V: "General Relations of Demand, Supply and Value" (in Russian translation - value). It is in this book that Marshall provides the basis for an abstract theoretical analysis of market equilibrium.

Marshall's main achievements in the field of demand theory are related to the concepts of the demand curve (demand curve), elasticity of demand (elasticity of demand) and consumer surplus (consumer surplus).

Marshall's work had a huge impact on his contemporaries. The very figure of Marshall marks a milestone in the development of Western economic thought in the late 19th and early 20th centuries. On the one hand, its synthesis turned out to be the pinnacle of all previous development of the neoclassical trend, which began in the 1870s. the last century. And at the same time, he became the founder of the famous Cambridge School, whose members were A. Pigou, as well as the young J. Keynes, J. Robinson and others, who paved new ways for the development of economic thought in the 20th century.

One of the representatives of neoclassical economic theory.

1) the central place is the problem of market pricing

Market price - the result of the intersection of the bid and offer prices

Equilibrium price - at the point of equilibrium of supply and demand (Marshal's cross)

The ideal picture of market interaction - supply and demand equally affect price changes

At different time intervals, different patterns appear (in the short term, demand takes on the role of the main price regulator, in the long term, supply)

2) the concept of elasticity of demand - an indicator of the dependence of the volume of demand on price changes

The elasticity of demand depends on three factors: marginal utility, market price, and money income.

3) in order to have lower costs, reasonable productivity will strive for the most efficient combination of production factors

4) distribution theory - (the conditions of supply and demand that determine the price of factors) four factors of production:

Land - rent

Labor - wages

Capital - percentage

Organization factor - profit

what is the national dividend

J. Clark is the author of numerous works. He proposed a new approach to the study of political economy in order to approach the exact sciences. By analogy with theoretical mechanics, J. B. Clark divided economic theory into two sections - statics and dynamics. He attached initial importance to the analysis of statics, that is, the economic situation of society in immobility, "in balance." Clark adhered to the theory of marginal utility, which he modified. "Clark's law" is that the utility of a good is broken down into its constituent elements ("bundle of utilities"), after which the value of a good is determined by the sum of the marginal utilities of all its properties.