TOPIC: AUSTRIAN ECONOMICS

Austrian economics



Austrian economics

Introduction

Comparative economic systems, as a distinct sub discipline of economics, began in the United States during the 1930s with the publication of textbooks such as William N. Loucks and J. Weldon Hoot's (1938) Comparative Economic Systems. However, as Maurice Dobb (1949) would note in his critical review of Loucks's text on the subject, comparative economic systems was already a thriving field of study in Europe, especially Britain. Benjamin Ward (1980) argues that comparative economic systems emerged as a field of study initially because of the utopian novels of the later nineteenth century and practicing communes whose existence both influenced the novels and was influenced by them. Novels such as Edward Bellamy's (1888) Looking Backward helped to spur political mass movements and inspired the development of utopian communities, perceived as alternative economic and social systems to those prevalent at the time.

Undoubtedly, this was in reaction to the economic and political upheavals that had come with the Industrial Revolution and its aftermath. This was a time of epochal change, as the emergence of capitalism, colonialism, and the introduction of new technologies and new relations of production caused disruptions in traditional ways of life. In the trauma of massive social change, displacement of rural and urban artisans, and radical shifts in income distribution and political power, large numbers of people came to question dominant theories of economic organization and distribution. The notion of comparing alternative economic systems was a direct reaction to witnessing the emergence of a new economic and social system and the disintegration of an older one.

Discussion

The spin-off of transition studies from comparative economic systems may ultimately be beneficial to the sub discipline. Comparatives, freed from cold war rhetoric, have already begun to explore the broader terrain indicated by Hanson (1971) and others

The Socialist Controversy

Perhaps one of the most interesting and confusing juxtapositions in comparative economic systems is that between socialism and capitalism. There has been a long-running debate among comparatives about not only which of these economic systems is better for a society but also what constitutes “socialism” and “capitalism.”

The debate over the relative economic viability of “socialism” versus “capitalism” began in the formative years of comparative economic systems. It appears to have been sparked by Ludwig von Mises's (1920) “Economic Calculation on the Socialist Commonwealth,” a scathing attack on the viability of socialism as a legitimate economic system.

Economics, as such, figures all too sparsely in the glamorous pictures painted by the Utopians. They invariably explain how, in the cloud-cuckoo lands of their fancy, roast pigeons will in some way fly into the mouths of the comrades, but they omit to show how this miracle is to take place. Where they do in fact commence to be more explicit in the domain of economics, they soon find themselves at a loss—one remembers, for instance, Proudhon's fantastic dreams of an “exchange bank”—so that it is not difficult to point out their logical fallacies.

In a series of articles titled “On the Economic Theory of Socialism,” Oskar Lange ...