C H A P T E R T W E N T Y - E I G H T Postwar Heterodox Economics The doctrines that comprise the Austrian school of economics have varied and the relative position of the school within the mainstream of economic thought has moved from the center to the fringe several times throughout the 130 years of its history. | CHAPTER TWENTY-EIGHT Postwar Heterodox Economics A THE AUSTRIAN SCHOOL OF ECONOMICS 1950-2000 Peter J. Boettke and Peter T. Leeson The Earlier History of the Austrian School The doctrines that comprise the Austrian school of economics have varied and the relative position of the school within the mainstream of economic thought has moved from the center to the fringe several times throughout the 130 years of its history. Carl Menger in his Grundsatze der Volkswirthshaftslehre of 1871 substituted subjective marginal utility for the classicists objective cost of production as the theory of value. Friedrich von Wieser introduced the idea of opportunity cost and emphasized its subjective and ubiquitous character. Eugen von Böhm-Bawerk engaged in applying Menger s theory of value to the theories of capital and interest. The next generation s leaders were Ludwig von Mises and Hans Mayer who emphasized epistemic ontological and other philosophical themes. A fourth generation of Austrian economists emerged most of whom would make their academic mark in the USA after World War II that included such major economists as F. A. Hayek Gottfried Haberler Oskar Morgenstern Fritz Machlup and Paul Rosenstein-Rodan. Austrian economics flourished in the period immediately following World War I. By the mid-1930s however the idea of a distinct Austrian program even in the minds of the Austrians themselves was seriously waning in part because the mainstream more or less absorbed the important points the Austrians were making. Von Mises 1981 1933 p. 214 had argued that while it is commonplace in modern economics to distinguish between the Austrian Anglo-American and Lausanne schools these three schools of thought differ only in their mode of expressing the same fundamental idea and that they are divided more by 446 P. J. Boettke and P. T. Leeson their terminology and by peculiarities of presentation than by the substance of their teachings. Hayek was even more explicit when he wrote
