ECON103: Principles of Austrian Economics I

Welcome to ECON103: Principles of Austrian Economics I 

Specific information about this course and its requirements can be found below. For more general information about taking Saylor Academy courses, including information about Community and Academic Codes of Conduct, please read the Student Handbook.

Course Description

The course introduces the basic principles of economics as studied and explicated by the Austrian school. Based primarily on Carl Menger’s Principles of Economics, Ludwig von Mises’ Human Action, and Murray Rothbard’s Man, Economy, and State, this course covers the concepts of human action, value, utility, scarcity, opportunity cost, time preference, capital, trade, money, and prices.

 

Course Introduction

The Austrian school of economics has for a century and a half maintained a rich tradition and a unique methodological approach to economics, which sets it apart from other traditions. Unlike other economic schools of thought, the Austrian School acknowledges that there are no constants in human action. Accordingly, the methodology used for economic analysis is different to that employed in natural sciences such as physics. Rather than positing hypothetical relationships between statistical aggregates that break down when scrutinized, the Austrian School treats the actions of individual humans as the ultimate causal explanations of economic phenomena, and analyzes them using deductive methods. The Austrian School does not advocate a particular political programme – it was described by Mises as “value-free” – it merely aims to help humans to understand the consequences of action. Although not currently a mainstream school of economic thought, there has been a resurgence of interest in the Austrian School since the 2008 Global Financial Crisis (which many mainstream economists failed to predict) and the invention of bitcoin.

As an introductory course to Austrian economics, the content draws heavily on some of the school’s defining texts authored by Carl Menger, Ludwig von Mises and Murray Rothbard. It touches on the ideas of Nobel Prize Winner F. A. Hayek, who was a proponent of the Austrian School and strongly influenced by the work of Menger and Mises. Although not covered in this course, Nobel nominees such as Israel Kirzner were also influential figures in the school’s modern development. Students will learn about some of the Austrian School’s most important concepts including time preference, marginal utility and the subjective theory of value.

The starting point of this course is understanding that all value is subjective, and dependent on the individual making the valuation. With this foundation laid, it becomes possible to understand how people willingly engage in trade. The second part of the course then describes how humans economize, by focusing on some of the most important economizing actions: labor, property, capital, technology, trade, and money. Students will explore the economic motivation and rationale behind each of these topics, along with its impact on human time.The third section of the course introduces the market economy and the capitalist system as the social order in which individuals are able to engage in the aforementioned economizing acts. We study how individual decisions translate to a market-wide price. The Misesian conception of the capitalist system as an entrepreneurial system is then explained, along with the concept of economic calculation, and how free market prices, and free enterprise with private property are the motivator and coordinator of economic activity.

The final section of the course examines the economic impact of violent intervention in the market order, and the introduction of coercive imposition on exchange. The course will explain the theoretical and logical reasons such economizing acts will have a different impact from those that are conducted peacefully. The course concludes with a critical assessment of the meaning of economic growth.

After completing this course students will have the methodological grounding required to undertake sound economic reasoning in the Austrian tradition. They will also be well-positioned to undertake further study of some of the more complex ideas of the Austrian School, such as Austrian business cycle theory and capital-based macroeconomics.

This course includes the following units:

• Unit 1: Economic Value
• Unit 2: Human Action
• Unit 3: Time and Labor
• Unit 4: Capital and Technology
• Unit 5: Economic Exchange
• Unit 6: Indirect Exchange
• Unit 7: Prices and Market Order
• Unit 8: Profit and Loss
• Unit 9: Violent Intervention
• Unit 10: Economic Progress

Course Learning Outcomes

Upon successful completion of this course, you will be able to:

• Explain what economic value is, how it emerges, and how it makes it possible for humans to trade and mutually benefit.
• Analyze economic questions at the margin and how it makes economic analysis more useful and powerful.
• Explain why essential goods are often far cheaper than inessential luxury goods.
• Analyze economic questions through a deductive approach that studies the consequences of human action.
• Explain why no natural resources have been depleted
• Differentiate between the relative scarcity of economic goods and the absolute scarcity of human time
• Identify the drivers of capital accumulation, and the risks and costs associated with accumulating capital.
• Identify the benefits from trade that motivate participants to engage in it, and explain the universal prevalence of trade worldwide.
• Distinguish between coercive and cooperation modes of interpersonal interaction, and the consequences of each.
  

Throughout this course, you will also see learning outcomes in each unit. You can use those learning outcomes to help organize your studies and gauge your progress.

Course Materials

The primary learning materials for this course are readings, lectures, and videos.

All course materials are free to access, and can be found in each unit of the course. Pay close attention to the notes that accompany these course materials, as they will tell you what to focus on in each resource, and will help you to understand how the learning materials fit into the course as a whole. You can also see a list of all the learning materials in this course by clicking on Resources in the navigation bar.

Evaluation and Minimum Passing Score

Only the final exam is considered when awarding you a grade for this course. In order to pass this course, you will need to earn a 70% or higher on the final exam. Your score on the exam will be calculated as soon as you complete it. If you do not pass the exam on your first try, you may take it again as many times as you want, with a 7-day waiting period between each attempt. Once you have successfully passed the final exam you will be awarded a free Course Completion Certificate.

There are also end-of-unit assessments in this course. These are designed to help you study, and do not factor into your final course grade. You can take these as many times as you want to, until you understand the concepts and material covered. You can see all of these assessments by clicking on Quizzes in the course's navigation bar.

Provide details about any other learning activities or projects here, as well.

Tips for Success

ECON103: Principles of Austrian Economics I  is a self-paced course, which means that you can decide when you will start and when you will complete the course. There is no instructor or set schedule to follow. We estimate that the "average" student will take 24 hours to complete this course. We recommend that you work through the course at a pace that is comfortable for you and allows you to make regular progress. It's a good idea to also schedule your study time in advance and try as best as you can to stick to that schedule.

Learning new material can be challenging, so we've compiled a few study strategies to help you succeed:

• Take notes on the various terms, practices, and theories that you come across. This can help you put each concept into context, and will create a refresher that you can use as you study later on.
• As you work through the materials, take some time to test yourself on what you remember and how well you understand the concepts. Reflecting on what you've learned is important for your long-term memory, and will make you more likely to retain information over time.

Technical Requirements

This course is delivered entirely online. You will be required to have access to a computer or web-capable mobile device and have consistent access to the internet to either view or download the necessary course resources and to attempt any auto-graded course assessments and the final exam.

• To access the full course including assessments and the final exam, you will need to be logged into your Saylor Academy account and enrolled in the course. If you do not already have an account, you may create one for free here. Although you can access some of the course without logging in to your account, you should log in to maximize your course experience. For example, you cannot take assessments or track your progress unless you are logged in.

For additional guidance, check out Saylor Academy's FAQ.

Fees

This course is entirely free to enroll in and to access. Everything linked in the course, including textbooks, videos, webpages, and activities, are all available for no charge. This course also contains a free final exam and course completion certificate.