Broadly speaking, economics is a social science. Among other things, economics focuses on the interactions of buyers and sellers and how they impact the production, distribution, and consumption of goods and services. As in other social sciences, competing schools of thought attempt to understand economic phenomena in different ways. For example, there is the original classical school of Adam Smith, the Keynesian school of John Maynard Keynes, the modern neoclassical school, and the Austrian school of Carl Menger and his followers. Just like other disciplines, these schools agree on many aspects of economics, and of course, disagree on others. Some of the major disagreements revolve around the role of governments and central banks in the economy. This course focuses on the heterodox school known as Austrian economics.
The Austrian school of economics was founded with the publication of Carl Menger’s Principles of Economics in 1871. Menger focused on subjective value and developed the influential theory of marginal utility: the greater the number of units of a good that an individual possesses, the less they will value any given unit. Equipped with deductive logic and qualitative reasoning, he explained the formation of day-to-day prices, emphasized the significance of the entrepreneur and the structure of production, and demonstrated how money historically originated on the market and not by the government. Menger’s economics provided a powerful case for laissez faire—the best way for an economy to grow is to let the price system work. His system stood in stark contrast to the prevailing classical and Marxist schools of thought as well as the emerging neo-classical economics of William Stanley Jevons and Léon Walras.
Menger’s later students, Ludwig von Mises and F.A. Hayek, pioneered in what came to be known as Austrian Business Cycle Theory: the idea that central banking distorts interest rates and leads to harmful booms and busts. In the 1930s, Mises and Hayek debated with socialists and the followers of John Maynard Keynes over the efficacy of central planning and countercyclical policy. For his efforts, F.A. Hayek received a Nobel Prize in 1974, a year after Mises’ death. Financial analysts and economists applied the theory to the harmful stagflation of the 1970s, the credit bubbles of the 1980s and 1990s, and the financial crisis of 2007 to 2009. In the process, they challenged the defense of deficit-spending and easy money by Keynesians and monetarists along with their hyper-mathematical models. Overall, Austrian economics is one of the foremost defenders of the capitalist order: the path to rising prosperity in the decades ahead can only come through strong private property rights, growing savings, and a vibrant system of decentralized exchanges.Austrian economists have been recognized for their contributions to the discipline. Nobel Prize winners such as James Buchanan, Ronald Coase, Vernon Smith, and Elinor Ostrom were all inspired by Austrian economics.
In this course, Professor Saifedean Ammous will teach you the fundamentals of the Austrian perspective. He will take you through the important concepts articulated in the canonical Austrian books of Menger’s Principles of Economics,Mises’ Human Action, and Murray Rothbard’s Man, Economy, and State. He starts off with the building blocks of scarcity, marginalism, and human action. You will learn that understanding humans’ purposive behavior requires tools different from those in the natural sciences, particularly the use of verbal logic and qualitative reasoning. Then, Saifedean will teach you about economizing, time preference, price formation, specialization, and the emergence of money. In doing so, you will appreciate the essentials of the market economy: self-interested entrepreneurial activity promotes the general interest, increased savings leads to higher productivity and lower prices of consumer goods, and the indispensable nature of the price system and the profit-and-loss test. By the end of the course you will be able recall crucial economic concepts, understand the world around you, and apply the economic way of thinking to analyze and solve the problems of today.
Mises stressed the importance of teaching economics to the average layperson and businessman, emphasizing that everyone must understand what policies lead to prosperity and poverty. To that end, I cannot recommend enough taking Saifedean’s economics course.