Course Syllabus

Welcome to ECON104: Principles of Austrian Economics II

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

Explore more complex themes of the Austrian school of economics with a focus on economic calculation, spontaneous order, time preference, interest rates, credit and banking, business cycle theory, security and defense, intellectual property, and Bitcoin.

Course Introduction

This course is designed to extend your knowledge of the principles of the Austrian school of economics. It is recommended that students complete ECON103: Principles of Austrian Economics I before this course to enhance their understanding. The course draws on the work of several scholars in the Austrian school tradition, mainly Ludwig von Mises, Murray Rothbard, Friedrich Hayek, and Hans Hermann Hoppe. It focuses on the concepts of economic calculation, time preference, interest rates, business cycle theory, the economics of security, and intellectual property. 

ECON103 explained the main types of actions that humans undertake to economize; this course moves to discuss the features of an impersonal market economic order, beginning with one of the most critical concepts: economic calculation. For example, Mises explains how a market order, where economic production meets the demands of consumers, is only possible with the system of free enterprise and private property, as that is the only system in which the owners of capital are able to calculate the costs and benefits of their actions rationally. This point is one of Mises' most important contributions to economics and forms the essence of his devastating critique of socialist economic planning, which has not been refuted a century later. The course also introduces the work of Friedrich Hayek on the concept of spontaneous order and how it helps us understand economic phenomena as the emergent result of human action and not human design. The different conceptions of rationality in economics and how order can emerge rationally from individual action are then discussed.

The bulk of the course explores the basics of the Austrian analysis of money, beginning with the concept of time preference, which could be considered the most important and useful concept to learn in economics. After explaining the importance and significance of time preference, how the Austrian school views time preference as the determinant of interest rates is analyzed. The concepts of credit and banking are introduced, followed by Mises' typology of money and the distinction between money and credit.

With that background, the Austrian theory of the business cycle is introduced. As interest rates on the free market are a reflection of time preference, an increase in the supply of credit that is treated as money leads to the distortion of interest rates, and the price of money, causing economic miscalculation in the capital markets, leading to malinvestments. We study this highly important theory from the works of several economists to get a full picture over two lectures. Then, we examine the market for security and national defense, analyzing the fallacy that these goods can only be provided by a monopoly, illustrating how they can be, and in fact are, produced by the free market, and how problems of insecurity and conflict around the world can best be understood as a result of the absence of a free market for security.

As we move toward the end of the course, the topic of intellectual property is discussed. We study the work of Stephan Kinsella, who argues that ideas and non-scarce goods cannot be property, and the attempt to treat them as such makes no sense economically or legally. The claim that intellectual property rights enhance innovation and economic well-being is scrutinized. Also, the connection between Austrian economics and Bitcoin is discussed. How does studying Austrian economics help us understand Bitcoin, and what does Bitcoin teach us about Austrian economics? We conclude with a discussion of the stock-to-flow numerical model of Bitcoin price and whether it poses a challenge to the Austrian method of economics. Ammous is a professor of Economics and the author of three books on the subject of economics.

This course includes the following units:

  • Unit 1: Economic Calculation
  • Unit 2: Spontaneous Order
  • Unit 3: Time Preference
  • Unit 4: Interest Rates
  • Unit 5: Credit and Banking
  • Unit 6: Business Cycle Theory - I
  • Unit 7: Business Cycle Theory - II
  • Unit 8: Security and Defense
  • Unit 9: Intellectual Property
  • Unit 10: Bitcoin and Austrian Economics


Course Learning Outcomes

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

  • describe the critical role of the capital market in determining prices and resource allocation in an economy;
  • describe how low time preference increases prosperity in a society;
  • explain how time preference influences (or determines) the interest rate according to Austrian theory;
  • explain why the expansion of credit cannot form a substitute for capital;
  • evaluate the causes and repercussions of the Austrian Business cycle;
  • differentiate between the effects of saving and creating fiduciary media on the process of production in the long term;
  • describe how security and defense can be a product of a free market; and
  • explain the Austrian concept of intellectual property rights and why they could be considered illegitimate.

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

This course's primary learning materials are articles, 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 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. 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 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.

Tips for Success

ECON104: Principles of Austrian Economics II 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 an assigned schedule to follow. We estimate that the "average" student will take 25 hours to complete this course. We recommend that you work through the course at a comfortable pace that allows you to make regular progress. It's also a good idea to schedule your study time in advance and try to stick to that schedule as best as you can.

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 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.
  • [[If necessary, include any other course-specific technical requirements here.]]
  • [[If the course has a credit recommendation, include this bullet point; otherwise, remove it.]] If you plan to attempt the optional Direct Credit final exam, then you will also need access to a webcam. This lets our remote proctoring service verify your identity, which is required to issue an official transcript to schools on your behalf.

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


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

Last modified: Monday, November 20, 2023, 5:00 PM