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
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 at this link.
Some parts of this course may have been created or reviewed with the support of artificial intelligence (AI). To make sure you receive accurate, high-quality, and academically sound learning materials, all AI-assisted content is carefully checked and approved by Saylor Academy's faculty and subject matter experts.
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 grade of 70% or higher on the final exam.
Your score on the exam will be calculated as soon as you complete it. Be sure to study in between each attempt! If you do not pass the exam, you will not complete this course or receive a certificate of completion. You can attempt the exam as many times as you want.
There are end-of-unit assessments in this course that are designed to help you study and do not factor into your final course grade. You can take them as many times as you want until you understand the concepts they cover.
You can see all of these assessments at this link.
Continuing Education Credits
The certificate earned by passing this self-paced course displays the program hours you completed and continuing education credits (CEUs). CEUs document successful completion of courses that are designed to improve the knowledge and skills of working adults. Many industries value CEUs, and now your certificate reflects them clearly, and they may be used to support career advancement or to meet professional licensing standards. This course contains 2.3 CEUs.
Tips for Success
ECON104: Principles of Austrian Economics II is a self-paced course, meaning you can decide when to start and complete the course. We estimate the "average" student will take hours to complete. We recommend studying at a comfortable pace and scheduling your study time in advance.
Learning new material can be challenging, so here are a few study strategies to help you succeed:
- Take notes on terms, practices, and theories. This helps you understand each concept in context and provides a refresher for later study.
- Test yourself on what you remember and how well you understand the concepts. Reflecting on what you've learned improves long-term memory retention.
Technical Requirements
This course is delivered entirely online. You will need access to a computer or web-capable mobile device and consistent internet access to view or download resources and complete auto-graded assessments and the final exam.
To access the full course, including assessments and the final exam, log into your Saylor Academy account and enroll in the course. If you don't have an account, you can create one for free here. Note that tracking progress and taking assessments require you to log in.
For more details and guidance, please review our complete Technical Requirements and our student Help Center.
Optional Saylor Academy Mobile App
You can access all course features directly from your mobile browser, but if you have limited internet connectivity, the Saylor Academy mobile app provides an option to download course content for offline use. The app is available for iOS and Android devices.
Fees
This course is entirely free to enroll in and access. All course materials, including textbooks, videos, webpages, and activities, are available at no charge. This course also contains a free final exam and a free course completion certificate.