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    • Time: 23 hours
    • Free Certificate

    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.

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      Foreword Page
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      BEFORE YOU START THE COURSE, READ THIS FOREWORD. It is a brief primer on the conceptual framework and the theoretical aspects of the Austrian school of economics , and it puts the school's main views in context of the broader economics discipline