Econ. 403 Austrian Economics
George Mason University, Summer 2016
MWF 7:00 pm - 10:00 pm, Mason Hall D003
Instructor: Professor Megan V. Teague
Email: mteague2@gmu.edu
Office Location: TBD
Office Hours: W 6:00-7:00 and by appointment
Course Webpage: None
Course Description:
This course is a preliminary introduction to the school of Austrian Economics. In particular, this
class will explore the Austrians’ heterodox approach to economics regarding methodology, price
theory, equilibrium processes, entrepreneurship, and business cycles. During the course, we will
compare these Austrian approaches to traditional Neoclassical theory, we will explore and understand Austrian applications across microeconomics and macroeconomics, and we will discuss the
implications that can be drawn from Austrian foundations.
Week 1
Introduction, History, and the Market Process
Week 2
Knowledge Problems
Week 3
Economic Calculation Debate
Week 4
Credit, Money, Banking, and ABCT
Week 5
Philosophy, Ideology, and Politics of the Austrians and the Final Exam
Required Text
• Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of Economics. Edward
Elgar Pub, Cheltenham, UK ; Northampton, Mass
Course Structure:
Each class is structured in two parts. The first part will be a lecture based upon readings for each
class; the second part will be a seminar led by the student discussion leader(s) using the readings
for that class.
Readings besides the required text will be provided via Dropbox for your convenience.
Class Participation:
After the lecture each week, assigned discussion leader(s) will lead the seminar and conversation
using the various readings for that class. It is up to the discussion leader(s) how to organize this.
Some ideas include: discussion of topics, lecture or presentation with interjections, posing a set of
questions to answer, etc.
Non-discussion leaders are expected to participate in these conversations every class.
Response Papers:
Starting Wednesday, May 18th, and every class thereafter, students will turn in a 5-sentence response (no more and no less) to the readings by 6:59 P.M. EST each class via my email—
mteague2@gmu.edu.
These responses can include original ideas (author x says y which made me think of z ), disagreements (author x is wrong because y), agreements (author x is correct because y), or
suggestions (author x should have done y because z ).
Exams:
There will be at least one exam (Final). This exam is essay-based. At the mid-point of class (May
30th), students will receive 10 essay questions, 5 of which will be on the final exam. Students are
encouraged to work in groups to answer questions prior to the final exam and are expected to have
well-prepared responses for the final.
Grades:
Grades will be divided into three categories: class participation, response papers, and exam(s).
Grades are commensurate with the quality of work and participation.
There are no makeups, late work, or additional credit.
The number of exams and grade weights ascribed to each category will be determined by students
on the first day of class.
Honor Code:
Cheating—and any variant of it (plagiarism, lying, etc)—on your response papers and/or final
exam is not tolerated. Violations will be reported to the University’s Honor Committee.
Accommodation for Students with Disabilities:
See me and contact GMU’s Office of Disability Services at 703.993.2474 within the first week of
class if any academic accommodations are needed (or will be needed) due to a disability.
Tenative Course Outline (subject to changes)
M. May 16: Introduction to Course
• Introduction to Class. Determine grade structure and scale, and assign discussion leader
roles.
W. May 18: Context and Content—What is Austrian Economics?
• Chapter 1 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Part 1, Chapters 1 and 2, p. 11-51 in Mises, L. (1998). Human Action: A Treastise on
Economics. The Ludwig Von Mises Institute, Auburn, Alabama
• Mises, L. (1984). The Historical Setting of the Austrian School of Economics. Ludwig von
Mises Institute
F. May 20: The Market as a Process
• Chapter 1 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Part 4, Chapter 15, p. 258-279; p. 287-303; p. 311-323 in Mises, L. (1998). Human Action:
A Treastise on Economics. The Ludwig Von Mises Institute, Auburn, Alabama
• Volume 1, Chapter 2 in Hayek, F. A. (1976). Law, Legislation and Liberty. The University of
Chicago Press
M. May 23: The Price System and the Use of Knowledge in Society
• Chapter 2 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Hayek, F. A. (1945). The Use of Knowledge in Society. The American Economic Review,
35(4):519–530
• Read, L. E. (1999). I, pencil. The Foundation for Economic Education, Inc., Irving-on-Hudson,
NY
• Mirowski, P. (1998). Economics, science, and knowledge. Tradition and Discovery, 25(1):29–
42
• Chapter 2 in Hayek, F. A. (1948). Individualism and Economic Order. The University of
Chicago Press
W. May 25: Entrepreneurship as the Source of Economic Change
• Chapter 2 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An
Austrian approach. Journal of economic Literature, 35(1):60–85
• Chapter 2 p. 32-47; p. 55-75 in Kirzner, I. M. (1973). Competition and Entrepreneurship.
The University of Chicago Press, Chicago and London
• Chapter 5 in Hayek, F. A. (1948). Individualism and Economic Order. The University of
Chicago Press
F. May 27: Firms as an Extension of Entrepreneurship
• Chapter 2 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapter 2 p. 47-65 in Kirzner, I. M. (1973). Competition and Entrepreneurship. The University of Chicago Press, Chicago and London
• Alchian, A. and Demsetz, H. (1972). Production, information costs, and economic organization. The American Economic Review, 62(5):777–795
• Coase, R. H. (1937). The nature of the firm. Economica, 4(16):386–405
M. May 30: MEMORIAL DAY
W. June 1: Economic Calculation Part I
• Chapter 3 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapters 1-5, Mises, L. v. (1990). Economic Calculation in the Socialist Commonwealth. The
Mises Institute, Auburn, Alabama
• Lange, O. (1936). On the economic theory of socialism: Part one. The Review of Economic
Studies, 4(1):53–71
• Chapter 1, p. 22-27 Lavoie, D. (1985). Rivalry and Central Planning. Cambridge University
Press, Cambridge
F. June 3: Economic Calculation Part II
• Chapter 3 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapters 3 and 6 in Boettke, P. (1993). Why Perestroika Failed: The Politics and Economics
of Socialist Transformation. Routledge, London and New York
• Caplan, B. (2004). Is socialism really “impossible”? Critical Review: A Journal of Politics
and Society, 16(1):33–52
• Boettke, P. and Leeson, P. (2005). Still impossible after all these years: Reply to caplan.
Critical Review: A Journal of Politics and Society, 17(1):155–170
M. June 6: Austrian Macroeconomics—Capital Theory, Money, and Banking
• Chapter 4 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapter 3 in Garrison, R. W. (2001). Time and Money. Routledge, London and New York
• White, L. Inflation. The Concise Encyclopedia of Economics
• Part 4, Chapter 1 and Part 1, Chapter 4 p. 71-78 in Mises, L. (1953). The Theory of Money
and Credit. Yale University Press, New Haven
W. June 8: Austrian Business Cycle Theory (ABCT) Part I
• Chapter 4 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapter 4 in Garrison, R. W. (2001). Time and Money. Routledge, London and New York
• Kirzner, I. M. (1999). Creativity and/or alertness: A reconsideration of the Schumpeterian
entrepreneur. The Review of Austrian Economics, 11(1):5–17
F. June 10: Austrian Business Cycle Theory (ABCT) Part II
• Chapter 4 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Chapter 6 in Garrison, R. W. (2001). Time and Money. Routledge, London and New York
• Cochran, J. (2010). Capital in disequilibrium: Understanding the“great recession” and the
potential for recovery. The Quarterly Journal of Austrian Economics, 13(3):42–63
• Horowitz, S. (2009). The microeconomic foundations of macroeconomic disorder: An austrian
perspective on the great recession of 2008 the microeconomic foundations of macroeconomic
disorder: An austrian perspective on the great recession of 2008. Mercatus Center Working
Paper, (09-23):1–23
M. June 13: Modern Applications of Austrian Economics—Philosophy, Ideology, and
Politics
• Chapter 5 in Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of
Economics. Edward Elgar Pub, Cheltenham, UK ; Northampton, Mass
• Volume 2, Chapter 9, p. 62-84 in Hayek, F. A. (1976). Law, Legislation and Liberty. The
University of Chicago Press
• Part 6, Chapter 27, p. 715-725 in Mises, L. (1998). Human Action: A Treastise on Economics.
The Ludwig Von Mises Institute, Auburn, Alabama
• Chapter 12 of Man, Economy, and State, p. 875-892; p. 946-957; p. 1024-1025 in Rothbard,
M. N. (2009). Man, Economy, and State with Power and Market. Ludwig von Mises Institute,
Auburn, Alabama, 2 edition
• Chapter 1 of Power and Market in Rothbard, M. N. (2009). Man, Economy, and State with
Power and Market. Ludwig von Mises Institute, Auburn, Alabama, 2 edition
W. June 15: Course Summary
• Review the concepts of the course; go over any additional questions (not exam questions) or
content.
F. June 17: Final Exam
References
[1] Alchian, A. and Demsetz, H. (1972). Production, information costs, and economic organization.
The American Economic Review, 62(5):777–795.
[2] Boettke, P. (1993). Why Perestroika Failed: The Politics and Economics of Socialist Transformation. Routledge, London and New York.
[3] Boettke, P. and Leeson, P. (2005). Still impossible after all these years: Reply to caplan. Critical
Review: A Journal of Politics and Society, 17(1):155–170.
[4] Caplan, B. (2004). Is socialism really “impossible”? Critical Review: A Journal of Politics and
Society, 16(1):33–52.
[5] Coase, R. H. (1937). The nature of the firm. Economica, 4(16):386–405.
[6] Cochran, J. (2010). Capital in disequilibrium: Understanding the“great recession” and the
potential for recovery. The Quarterly Journal of Austrian Economics, 13(3):42–63.
[7] Garrison, R. W. (2001). Time and Money. Routledge, London and New York.
[8] Hayek, F. A. (1945). The Use of Knowledge in Society. The American Economic Review,
35(4):519–530.
[9] Hayek, F. A. (1948). Individualism and Economic Order. The University of Chicago Press.
[10] Hayek, F. A. (1976). Law, Legislation and Liberty. The University of Chicago Press.
[11] Holcombe, R. G. (2014). Advanced Introduction to the Austrian School of Economics. Edward
Elgar Pub, Cheltenham, UK ; Northampton, Mass.
[12] Horowitz, S. (2009). The microeconomic foundations of macroeconomic disorder: An austrian
perspective on the great recession of 2008 the microeconomic foundations of macroeconomic
disorder: An austrian perspective on the great recession of 2008. Mercatus Center Working
Paper, (09-23):1–23.
[13] Kirzner, I. M. (1973). Competition and Entrepreneurship. The University of Chicago Press,
Chicago and London.
[14] Kirzner, I. M. (1997). Entrepreneurial discovery and the competitive market process: An
Austrian approach. Journal of economic Literature, 35(1):60–85.
[15] Kirzner, I. M. (1999). Creativity and/or alertness: A reconsideration of the Schumpeterian
entrepreneur. The Review of Austrian Economics, 11(1):5–17.
[16] Lange, O. (1936). On the economic theory of socialism: Part one. The Review of Economic
Studies, 4(1):53–71.
[17] Lavoie, D. (1985). Rivalry and Central Planning. Cambridge University Press, Cambridge.
[18] Mirowski, P. (1998). Economics, science, and knowledge. Tradition and Discovery, 25(1):29–42.
[19] Mises, L. (1953). The Theory of Money and Credit. Yale University Press, New Haven.
[20] Mises, L. (1984). The Historical Setting of the Austrian School of Economics. Ludwig von
Mises Institute.
[21] Mises, L. (1998). Human Action: A Treastise on Economics. The Ludwig Von Mises Institute,
Auburn, Alabama.
[22] Mises, L. v. (1990). Economic Calculation in the Socialist Commonwealth. The Mises Institute,
Auburn, Alabama.
[23] Read, L. E. (1999). I, pencil. The Foundation for Economic Education, Inc., Irving-on-Hudson,
NY.
[24] Rothbard, M. N. (2009). Man, Economy, and State with Power and Market. Ludwig von Mises
Institute, Auburn, Alabama, 2 edition.
[White] White, L. Inflation. The Concise Encyclopedia of Economics.