How Knowing Austrian Economics Makes You Mindful

A major benefit in knowing Austrian Economics.

By Matthew Geiger

Many skeptics of Austrian economics ask how learning all this theoretical information can assist them in the real world, more specifically how can a person make money from knowing about Austrian economics? The truth is that money is made by those who supply consumers relatively better than competitors and who have the entrepreneurial capacity for predicting successful future investments. But Austrians and economists in general cannot predict the future, so making money requires an element of predictable foresight rather than pure speculation. 

A practicing doctor’s credibility should be determined based on their capabilities of assisting a patient immediately in front of them, not on how knowledgeable they are on all the medicinal theories that exist and the history of various medicinal practices. So must economists and students of economics be knowledgeable about the current economy and its health in the present world, not just about economic theory pertaining to a society in isolation. The current world we live in has influence from politics, culture, and persuasive sociopaths who have easy access to political money that our current time is plagued with. In the modern world, where economics has been turned into a variation of command and interventionist economics, people should be informed on how to go about their lives despite the dynamic turbulence of our politicized civilization.

As all Austrian and modern students of economics should know the shortcomings of the classical economists who thought that value is objective, Carl Menger and others post 1871 discovered that value is subjective in the Marginalist revolution. What one person does and wants to do may not be psychologically or physiologically satisfying for another person to do. Essentially, not everything is for everybody. When you begin looking at the world from this foundational premise, life in modern society becomes easier to understand and digest how cultures rise and change overtime, which is useful to see the cause and effect of how the waves of history brought us to where we are today. Furthermore, the subjectivist perspective allows you to observe the modern politicization of society and the economy in order to know how prices and interpersonal relationships develop and the direction they are likely to head towards in the near future. 

Austrian economics does not have to stop with purely economic transactions, much of the beauty in the Austrian body of knowledge can translate into one’s daily life. Knowing that it is peoples’ self-interest that makes them pursue money and higher subjective states of satisfaction with the means available to them, you can begin to observe human action at large in a mindful manner. As Murray Rothbard has pointed out in his magnificent work An Austrian Perspective on the History of Economic Thought, some of the first economic thinkers and anarchists were the ancient Chinese students of Lao Tzu and Taoism in the fifth and sixth centuries. These people understood that life in time is a product of the universe and simultaneously impermanent, or scarce, therefore, your life is a constant transformation. As the great Ludwig von Mises has said in his magnum opus Human Action, “every age is an age of transition.” What a person values today may not be what they value in the next moment. 

Austrian economics is based on praxeology, the science of human action. Understanding that it is subjective values that facilitate economic exchanges can give the keen Austrian observer of market transactions an insight into people’s preferences and the socio-culture as a whole. Instead of the traditional conservative critique of culture that typically sounds like, “why are these kids acting like this!?” The insightful Austrian can take a step back and wholly understand that people are acting from their own self-interest and that the actions these people are undertaking are their own demonstrated preferences among all the other known options presented to them. The protestors throwing paint on Van Gogh paintings and super gluing their hands to the walls in solidarity are acting upon the ideas that they believe in. Whether their ideas and beliefs about achieving their ends are successful is beholden to their own perspectives, not mine. 

All the social sciences rest upon praxeology, so if you understand praxeology you are more informed about how civilization works than your Facebook friend. Whatever one believes has no implication on my happiness and satisfaction, what politicized emotional energy charges one person does not have to emotionally charge me. I can remain at peace regardless of the ideas other people have in their minds and go about my life living as happily as I chose to be.

Sources

Mises, L.v. (1999). Human Action. Auburn, Alabama: Ludwig von Mises Institute. (Re-issue of the 1949 edition).

Rothbard, M. (2006). Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, Volume I. Cheltenham, United Kingdom: Edward Elgar Publishing. (Original Work published in 1995).

About the Author

Matthew has studied Austrian economics under Professor Daron Djerdjian at Occidental College in Los Angeles, California for his undergraduate degree and under Professor Jesús Huerta de Soto at  King Juan Carlos University in Madrid, Spain for his Masters degree. 

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