Title: The Austrian School. Market Order and Entrepreneurial Creativity
Abstract: Review of Jose Huerta de Soto, The Austrian School. Market Order and Entrepreneurial Creativity, Edward Elgar Publishing, 2011, 129 pp.Heterodox economics has undoubtedly enriched neoclassical paradigm of economics, as a quasi-natural step in development of economic science. In this process, a notable role can be attributed to Austrian school, with its consolidated and systemic corpus of knowledge and thought.A prominent representative of Austrian School, Professor Huerta de Soto addresses main contributions of Austrian economics, offering a terse and genuine voyage in Austrian philosophy. The book is valuable mostly for undergraduates in economics, but also for their mentors, due to almost didactical approach of author.The Austrian journey starts by subjective understanding of creative entrepreneur's actions, subject to potential errors that occur in process of entrepreneurial rivalry, marked by impossibility of specific predictions of future, responsible himself for these predictions. This world can be understood, according to Austrian school economists, with lens of methodological individualism and non-mathematical subjectivism.One of pillars of this market system is peculiar significance awarded by Austrians to concept of information, which is naturally and always subjective. This explains why market inefficiency due to imperfect is not a reasonable hypothesis, in Austrian philosophy. The Austrian world's dynamics, viewed as an entrepreneurial process of coordination, is in fact a social coordination process, in which social discoordination materializes as a profit opportunity which remains latent until entrepreneurs discover (p.8).In their interaction, entrepreneurs establish costs on a subjective base, i.e., prices of final consumer goods are ones that determine costs that an actor is willing to incur to produce goods, and not other way around. Denying usefulness and adequacy of mathematical instrumentation in economics, because this method synchronizes magnitudes which are heterogeneous from standpoint of time and entrepreneurial creativity (p.12), Austrian entrepreneurs are unable to predict future and to make empirical verifications of past, present or future events. Instead, Austrians interpret social reality based on theory and non-scientific judgement of relevance, strongly neglecting scientism, understood as unjustified application of methodology of natural science to field of social science. Actions generate entrepreneurs' knowledge, which is, according to de Soto, subjective and practical, rather than scientific, dispersed through minds of all men and women, mainly tacit and created ex nihilo. The transmission of information between entrepreneurs makes economic and social coordination, adjustment and economic calculation possible, as underlined by Mises and Hayek, two prominent Austrian school representatives. This strong belief of Austrian school explains perhaps why most Austrian theorists are libertarian philosophers who are deeply committed to defending an uncontrolled market (p.25). This uncontrolled market economy is possible because, for Austrians, entrepreneurship is force which unites society and permits its harmonious advancement, since it also tends to coordinate maladjustments this process of advancement inevitably brings forth. (p. 26)As de Soto points out, validity of Austrian thought is rooted in scholastics of representatives of Spanish Catholic church and in rest of Mediterranean Europe and Greece, in particular Dominican and Jesuit professors of moral doctrine and theology. For example, one essential idea of brightest disciple of Thomas Aquinas, Gilles de Lessines (dead in 1304), that would later be incorporated in Austrian economics is the principle of time preference, i. …
Publication Year: 2012
Publication Date: 2012-04-01
Language: en
Type: article
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