The Viennese School of Economics: A History of its Ideas, Proponents, and Institutions

The Viennese School, working on the assumption of the individual as the essential economic agent, and subsequently centering its research on individual preferences and on the intersubjective balancing of these preferences in the context of markets, consistently pointed out that institutions such as money, states and markets had emerged without any planning, central purpose or force, but simply on the basis of human interactions, in a way that befitted both humans and human logic and was therefore natural, as it were. Of course, this basic insight got in the way of all those political and economic ideologies, which viewed such institutions as operational areas for establishing or developing authoritarian activities and which aimed specifically at influencing or even controlling the emergence of individual preferences or the balancing out of these preferences between individuals.

In practice this meant that in Austria during the interwar period the Viennese School was attacked, sometimes ferociously, by political parties both of the right and the left, because it not only denied the legitimacy, but also the efficacy, of many economic policies. Furthermore, the School always considered itself a universal science in which there was no room for national, religious or class-oriented constrictions. In a way it even represented a sort of alternate world to many of this country’s idiosyncrasies: it focused exclusively on the individual and declared that individual action on the basis of subjective preferences was the starting point of research; it proceeded from a realistic image of humanity, which could not possibly lend itself to flights of idealistic fantasy and which for this reason alone did not lend itself to cheap political exploitation; it was free of magniloquent utopias, upheld the principles of selfdetermination and non-violence and was fundamentally critical of any state intervention occurring under a monopoly of the use of force. In addition, it emanated a highly scholarly ethos, which made possible the emergence of an uncommonly cosmopolitan and tolerant discourse.