TWENTY-SIX YEARS AGO, in June 1974, I was fortunate enough to be invited by the Institute for Humane Studies to be one of 40 people who attended a week-long conference on Austrian economics in South Royalton, Vermont. After a decades long hiatus, during which Keynesianism had almost monopolized all discussions about economic theory and policy, a rebirth of interest in the Austrian school of economics was about to begin.

At the time, during that week in South Royalton, it did not necessarily seem that way. The previous year, in October 1973, Ludwig von Mises had passed away at the age of 92. And no one attending that conference imagined that four months later, in October 1974, Friedrich A. Hayek would be awarded the Nobel Prize in economics. In fact, Milton Friedman, the leading figure of the Chicago school of economics, came to one of the conference dinners and attempted to slight the rationale for the gathering by saying in a brief after-dinner talk that there was no such thing as a Chicago or an Austrian school of economics, “only good economics and bad economics.” And it was obvious that Friedman considered his to be the “good economics,” with the implication that the attendees were pursuing the “bad economics” in taking the Austrian school too seriously.

But nonetheless, the week at South Royalton was spent listening to and discussing a series of lectures delivered by Israel M. Kirzner, Murray N. Rothbard, and Ludwig M. Lachmann on virtually every facet of Austrian economics. Two years later, in 1976, those lectures appeared in book form under the title The Foundations of Modern Austrian Economics. The same year a formal Austrian economics graduate program was started at New York University under Kirzner’s wise guidance, which I was, again, fortunate enough to participate in for several years. Those were exciting times, as the ideas of the most insightful and consistently free-market school of economics had its rebirth.

Now a quarter of a century later, the Austrian school has reestablished itself as a vital, contributing force in the arena of economic theory and policy both in America and around the world. Yet even now, the long and rich heritage of Austrian economics is not fully appreciated. And that is what makes 15 Great Austrian Economists, edited by Randall G. Holcombe, such a useful contribution to the growing library of books on Austrian economic themes.

The volume begins with five chapters on economists who preceded the Austrians, sometimes by centuries, who already grasped the nature of the workings of the market process in raising standards of living, coordinating supplies and demands, and possessing self-correcting mechanisms to adjust for any temporary imbalances between the consumption and production decisions of millions in a complex system of division of labor. Special attention is given to the important contributions of such 18th-century and 19th-century French classical economists as A.R.J. Turgot, Jean-Baptiste Say, and Frédéric Bastiat.

The remaining ten chapters focus on the Austrian school itself, beginning with the school’s founder, Carl Menger, whose first contributions were made in the 1870s. Joseph Salerno traces out Menger’s development of a subjective theory of value and his formulation of the marginal utility concept, the integration of time and uncertainty into an understanding of how market decisions are made, and the causal processes at work in all production activities.

Roger Garrison neatly summarizes Eugen von Böhm-Bawerk’s theory of capital and interest and his analysis of “roundabout” methods of production that increase the productivity of human labor as well as the process by which the differing time valuations of market participants interact to generate the rate of interest.

Israel Kirzner explains the contributions of the British “Austrian,” Philip Wicksteed, who emphasized that “costs” represent the individual, subjective estimates of the value of foregone opportunities in any act of choice and the unifying role of the choice-concept for understanding all decision-making in which the means are scarce relative to the ends for which they might be applied.

Jeffery Herberner discusses the writings of the American “Austrian,” Frank A. Fetter, who constructed a consistent theory of value, price, cost, and production in the context of emphasizing the time-valuational element in all consumption and production choices.

The chapter on Ludwig von Mises is an abridged version of a previously published monograph by Murray Rothbard, explaining Mises’s extraordinary contributions to the theories of human action, entrepreneurship, the competitive process, money, and the business cycle.

Peter G. Klein discusses Friedrich Hayek’s refinement of Mises’s Austrian theory of the business cycle and his explanation of competition as a discovery process in which market prices serve as a tool for economizing and dispersing information to all the participants in an extended system of division of labor.

John B. Egger summarizes the works of William H. Hutt, who challenged many of the assumptions of Keynesian economics, including Keynes’s claim that capitalism lacked a mechanism to ensure full employment and Keynes’s downplaying of the importance both of competition and of wage and price flexibility to maintain continuous economy-wide coordination of market supplies and demands.

Jeffery Tucker pays tribute to Henry Hazlitt, the clear and influential popularizer of Austrian-style free-market ideas, as well as insightful critic of Keynes and his misplaced macroeconomic approach.

Shawn Ritenour offers a sympathetic evaluation of the writings of the German “Austrian,” Wilhelm Röpke, who opposed the collectivist and totalitarian tendencies of the 20th century, and who argued for the importance of a moral element in the defense of the market order.

Finally, Hans-Hermann Hoppe details the important contributions to Austrian economics made by Murray Rothbard, who refined and expanded on many of Mises’s contributions in his own 1962, two-volume treatise, Man, Economy, and State, including the Austrian theory of subjective valuation, time-preference and production, competition and monopoly theory, and the case for laissez faire.

As Holcombe points out in his introduction, the mainstream of the economics profession is finally discovering many of the insights the Austrians developed decades ago, which are once again putting Austrian economics at the forefront of economic analysis.

This volume offers one of the clearest guides for appreciating those earlier contributions as a point of reference for economic thinking in the 21st century.

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