Austrian Economics in America: The Migration of a Tradition.

• Author: Garrison, Roger W.

As both eyewitness and engaging writer, Karen Vaughn retells the history of the modern Austrian school from the perspective of current internal debate. Apart from its recurring bouts with schizophrenia, this school of thought is alive and well and residing (mostly) in the United States - in New York, Fairfax, Auburn, and elsewhere. Although a self-identified contrarian, Vaughn has sympathies with the Austrian school, at least in one of its identities. The two competing identities are defined in terms of their conflicting goals, one of "supplementing," the other of "undercutting" the dominant neoclassical paradigm; Vaughn, at heart, is an undercutter.

Overly cautious in her preface, Vaughn denies that a "fully articulated and importantly distinct" Austrian economics as yet exists. But soon enough she sets out its boundaries in terms of methodological precepts, modes of thought, and focus of analysis. Writing for the New Palgrave, Israel Kirzner [2, pp. 149-50] offered five different perceptions, or aspects, of the modern Austrian school, aspects which derive from its (1) origins in the writings of Carl Menger, (2) attention to the economy's intertemporal capital structure, (3) capacity to bolster market-oriented policies, (4) focus on equilibrating processes as opposed to equilibrium states, and (5) acknowledgment of "radical" uncertainty faced by market participants. Vaughn, in effect, pits the last-listed aspect (with partial support from the first-listed one) against all the rest.

One of the most insightful parts of the book is the early chapter on Menger. How was it that the founder of the Austrian school dedicated his Principles to a member of the Historical school, did battle (the Methodenstreit) with another member of that same school, and came to be recognized as a key member of the neoclassical school? Vaughn answers this question with a satisfying and memorable story. Menger dedicated his book to Wilhelm Roscher, believing himself to be offering an organizing principle for historical research; Roscher, who did not readily accept the offer, was eventually overshadowed by Gustav Schmoller, who opposed all a priori universal theory. Fellow Austrians in closest sympathy with Menger's views developed his ideas in a distinct neoclassical direction. Friedrich von Wieser formalized marginal-utility theory and the closely related notion of opportunity costs; Eugen von Bohm-Bawerk formalized capital theory, defining the time element in the...