Austrian school of economics

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Definition

The Austrian school of economics is a heterodox (i.e., non-mainstream) school of economics with the following features:

  1. A heavy reliance on methodological individualism, i.e., the claim that social phenomena must be explained by showing how they result from individual actions, which in turn must be explained through reference to the intentional states that motivate the individual actors.
  2. The concept of spontaneous order, i.e., the emergence of order through the interaction of many different parties, by putting together their local knowledge via the price mechanism.
  3. A rejection of many of the mathematical and quantitative methods used in economics, such as cardinal utilities.
  4. A rejection of notions of macroeconomic aggregates.
  5. A high degree of skepticism of central planning, such as the critique implicit in the analysis of the economic calculation problem.