A New Collection on Austrian Economics

By: Matthew McCaffrey

I’m delighted to announce the publication of a new collection of papers on Austrian economics, The Economic Theory of Costs: Foundations and New Directions (Routledge, 2018).

The Austrian school is growing rapidly, but with so many scholars producing good research, it can also be difficult to keep up with each new contribution. Hence this collection, which provides an overview of several promising developments relating to core problems in Austrian economics.

The unifying theme of the book is the “theory of cost,” which I use in a general sense to refer to the theory of value and price established by Menger and his students, and its relation to its competitors both old and new. The chapters examine a large number of problems of special interest to Austrians, from the basic elements of action and choice, to the theories of price formation, production and distribution, entrepreneurship, and the firm, to comparative economic systems and alternative institutions. They are thus intended to address fundamental questions in Austrian economics—the “mundane” problems that make the school unique, and that inspired writers like Menger and Mises. As such, they serve to remind us that economics at its core is not a problem that has been “solved,” but rather is developing constantly in response to criticism as well as to challenging new events in the world.

The contributors include some of the most thought-provoking people currently working in the Austrian tradition, from established scholars like Joseph Salerno, Jeffrey Herbener, and Guido Hülsmann, to younger economists like Per Bylund, Vlad Topan, Mateusz Machaj, Xavier Méra, Jonathan Newman, and Patrick Newman. There is even a recently-unearthed draft chapter from Murray Rothbard’s Man, Economy, and State, which outlines his original approach to production theory.

The other topics covered likewise span a wide range of problems in economic theory, including the role of cost in debates about choice and opportunity costs; demand and income effects; production and distribution; risk and interest rates; uncertainty and production; monopsony; Post-Keynesianism; transaction costs; socialism and management; and social entrepreneurship.

Together, these contributions offer an update and restatement of some key elements of Austrian price theory that are central to the economic way of thinking. Each chapter reveals how the Austrian, causal-realist approach to value and costs can be used to solve an important problem or debate in economics. Moreover, the chapters are not only useful for students learning these concepts for the first time: they are also valuable for researchers seeking to understand the unique Austrian perspective and those who want to apply it to new problems.

The table of contents (including links where possible) is below. All of the individual chapters are, or soon will be, available online.


Introduction: “The Economic Theory of Costs in Perspective” Matthew McCaffrey

Cost and Choice

Chapter 1: “Contemporary Debates on Opportunity Cost Theory and Pedagogy” Jonathan Newman

Chapter 2: “The ‘Income Effect’ in Causal-Realist Price Theory” Joseph T. Salerno

The Evolution of Causal-Realist Production Theory

Chapter 3: “From Marshallian Partial Equilibrium to Austrian General Equilibrium: The Evolution of Rothbard’s Production Theory” Patrick Newman

Chapter 4: “Man, Economy and State, Original Chapter 5: Producer’s Activity” Murray N. Rothbard

Risk, Uncertainty, and Cost

Chapter 5: “The Myth of the Risk Premium” Jörg Guido Hülsmann

Chapter 6: “Time and the Theory of Cost” Jeffrey M. Herbener

Causal-Realist Price Theory: Debate and Synthesis

Chapter 7: “Monopsony Theory Revisited” Xavier Méra

Chapter 8: “Costs and Pricing: An Austro-Post-Keynesian Synthesis?” Mateusz Machaj

Economic Organization, Entrepreneurship, and the Firm

Chapter 9: “Austrian Economics and Transaction Cost Economics: Notes on a Doubtful Compatibility” Mihai-Vladimir Topan

Chapter 10: “The Management Problem of Socialism: Cost at the Expense of Value” Per L. Bylund

Chapter 11: “Economic Calculation and the Limits of Social Entrepreneurship” Matthew McCaffrey


The book is on sale now, and even though it’s still relatively expensive, please consider ordering a copy for your university’s library.

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