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During the socialist calculation debate, Ludwig von Mises and F. A. Hayek made a positive argument regarding the impossibility of economic calculation under socialism. In this study, I argue that the arguments made by Mises and Hayek have normative implications for capitalism. I do so by drawing an analogy between an Austrian account of the market process and a neo-Aristotelian account of human flourishing. Neither economic calculation follows passively from implementing a set of profit-maximizing rules nor does human flourishing follow passively from following a set of universal moral norms (be they of utilitarian, deontological, or natural law inspiration). Both economic calculation and human flourishing are inherently based on individual acts of knowledge creation, actualized only by self-directed individuals. In both cases, the creation of such knowledge is both contextual and specific to the unique circumstances of each individual of a particular time and place. Therefore, to assume that such knowledge exists ex ante, and is objective and transpersonal across time, place, and institutional context renders both economic calculation and human flourishing into a technological problem of given means and given ends, in essence defining both activities out of existence. The possibility of economic calculation and human flourishing are therefore dependent upon a political/legal order that protects the possibility of self-directed knowledge creation in both the economic and moral realms, that is, to say an institutional framework of private property rights.

We argue that the future of Austrian political economy rests on the study of how institutional entrepreneurs discover and implement alternative institutional arrangements conducive to economic growth. This requires a dual level of analysis in spontaneous order studies. How such institutional arrangements manifest themselves is ultimately an empirical question. As a progressive research program, Austrian political economy will entail cross-fertilization with other empirical branches of political economy that illustrate its own central theoretical contributions to political economy, namely economic calculation, entrepreneurship, and spontaneous order. Accordingly, we argue that such cross-fertilization with the work of Ronald Coase and Elinor Ostrom will further expound the institutional counterpart of “rivalry” in the market process, namely polycentricism and its empirical manifestation. Understanding the distinct relationship between rivalry and polycentricism will provide the central theoretical underpinning of institutional evolution.

The Coase theorem is associated with Stigler because Stigler coined the term. The object of this paper is to show that Stigler’s Coase theorem is Stiglerian for deeper – namely, methodological – reasons. We argue that, convinced as he was by the importance of Coase’s message, Stigler also believed that this message – such as presented in “The Federal Communications Commission” (1959) or “The Problem of Social Cost” (1962) – was not scientific. Hence, he had to transform it into a theorem to give it a scientific dimension. This is what we try to show by presenting Stigler’s methodology and by confronting it to the methodology used in Coase’s articles.

This chapter is the editor’s introduction to Austrian Economics: The Next Generation, which includes a brief description of the workshop that produced the papers and short summaries of each contribution organized by sub-topic.

The Austrian School of Economics, pioneered in the late nineteenth century by Menger and developed in the twentieth century by Mises and Hayek, is poised to make significant contributions to the methodology, analytics, and social philosophy of economics and political economy in the twenty-first century. But it can only do so if its practitioners accept responsibility to pursue the approach to its logical conclusions with confidence and absence of fear, and with an attitude of open inquiry, acceptance of their own fallibility, and a desire to track truth and offer social understanding. The reason the Austrian school is so well positioned to do this is because (1) it embraces its role as a human science, (2) it does not shy away from public engagement, (3) it takes a humble stance, (4) it seeks to be practical, and (5) there remains so much evolutionary potential to the ideas at the methodological, analytical, and social philosophical level that would challenge the conventional wisdom in economics, political science, sociology, history, law, business, and philosophy. The author explores these five tenants of Austrian economics as a response to the comments on his lead chapter “What Is Still Wrong with the Austrian School of Economics?”