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What can the applied economist do? In order to explore issues playing out in the “real world” of the past or present, the applied social scientist has to make a series of decisions about what they will accept as the facts of the situation. Particularly for research questions in which the beliefs, plans, and motivations of individuals matter – such as institutional analysis – this task requires the development of some degree of intersubjective understanding, or verstehen. For over 50 years, the Bloomington School of Institutional Analysis has been using fieldwork and deep archival history to conduct meaningful institutional analysis that takes interpretation and the quest for understanding seriously. As such, those who wish to take up the call for economists to take an “interpretive turn” can gain a great deal of insight and practical advice from the study of the Bloomington School’s methods and approach.

Recognizing heterogeneity of legal/social status, historical experience, and the resulting variation in the constraints faced by different groups can be a valuable complement to forms of heterogeneity already recognized by Austrian economists. This is particularly true for empirical analyses of caste-based societies, women’s history, and the experiences of other currently or historically persecuted minority populations. When (1) political institutions and/or other emergent social structures establish rules that apply to some individuals but not others, (2) these non-general rules are constructed in such a way that individuals cannot easily move in and out of established groups, and (3) some of the groups created by this process hold authority over others, class structures are created that can be understood without violating methodological individualism and other key tenets of Austrian economics. Like other heterogeneities that have now become incorporated into mainstream economic thought, the development of an Austrian theory of class could advance both the Austrian tradition and economic science in general.

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?”