Economics and Ethics within the Austrian School of Economics

Abstract

Twentieth-century Austrian economists became known as champions of the free-market system yet claimed value-freedom in their economic analysis. However, advocacy of free markets is viewed as inherently ideological, involving ethical assumptions within the economic analysis. In this chapter, we discuss the connection between economics and ethics in the Austrian school of economics. We explore what value-freedom in the Austrian school entails and how twentieth-century Austrian economists were able to hold dual positions as value-free economists and advocates of free markets. We argue that Austrian economists separate ethical assumptions from their economic analysis. They maintain strict adherence to value-free analysis through an emphasis on social cooperation, which allows them to maintain their objectivity with respect to individuals’ ends. This combination allows Austrian economists to maintain their positions as value-free scientists while arguing that a free-market, capitalist system will best achieve peoples’ diverse ends.