Austrian Economics

Austrian Economics is a school of thought that centers on individual decisions, market freedom, and the vital role of entrepreneurs in shaping the economy. Instead of leaning on complex math or models, Austrian economists use logical reasoning to understand how people’s choices drive economic outcomes. Founded in the late 1800s by Carl Menger—whose influential book, “Principles of Economics,” set the groundwork—this approach stresses how personal preferences and actions shape markets.

One early concept from Austrian theory is diminishing marginal utility: the idea that each additional unit of something (like money) is valued less than the previous one. For example, an extra dollar can mean a lot to someone without resources, but very little to the extremely wealthy.

Supporters of Austrian Economics typically argue for free-market systems, limited government involvement, and favor "sound money"—a stable currency backed by tangible assets—over fiat money created by governments. They often criticize government interference and believe that such intervention, along with fiat currency, leads to inefficiencies and inflation. In contrast to Keynesian Economics, which favors active government management of the economy, Austrian Economics sees markets as best left to self-regulate. Modern examples like Bitcoin appeal to Austrian principles, as they promote decentralized, limited-supply money and financial independence from central authorities.