JOURNAL OF ECONOMICS AND FINANCE EDUCATION •Volume 10• Number • Fall 2011 Teaching Austrian Economics in Austria as a NonAustrian: A Note Bryan C McCannon1 Abstract In the summer of 2009 I taught a course in Austrian Economics in Vienna, Austria This note provides details on the design and structure of the course and outlines the advantages of it to the instructor and students The objective is to provide information for both Austrian and non-Austrian economists so they can offer a similar course Introduction An education in Austrian Economics provides students with a valuable and interesting alternative theory It provides a framework for students to engage in policy analysis, creates an appreciation for the market process and the role of the entrepreneur, and generates an awareness of the importance of information and uncertainty in the economy In the summer of 2009 I taught a course in Austrian Economics for Wake Forest University What was unique about the course was that it was held in Vienna, Austria – the birthplace of the school of thought My objective with this note is to provide the details of my Austrian Economics class in Austria so that it may be replicated by both those trained in the Austrian Economics and those, like me, who are rather new to the field First, a word about the background, both mine and of the course, is in order In the spirit of full disclosure I have no formal training in Austrian Economics As an applied microeconomic theorist I am constantly in pursuit of an understanding of the complex workings of markets and institutions Whether it be how trade restrictions affect product quality decisions with internationally-traded goods, the causes of excessive turnover of labor, or the use of sanctions to deter criminals I am awed by just how little we, as researchers in economics, understand about the workings of the economy Consequently, I have always been quite skeptical of policy interventions by those who have much less knowledge and training as the thousands of economists who each spend their careers devoting their efforts to understanding small portions of the economy Austrian Economics, which highlights the role of the entrepreneur as the agent making the risky investments and trying to sift through poor information to provide customers with goods and services that make their lives better, is quite appealing Therefore, since my graduate training I have gradually gained an appreciation for the arguments and insights that Austrian Economics provides Wake Forest University owns a house in Vienna, which is known as the Flow House WFU faculty and students study there year round A call for proposals was circulated on campus in the fall of 2008 inviting faculty to propose courses to teach in the upcoming summer (WFU also owns houses in London and Venice) Summer courses at the international houses are four-week courses that meet for 2.5 hours every day of the week My proposal to lead a course in Austrian Economics was accepted Recruitment for the course was both campus wide as well as being a directed advertising campaign among economics students The Design and Structure of the Course My objective was to create a course that provided students with the opportunity to gain an appreciation for the Austrian way of viewing the market process We did not attempt to criticize Austrian Economics Assistant Professor of Economics, Wake Forest University, Winston-Salem NC 27109 Email: mccannbc@wfu.edu JOURNAL OF ECONOMICS AND FINANCE EDUCATION •Volume X • Number X • [Summer] 2011 nor was our objective to criticize more mainstream arguments In my opinion, that would be inappropriate given that I was someone who was just learning Austrian Economics along with the students A student will have succeeded in the course if they could adequately evaluate policy interventions and proposals from an Austrian perspective Additionally, my role in the course was to facilitate their learning I deferred to the competent and articulate scholars in the field to explain the concepts My objective was to facilitate their learning: guide them through the readings, aid in their mastery of the arguments, provide the encouragement (and incentives) to their learning, and supply explanations of mainstream economic arguments as needed to appreciate the points made in the writings To construct my course I took advantage of the resources offered by the Ludwig von Mises Institute They provide a number of syllabi of Austrian Economics courses taught at various levels The syllabi were useful in that they provided an outline of the primary topics addressed in these classes, included the readings to be done, and covered both undergraduate and graduate-level courses so I could distinguish topics and readings that others had found to be more challenging for undergraduates from more appropriate ones Along with the syllabi books such as Boettke’s (1994) and Taylor’s (1980) organize the topics into units Thus, my syllabus followed the setup of these syllabi and books The substantial adjustment I made to these sources is that a clear separation between theory and application was made First, we tackled the foundations of Austrian economic theory After this was completed I organized units of study around specific subfields of economics (e.g labor economics, environmental economics, etc.) As a facilitator, rather than a lecturer, I felt if we first dived into the fundamentals and then emphasized their applicability to specific areas of study the course would be more successful Courses taught by Austrian economists can utilize readings from primary sources, such as reading directly from Mises or Rothbard for example, because the lecturer has the wealth of knowledge and experience, I suspect, to aid the students in the comprehension of the material As a non-Austrian I relied much more heavily on textbook treatments of the material before we were ready to apply the theory Finally, being at Wake Forest I had the opportunity to consult with Thomas Taylor who is a professor here Discussions with him on the important topics and applications along with suggestions on presentation and points of emphasis proved to be quite valuable With regard to the structure of the course topics the class consisted of three parts In the first part students were to be introduced to the theory of Austrian Economics This included readings and discussions on the market process, role of the entrepreneur, information and uncertainty, praxeology, and subjectivism The second part of the course focused on applying the core Austrian concepts to applied fields Fields of study included in the course are money, business cycles, economics of industry, law and economics, environmental economics, and labor economics to name a few Finally, the third part of the course was a reading and discussion of Friedrich von Hayek’s book The Road to Serfdom The readings in the course were numerous Before the summer session started each student was to read Thomas Taylor’s (1980) textbook An Introduction to Austrian Economics The text is freely available as a pdf book from the Mises Institute I required that the entire text be read before they arrived in Austria for one reason in particular: I was interested in having the students read as much as possible The two primary constraints were that the course was only four-weeks long and I wanted students to be able to fully experience the Viennese culture, history, and society During the first three weeks of the course the reading included Randy Holcombe’s (1999) 15 Great Austrian Economists, Peter Boettke’s (1994) volume An Elgar Companion to Austrian Economics, and numerous journal articles from the Review of Austrian Economics and the Quarterly Journal of Austrian Economics To illustrate how each class session operated let me give you an example of one day in the semester During the third week I proposed that public goods be the topic of the day For the class session the students were to have read before class Randy Holcombe’s (1997) journal article “A Theory of the Theory of Public Goods” as well as the essays by Anthony de Jasay (1994), “Public Goods Theory”, and Charles K Rowley (1994), “Public Choice Economics”, from Boettke’s volume During the class session we held discussions and debates on topics such as the definition and examples of public goods, exclusion as an entrepreneur’s catalyst, and potential distortions from government intervention My role as the facilitator was to set the reading list for the session, propose direct questions and issues for debate, and to moderate/encourage throughout This setup was repeated for each class session in the term The Appendix provides the reading list for the summer The assignments given to the students were diverse Students were to complete three major essay assignments on topics I assigned The essays were to be written on policy debates; both issues in U.S policy as well as Austrian/E.U policy Additionally, students were to give multiple in-class presentations JOURNAL OF ECONOMICS AND FINANCE EDUCATION •Volume X • Number X • [Summer] 2011 Prior to the class I collected current-event news articles from English-language Austrian news organizations Students were to select two of the current events and present, using an Austrian perspective, an analysis of the event Additionally, each student was to complete a biographical presentation of a famous Austrian economist Advantages from Being in Austria Being in Vienna allowed for added significant value of the class First, students became up-to-date on Austrian current economic and political news They were required to read current event news stories and questioned resident Austrians on their perspectives regarding political and economic policy Second, throughout the class sessions shared experiences in Vienna were used to illustrate the principles being discussed For example, entrepreneurship can be discussed by using observations from the Naschmarkt: the large open-air market in the center of the city Wake Forest University employs a local academic to aid students and faculty at the house He provided walking tours of the city and discussions of current events in Austria Walking with the students in the Naschmarkt allowed for a unique opportunity to discuss foundational issues of Austrian Economics, while directly interacting with these processes in a truly reallife scenario Walking down the path surrounded by competing olive retailers who have each developed unique dishes and are emphatically encouraging you to try a sample gives one a true sense of entrepreneurship Listening to coffee roasters give free public lectures on the process of making and selecting a good cup of coffee provides an opportunity to discuss the need for public provision of public goods Strolling through a large, active open market provides numerous examples of the market process in action and provides the seeds to many fruitful discussions We, also, discussed institutions that were shared experiences such as public transportation and the postal service For example, public transportation in Vienna operates on an honor code Users are to purchase tickets (either for single rides, day, week, or month) at the U-Bahn station (metro) There is, though, no enforcement; turnstiles requiring tickets are not installed and drivers not check tickets One may freely jump on and off buses and trains with no consequence This provided a fantastic opportunity to discuss the possibility of private provision of public goods, the necessity (or lack of necessity) of publiclyprovided private goods, social norms in markets and, of course free riding! Additionally, the entire class traveled to Prague over one weekend Tours of the medieval city, the castle, and the Jewish ghetto were arranged This weekend trip provided a contrast to our observations in Vienna Prague is a fabulous city with a rich and interesting history and beautiful architecture The effects of decades of central planning, a retarded economy, and underinvestment are obvious though This contrast added additional dimensions to our in-class discussions Occasionally, unplanned events occur that become valuable teaching moments One such experience occurred in Prague Our guide for the Prague Castle was the literature professor in Vienna who oversees the Flow House for Wake Forest University In the middle of an explanation of the historical significance of a room we were in a woman began screaming at him (in Czech)! We learned that she was a tour guide for hire The state heavily regulates the industry erecting entry barriers and taxing the profits It is in her interest to ward off unregulated guides and, obviously, this was a task she performed with zeal This one event lead to a detailed discussion between myself and the students about the effect of state regulation and opened the door for another chance to apply Austrian Economics to public policy While moments such as this cannot be planned, it does emphasize the potential value of out-of-the-classroom activities creating shared experiences to be incorporated into the learning There are, though, many opportunities to add to the course that I did not know about before the course started The Hayek Institute, founded in 1993 to promote the ideas of Austrian economics, is located in Vienna and offers educational programs, such as seminars Also, Benjamin Powell has organized a wonderful website full of information on things to see and places to visit in Vienna One could take students to see Mises’ house, the Gruener Anker Restaurant where the famous Mises circle met, and the university where the interior court features busts of the famous Austrian economists Menger, BöhmBawerk, and Wieser Discussions of these Austrian economists’ contributions can be had in the very places where the ideas were first discussed Experiential learning opportunities such as this are rare in typical classes Utilizing the historical sites should add a layer of motivation and excitement which is hard to We also received interesting lectures on Kafka, which was his area of research JOURNAL OF ECONOMICS AND FINANCE EDUCATION •Volume X • Number X • [Summer] 2011 produce in the classroom The location and description of places such as these can be found in Powell (2006) Conclusion In conclusion, courses such as this one can prove to be quite beneficial to students It could be replicated on campus or taken overseas Faculty with strong backgrounds in Austrian Economics can use the city to expand the scope of their students’ experience, while an instructor without a formal background can, as I did, approach the material as a facilitator of student learning Teaching this course, I believe, has made me a better teacher in my other courses One primary thing that the class provided was an intensive study of Austrian Economics I had to prepare the topics, select the readings, and facilitate the discussions My focus while doing this was to aid students who, for the most part, had taken only one introductory course in economics Thus, my emphasis was on relating the Austrian concepts to the topics covered in principles courses I found that I can use Austrian arguments to help provide new explanations for core economics concepts The Austrian perspective strongly emphasizes marginal utility, diminishing returns, and the role of information I am able to present new explanations for these concepts now Also, some topics which are at the heart of Austrian economics are typically not covered in mainstream economics classes For example, the entrepreneur and his/her role in the market process is absent in most economics classes Bringing in this topic I believe provides a more well-rounded economics education Finally, teaching this class provided me the opportunity to step out of my comfort zone I was forced to rely less on “chalk-and-talk” lecture styles and, instead, act as a facilitator My emphasis had to be on class discussion and building debates off of students’ comments These are skills that I find useful in my other course offerings References Boettke, Peter J 1994 The Elgar Companion to Austrian Economics Cheltham, UK: Edward Elgar de Jasay, Anthony 1994 “Public Goods Theory.” In The Elgar Companion to Austrian Economics, edited by Peter J Boettke Cheltham, UK: Edward Elgar, 276-284 Benson, Bruce L 2006 “Contractual Nullification of Economically-Detrimental State-Made Laws.” Review of Austrian Economics 19: 149-187 Carilli, Anthony M and Gregory M Dempster 2008 “Is the Austrian Business Cycle Theory Still Relevant?” Review of Austrian Economics 21: 271-281 High, Jack 1991 “Regulation as a Process: On the Theory, History, and Doctrine of Government Regulation.” In Champions of Freedom, volume 17, Austrian Economics: Perspectives on the Past and Prospects for the Future, edited by Richard M Eberling, Hillsdale: Hillsdale College Press Holcombe, Randall G 1997 “Theory of the Theory of Public Goods.” Review of Austrian Economics 10: 1-22 Holcombe, Randall G 1999 15 Great Austrian Economists Auburn: Ludwig von Mises Institute Horowitz, Steven 2003 “The Costs of Inflation Revisited.” Review of Austrian Economics 16: 77-95 Powell, Benjamin 2006 “The Misesian Sights: An Austrian Visits Vienna.” Mises.org Daily Article http://mises.org/daily/2283 Rowley, Charles K 1994 “Public Choice Economics.” In The Elgar Companion to Austrian Economics, edited by Peter J Boettke Cheltham, UK: Edward Elgar JOURNAL OF ECONOMICS AND FINANCE EDUCATION •Volume X • Number X • [Summer] 2011 Sobel, Russell S., J R Clark, and Dwight R Lee 2007 “Freedom, Barriers to Entry, Entrepreneurship, and Economic Progress.” Review of Austrian Economics 20: 221-236 Taylor, Thomas C 1980 An Introduction to Austrian Economics Auburn: Ludwig von Mises Institute Appendix Here is the daily reading list from my course Class Session Week Day Day Topic Reading introduction marginal utility, prices, & entrepreneurship time, information, & uncertainty ERE & Austrian macroeconomics Taylor, pg 1-95 Boettke, chp 12 – 15 Taylor, chp – Boettke, chp 16, 17, 24, 25 Boettke, chp 3, 11, 46 Day philosophical principles: praxeology & subjectivism money, banking, & inflation Day business cycles Day economics of industry Boettke, chp 55, 56 Sobel, Clark & Lee (2007) Day labor economics & law and economics No Class – Reading Day Regulation and Taxation Boettke, chp 37, 38, 51, 73 Benson (2006) Day Day Taylor, chp – Week Day Boettke, chp 34, 36, 58, 59, 60 Horowitz (2003) Boettke, chp 32, 62; Hughes (1997) Carilli and Dempster (2008) Week Day Day Day environmental economics & public goods Day Hayek Day Day Day Hayek Hayek Hayek Boettke: 42, 50, 54, 61, 65 High (1991) Boettke: 27, 40, 43 Holcombe (1997) Week Road to Serfdom Chp – Chp – Chp – 12 Chp 13 – 16 ... role as the facilitator was to set the reading list for the session, propose direct questions and issues for debate, and to moderate/encourage throughout This setup was repeated for each class session... major essay assignments on topics I assigned The essays were to be written on policy debates; both issues in U.S policy as well as Austrian/E.U policy Additionally, students were to give multiple... Walking with the students in the Naschmarkt allowed for a unique opportunity to discuss foundational issues of Austrian Economics, while directly interacting with these processes in a truly reallife