Austrian Economics and the Bloomington School: An Introduction and Overview

Abstract

This paper compares and contrasts two schools of political economy: the Austrian School, prominent members of which include Friedrich Hayek and Ludwig von Mises; and the Bloomington School, which was founded by Elinor and Vincent Ostrom. It is argued that the two traditions share a good deal in common: both have improved our understanding of the limits of centralised or monocentric approaches to the organisation of society, as well as of the potential of polycentric systems to facilitate the effective use of local knowledge; and both have also engaged in empirical strategies that have privileged being “on the ground” and efforts to understand their subject’s point of view. The paper also discusses how in practice relations between the two schools were mediated by the work of two other groups of thinkers: school, namely the Virginia school of political economy — or public choice theory — as developed by James Buchanan and Gordon Tullock; and the ordo-liberal or Freiburg school of Walter Eucken and Franz Böhm. However, notwithstanding such common ground, it is also argued the facts that the links between the two schools are not as strong as they might be. This essay suggests how those connections might be deepened, in particular by summarising the arguments advanced in the essays contained in the volume to which it serves as the Introduction.

Keywords: Austrian economics, Bloomington school, Hayek, Ostrom, public choice, Virginia School, poycentricity, ordo-liberalism

JEL Classification: B2, B4, B5, B25, B41, B52, B53, D7, D8, P16