Swedish Influences, Austrian Advances: The Contributions of the Swedish and Austrian Schools to Market Process Theory

THE EVOLUTION OF THE MARKET PROCESS: AUSTRIAN AND SWEETISH ECONOMICS, Michel Bellet, Sandye Gloria-Palermo, Abdallah Zouache, (eds.), pp. 20-31, Routledge Publishing, 2004

12 Pages Posted: 18 Jan 2010

See all articles by Christopher J. Coyne

Christopher J. Coyne

George Mason University - Department of Economics

Peter J. Boettke

George Mason University - Department of Economics

Date Written: 2004

Abstract

Market process theory has its origins in the attempt to gain a richer understanding of how the invisible hand operates in coordinating the vast array of economic exchanges that occur on a daily basis. This is in stark contrast to general equilibrium theory, which seeks a price vector that allows all markets to simultaneously clear. As Ludwig von Mises (1978: 36) wrote: ‘What distinguishes the Austrian School and will lend it immortal fame is precisely the fact that it created a theory of economic action and not of economic equilibrium.’ General equilibrium theory explains the achievement of the desired efficiency in terms of strict behavioral assumptions placed upon economic participants. In contrast, the former methodology focuses on the institutional structure that creates a unique incentive-based framework that in turn influences the behavior of actors. This behavior includes the dissemination of information which then directly influences the decisions and actions of agents in coordinating their activities and hence in improving the overall efficiency of the economic system. The Austrian School was certainly not the only one to focus attention on the market process rather than the equilibrium state. The Swedish school of economics made significant contributions to the development of a theory of the economic process as well. The Swedish and Austrian Schools, while surely not the only contributors to market process theory, have made distinct contributions to the development of this methodology. These contributions have established market process theory as a distinct and robust explanation of economic activity.

JEL Classification: B53

Suggested Citation

Coyne, Christopher J. and Boettke, Peter J., Swedish Influences, Austrian Advances: The Contributions of the Swedish and Austrian Schools to Market Process Theory (2004). THE EVOLUTION OF THE MARKET PROCESS: AUSTRIAN AND SWEETISH ECONOMICS, Michel Bellet, Sandye Gloria-Palermo, Abdallah Zouache, (eds.), pp. 20-31, Routledge Publishing, 2004 . Available at SSRN: https://ssrn.com/abstract=1538076

Christopher J. Coyne

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Peter J. Boettke (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
42
Abstract Views
632
PlumX Metrics