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• Austrian Economics Vs. the Mixed Economy
• Macroeconomic Formalism Vs. Human Action

Austrian Economics vs. the Mixed Economy

S. C. Littlechild

• University of Birmingham

The Fallacy of the Mixed Economy. London: The Institute of Economic Affairs (1978) 83 pp. Reprint. San Francisco: Cato Papers (1978).

At once an historical sketch of the Austrian economic school and a brief outline of Austrian economics, this monograph both explains Austrianism and contrasts it with economic theory in the neoclassical mainstream. One of the most engaging aspects of the monograph is Professor Littlechild's use of Professor James Meade's The Intelligent Radical's Guide to Economic Policy: The Mixed Economy to illustrate the differences between Austrianism and neoclassical economics. Meade's work marshalls the full theoretical forces of neoclassical economics to defend the “mixed economy” against its socialist critics. Littlechild considers Meade's theoretical arguments, provides an Austrian critique, and then shows that the economic policies which Meade supports will frustrate or impede the very achievement of his policy goals. In addition to considering Meade's views, Littlechild also considers in generic form the various arguments offered by neoclassical economists for governmental economic intervention. The result is an effective presentation of how Austrian economists take subjectivism and methodological individualism more seriously than their mainstream counterparts.

In the course of his exposition Littlechild moves from a discussion of Austrian economy theory to “Austrian policy.” Since policy conclusions do not follow immediately from economic theory, Littlechild implicitly imputes certain value judgments to Austrian economists in order to formulate “Austrian policy.” The values Professor Littlechild employs to formulate “Austrian policy” are held by many but not all Austrians.