An extract on #fitlife
By the mid-1930s, most economists had embraced what they considered the important contributions of the early Austrians. Fritz Machlup quoted Hayek's statement, "the greatest success of a school is that it stops existing because its fundamental teachings have become parts of the general body of commonly accepted thought." Sometime during the middle of the twentieth century, Austrian economics became disregarded or derided by mainstream economists because it rejected model building, and mathematical and statistical methods in the study of economics. Mises' student, Israel Kirzner recalled that in 1954, when Kirzner was pursuing his PhD, there was no separate Austrian School as such. When Kirzner was deciding which graduate school to attend, Mises had advised him to accept an offer of admission at Johns Hopkins because it was a prestigious university and Fritz Machlup taught there.
After the 1940s, Austrian economics can be divided into two schools of economic thought, and the school "split" to some degree in the late 20th century. One camp of Austrians, exemplified by Mises, regards neoclassical methodology to be irredeemably flawed; the other camp, exemplified by Friedrich Hayek, accepts a large part of neoclassical methodology and is more accepting of government intervention in the economy. Henry Hazlitt wrote economics columns and editorials for a number of publications and wrote many books on the topic of Austrian economics from the 1930s to the 1980s. Hazlitt's thinking was influenced by Mises. His book Economics in One Lesson (1946) sold over a million copies, and he is also known for The Failure of the "New Economics" (1959), a line-by-line critique of John Maynard Keynes's General Theory.
The reputation of the Austrian School rose in the late-20th century due in part to the work of Israel Kirzner and Ludwig Lachmann at New York University, and to renewed public awareness of the work of Hayek after he won the 1974 Nobel Memorial Prize in Economic Sciences. Hayek's work was influential in the revival of laissez-faire thought in the 20th century.
Many theories developed by "first wave" Austrian economists have long been absorbed into mainstream economics. These include Carl Menger's theories on marginal utility, Friedrich von Wieser's theories on opportunity cost, and Eugen Bhm von Bawerk's theories on time preference, as well as Menger and Bhm-Bawerk's criticisms of Marxian economics.
Former U.S. Federal Reserve Chairman Alan Greenspan said that the founders of the Austrian School "reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in this country." In 1987, Nobel Laureate James M. Buchanan told an interviewer, "I have no objections to being called an Austrian. Hayek and Mises might consider me an Austrian but, surely some of the others would not." Chinese economist Zhang Weiying supports some Austrian theories such as the Austrian theory of the business cycle.
Currently, universities with a significant Austrian presence are George Mason University, New York University, Loyola University New Orleans, and Auburn University in the United States, King Juan Carlos University in Spain and Universidad Francisco Marroqun in Guatemala. Austrian economic ideas are also promoted by privately funded organizations such as the Mises Institute, and the Cato Institute.