Year: 2026 | Month: January | Volume: 13 | Issue: 1 | Pages: 152-165
DOI: https://doi.org/10.52403/ijrr.20260115
A Conceptual Review of the Austrian School of Economics as an Alternative to Keynesian Macroeconomics
Enrico Moch, PhD
Academic Director, Department of Economics, GrandEdu Research School, Germany.
Corresponding Author: Enrico Moch
ABSTRACT
Macroeconomic research in advanced economies is still largely shaped by Keynesian and neo-Keynesian traditions. These frameworks work primarily with aggregates and assume that fiscal and monetary policy can stabilise the economy. The financial and banking crisis of 2007–2009 exposed persistent weaknesses in this view, especially in its explanations of instability and in its confidence in policy control. This paper revisits the Austrian School of Economics as a coherent alternative grounded in a distinct epistemology. Using a conceptual method, it reconstructs the Austrian action-theoretic tradition, beginning with praxeology as a theory of purposeful behaviour and deriving from it methodological individualism and subjective value theory. It then develops the Austrian account of decentralised knowledge, markets as discovery processes, and spontaneous order, with particular emphasis on capital theory and Austrian business cycle theory. From this perspective, economic crises emerge not primarily from fluctuations in aggregate demand but from intertemporal miscoordination within time-structured production processes, often amplified by monetary intervention. The paper argues that the most valuable contribution of the Austrian School is not short-term forecasting but its ability to explain the structural origins of macroeconomic instability and to clarify the institutional conditions under which coordination can be sustained. In doing so, it supports pluralism in macroeconomic theory and advances research in regulatory economics.
Keywords: : Austrian School of Economics, Keynesian Macroeconomics, Praxeology, Methodological Individualism, Subjective Value Theory, Decentralised Knowledge, Capital Theory, Business Cycle Theory, Spontaneous Order, Economic Order Theory .
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