How the Lausanne School of Economics Differs From the Austrian School of Economics

Menger’s successor at the University was Friedrich von Wieser. He was a highly cultured gentleman, had a fine intellect, and was an honest scholar. Before many others, he was fortunate to become acquainted with the work of Menger, the significance of which he recognized immediately. He enriched the thought in some respects, although he was no creative thinker and in general was more harmful than useful. He never really understood the gist of the idea of Subjectivism in the Austrian School of thought, which limitation caused him to make many unfortunate mistakes. His imputation theory is untenable. His ideas on value calculation justify the conclusion that he could not be called a member of the Austrian School, but rather was a member of the Lausanne School [Leon Walras et al. and the idea of economic equilibrium], which in Austria was represented brilliantly by Rudolf Auspitz and Richard Lieben.

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 or non-action. The Austrian School, too, uses the idea of rest and equilibrium, which economic thought cannot do without. But it is always aware of the purely instrumental nature of such an idea, and similar aids. The Austrian School endeavors to explain prices that are really paid in the market, and not just prices that would be paid under certain, never realizable conditions. It rejects the mathematical method, not because of ignorance of mathematics or aversion to mathematical exactness, but because it does not emphasize a detailed description of a state of hypothetical static equilibrium. It has never suffered from the illusion that values can be measured. It has never misunderstood that statistical data belong to economic history only, and that statistics have nothing to do with economic theory.

--Ludwig von Mises, Notes and Recollections with the Historical Setting of the Austrian School of Economics, ed. Bettina Bien Greaves, trans. Hans Sennholz (Indianapolis: Liberty Fund, 2013), 24.