The Subjectivism of the Austrian School

Subjectivism has never, of course, meant any challenge to the possibility of “objective truth” in economics. It has never claimed that “everything is merely a matter of subjective interpretation” by the would-be economist. What the subjectivism of the 1870s challenged was the basic—if unstated—classical tenet that ultimately the only determinant of social-economic phenomena is the objective physical environment. All economic science has endeavored to account for real-world phenomena. The classical economist believed that these phenomena are to be seen as having been inexorably determined by the underlying physical realities. The availability of scarce natural resources, in conjunction with population and its demographics, basically determine the course of human history. What emerges over history is inescapable, it cannot be substantially altered by human will. Economic history emerges as automatically determined by the objective conditions governing and surrounding production. It was against this premise that Menger did revolutionary battle in his 1871 Grundsätze—written, we are told, in what he himself described as “a state of morbid excitement.”

--Israel M. Kirzner, The Driving Force of the Market: Essays in Austrian Economics, Foundations of the Market Economy (London: Routledge, 2003), 41-42.