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Austrian Economics for Managers

Econ_2014_A_Managerial — with Peter Klein

Cost: $49   Length: 6 Lectures
Format: Independent Study
Status: Open for enrollment


Business people – and business-school students – often view economics as a dry, technical subject with little relevance to business practice. One could easily get that impression from studying neoclassical economics at most business schools! But economics, as understood especially by the Austrian school, has important implications for managers, investors, and entrepreneurs. The Austrians’ thorough analysis of purposeful human action and their causal, realistic approach to prices and markets contains valuable insights not only for students, citizens, and policymakers, but for business professionals as well.

This course offers a brief overview of managerial and organizational economics from an Austrian perspective. Unlike the typical case-based business-school course, it is primary theoretical, though the discussion is filled with real-world illustrations and applications. The focus is how to use Austrian economic analysis to frame, analyze, and solve business problems. As we’ll see, the Austrian approach to value, price and exchange, the notion of resources as heterogeneous and subjectively perceived, the concept of competition as rivalry, and the Austrian understanding of the entrepreneur all provide critical insights on how successful firms deal with customers and suppliers, interact with competitors, attract and retain employees, grow and restructure, and organize and govern themselves.

Traditional courses in managerial economics have limited value. They embrace the artificial abstractions of neoclassical economics (for example, treating the business firm as a single decision maker that buys inputs in markets at prices determined by the impersonal forces of demand and supply, transforms the least-cost combination of those inputs into an output in accordance with a given production function, and given the demand curve for the output, produces the profit maximizing amount of output). This approach underlies neoclassical models of markets and prices, but is basically useless for people managing actual firms. Instead, we need a causal, realistic framework that starts from individual choice and builds to demand, capital and production, entrepreneurship and change, and industry structure.  The firm is viewed not as a production function, but a team of individuals trying to coordinate their behavior to create and capture economic value. This includes issues of managing information flows, motivating people, deciding how to fund the firm’s activities, whether to make inputs or buy from outside suppliers, how to react to competitors’ behavior, and so on.

Our course begins with an overview of Austrian-style price theory and an introduction to core concepts about valuation, marginal analysis, pricing, resources, production, and competition. We’ll then cover details of demand and the consumer, production and cost, firm boundaries, organizational design, and more.

About the Instructor

Besides being a successful economist, Peter is also an experienced management scholar and teacher, with many years of experience teaching economics, business strategy, and entrepreneurship to MBA students and executives. He serves as Representative-at-Large for the Competitive Strategy Interest Group of the Strategic Management Society and has received research awards from the Strategic Management Society, the Academy of Management, and the European Management Association. He holds an adjunct professorship with the Department of Strategy and Management of the Norwegian School of Economics and teaches in the International Management Program of the University of Angers, France. He is a frequent management consultant and sits on the Board of Directors of a financial services company.

Readings

All other readings for this course are free, available online, and provided to students in a fully-hyperlinked syllabus.

Independent Study

Independent study courses are courses that were presented live in the past. These courses are now offered at a discount to anyone who wants to study independently. All courses include lecture recordings, slides, a complete hyper-linked syllabus, automatically-graded quizzes, and a discussion forum. Professors are not available for academic support for these independent study courses.

Sample Certificate of Participation

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klein

Peter Klein

Peter G. Klein is Associate Professor in the Division of Applied Social Sciences at the University of Missouri and Director of the McQuinn Center for Entrepreneurial Leadership. He also holds appointments with the Truman School of Public Affairs and the Norwegian School of Economics and Business Administration. His research focuses on the boundaries and internal organization of the firm, with applications to diversification, innovation, entrepreneurship, and financial institutions. He taught previously at the University of California, Berkeley, the University of Georgia, and the Copenhagen Business School, and served as a Senior Economist with the Council of Economic Advisers. He is also a former Associate Editor of The Collected Works of F. A. Hayek. He lectures regularly at the Mises University and other Mises Institute events.

Klein received his Ph.D. in economics from the University of California, Berkeley and his B.A. from the University of North Carolina, Chapel Hill. He is editor of two books and author of many scholarly articles and book chapters. See here for his complete vita and here for his website at the University of Missouri.

Check out his blog, Organizations and Markets.

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