1 Forthcoming in Jeff Biddle and Warren Samuels, eds., Blackwell Companion to the History of Economic Thought (Oxford: Basil Blackwell, 2002). The Austrian School of Economics: 1950-2000 Peter Boettke and Peter Leeson • The Earlier History of the Austrian School The doctrines comprising the Austrian school of economics have varied and the relative position of the school within the mainstream of economic thought has moved from the center to the fringe several times throughout the 130 years of its history. Carl Menger, in his Grundsatze der Volkswirthshaftslehre of 1871, substituted subjective marginal utility for the classicists’ objective cost of production as the theory of value. Friedrich von Wieser introduced the idea of opportunity cost and emphasized its subjective and ubiquitous character. Eugen von Böhm-Bawerk engaged in applying Menger’s theory of value to the theories of capital and interest. The next generation’s leaders were Ludwig von Mises and Hans Mayer, who emphasized epistemic, ontological and other philosophical themes. A fourth generation of Austrian economists emerged (most of whom would make their academic mark in the US after WWII) that included such major economists as F. A. Hayek, Gottfried Haberler, Oskar Morgenstern, Fritz Machlup and Paul Rosenstein-Rodan. Austrian economics flourished in the period immediately following WWI. By the mid-30's, however, the idea of a distinct Austrian program, even in the minds of the Austrians themselves, was seriously waning, in part because the mainstream more or less absorbed the important points the Austrians were making. Mises (1933, 214) had argued that while it is commonplace in modern economics to distinguish between the Austrian, Anglo- American, and Lausanne School, “these three schools of thought differ only in their mode of expressing the same fundamental idea and that they are divided more by their terminology and by peculiarities of presentation than by the substance of their teachings.” Hayek was even more explicit when he wrote as late as 1968 that while the fourth generation of Austrian economists continued to show their training in Vienna in the 1920s in terms of their style of thinking and theoretical interests, they could hardly be considered a separate school of thought anymore. “A school has its greatest success when it ceases as such to exist because its leading ideals have become a part of the general dominant teaching. The Vienna school has to a great extent come to enjoy such a success” (1968, 52). Yet by the early post-WWII • James M. Buchanan Center for Political Economy, Department of Economics, MSN 3G4, George Mason University, Fairfax, VA 22030. We thank John Robert Subrick, Edward Stringham, Scott Beaulier, Ryan Oprea and Warren Samuels for their comments on an earlier version.