The Austrians on Relative Inflation as a Cause of Crisis

The development of Austrian economics in the interwar period was marked by the contrast between its high esteem at the beginning of the 1930s and its dwindling influence throughout the remainder of the decade. A variety of reasons have been conjectured for this decline (and the eventual dissolution) of the Austrian school of economics (see Caldwell 1988, pp. 517–21). A rarely mentioned factor of a more sociological nature that may have contributed to or that at least indicated the school's decline was its loss of coherence during the late 1930s, when, as a consequence of the emigration of the most prominent members, Vienna lost its role as the Austrian school's main center of communication. Insofar as this lack of coherence led not just to diversity within a unifying framework but to crucial divergences among the school's leading members, this might help to explain why after 1945 the Austrians were no longer perceived as a distinct school—some parts of their thinking had been fused into the neoclassical mainstream and others had largely fallen into disregard.