Austrian economic theory studies the organizing power of markets. Free market prices are driven by complex interplay of supply and demand, an understanding that is beyond the reach of any single individual, which determines the allocation of resources in an economy. Characteristics of Austrian economic theory include use of inductive reasoning to explain economic phenomena based on the actions and subjective choices of individuals, opportunity costs, the marginal effects of the last unit produced or consumed, and the effects of time preferences in allocation of resources.
Today’s markets are seldom free of government interference. Nonetheless, we can analyze the economies of today and make long term predictions about the types of upsets economies will likely experience, and how we can protect ourselves against such upsets.