The Austrian school of economics: from oblivion to the inspiration of Bitcoin

“All we can do is introduce, by a roundabout and cunning means, something that they will not be able to stop. » (Friedrich Hayek, filmed interview, 1984)

Go to a Bitcoin conference and listen for two minutes. You will hear the same names coming over and over again. Menger, Mises, Hayek. Austrian economists, most of whom have been dead for more than half a century. Now, open the door of an economics college and look for these same names in the courses. You will hardly find anything. How did a school born in the cafes of Vienna one hundred and fifty years ago, a school that we thought was defeated, become the bible of bitcoiners? That's the whole story of one of our latest videos on our YouTube channel. Here's something to whet your appetite.

An umbrella, an insult and a quarrel with the Germans: The history of the libertarians

Return to Vienna, in 1871. We still light with candles. A professor named Carl Menger publishes a book that will change everything. Until then, we thought that the value of a good came from the work we put into it. This was the thesis of Marx and Ricardo. Menger says the value is in your head, at the precise moment you need the thing.

Take his example, an umbrella beast. Great sun, no one wants it, even at 2 euros. Torrential downpour, you in a suit, late for an appointment, and the same umbrella leaves at 20 bucks without negotiating. The object has not changed. Your need, yes. Value has just become subjective.

Around this idea, a school of thought is taking shape in Vienna. Her name, Austrian? At first, it's an insult. German professors, who then dominated the discipline, used it to say “provincial”, the thing for losers. The insult will come back to them in the face.

Mises, Hayek and Keynes: novel lives

This school is not just ideas. They are characters. Eugen von Böhm-Bawerk, a Minister of Finance who stood up to Emperor Franz Joseph in the Council of Ministers to defend a balanced budget. Ludwig von Mises, who fought against the printing press during the day and remade the world in the evening in his office, before fleeing the Nazis and seeing the Gestapo take away his entire library. We will find her decades later… in Moscow.

And then Hayek, Mises's student, who arrived in London in the 1930s and became the great rival of John Maynard Keynes, the most listened to economist of the century. Their disagreement is simple. When the economy collapses, Keynes wants the state to spend to revive the machine. Hayek swears that this headlong rush leads straight to inflation. However, the story goes that one night during the war, the two rivals stood guard together on a Cambridge roof, armed with shovels, to repel incendiary bombs. Embellished, surely. But it says something about their relationship.

Basically, it is Keynes who wins. For decades, these are the recipes that governments have applied. And the Austrian school falls into oblivion.

The revenge of the vanquished, and its paradox

Until a little book by Hayek, in 1976, asked a crazy question: what if we took away the State's monopoly on money? A quarter of a century later, a few lines of code that no one controls will answer it. Offer capped at 21 million, no central bank, a currency born on its own on the market. Bitcoin ticks almost all the boxes of the sound money that Austrians dreamed of. The ECB itself wrote it in black and white in 2012.

Almost all boxes. Because there’s a catch, and it’s a big one. According to the rule that Mises himself had laid down on the birth of currencies, Bitcoin should not even be able to exist. A theory that Bitcoin realizes and tramples on at the same time.

We'll let you find out why in the video below!