Market Action: Austrian Economics and the Stock Marke

BcA. Matteo Nicolas Konrad

Master's thesis

Abstract:

The Austrian school of economics provides a remarkable methodology contrasting mainstream approaches, which usually rely on mathematical empiricism. More specifically, Austrian economics is grounded on human action. The general theory of human action is praxeology, while the record of human action is history. Praxeology is based on verbal and deductive reasoning to establish undeniable and universally true principles, whereas history deals with unique events from the past. The methodology can be applied in a limited but still fruitful manner as a lead framework for active stock picking. Praxeology helps to reflect market action in a logical and comprehensible way. Understanding the history is a starting point for guiding the investment decisions. Although understanding is rather an art and therefore not well teachable, there are teachings about heuristics which tend to match intellectually with Austrian economics and might at least help as an orientation. However, the strong influence of the social system on the stock market and its returns has to be considered and is critically examined from the perspective of economic freedom, which contributes to the understanding of political power, economic development and the movement of liquidity.

Abstract:

The Austrian school of economics provides a remarkable methodology contrasting mainstream approaches, which usually rely on mathematical empiricism. More specifically, Austrian economics is grounded on human action. The general theory of human action is praxeology, while the record of human action is history. Praxeology is based on verbal and deductive reasoning to establish undeniable and universally true principles, whereas history deals with unique events from the past. The methodology can be applied in a limited but still fruitful manner as a lead framework for active stock picking. Praxeology helps to reflect market action in a logical and comprehensible way. Understanding the history is a starting point for guiding the investment decisions. Although understanding is rather an art and therefore not well teachable, there are teachings about heuristics which tend to match intellectually with Austrian economics and might at least help as an orientation. However, the strong influence of the social system on the stock market and its returns has to be considered and is critically examined from the perspective of economic freedom, which contributes to the understanding of political power, economic development and the movement of liquidity.

Keywords

Austrian School, Economics, Finance, Stock Market, Investing, Human Action, Austrian Methodology, Praxeology, History, Empiricism, Heuristics, Libertarianism, Capitalism, Economic Freedom, Market Process, Fiat Money, Socialism, Political Power, Governments

Language used: English

Date on which the thesis was submitted / produced: 10. 9. 2021

Thesis defence

• Date of defence: 23. 9. 2021
• Supervisor: Dr. Anthony Mueller
• Reader: Ing. Mgr. Dominik Stroukal, Ph.D.

CEVRO Institute

Master programme / field:
Philosophy, Politics, Economics / PPE lifelong learning program