The Economic Crisis Theory Of Austria School And Its Enlightenment And Reference Significance

The national economy has maintained a good growth before the2008financial c-risis,some economists thought that we has mastered the basic economic rules of macroeconomics and the economic crisis has completely disappeared.But the outbreak of the financial crisis took the economists all over the world a surprise. Economists raised a research upsurge of the reasons of the crisis,and gave a variety of explanations. Some held the opinion that the reason is the laissez-faire, while there were some arguments that it should be blamed on the excessive intervention of government policy. The paper relates to a representative of the school--the Keynes doctrine, the Marx doctrine, Monetarism and the Austria school.It gives a introduction about the business cycle theory of the Austria school and a explanation about the economic crisis.According to the Keynes doctrine, the consumer’s investment demand continued to strengthen in the booming market.The financial innovation and the financial surper-vision has further strengthened the affects.The investment panic triggered when the crisis erupted,led to massive investment to sell and a great recession.The Marx doctrine pointed out that the main reason of this financial crisis is the capita-list social system,as far as the capitalist system and the basic contradict-tion between large-scale socialized production and private ownership are concerned. Monetarism analysis the changes of the volume of money supply caused by Fed’s monetary policy, and the price level.As a result, asset prices fell sharply and sparked widespread pessimism,and the crisis break out at last. The business cycle theory of Austria school this paper focuses on is mainly based on the subjective value, time preferences, production structure, capital interest rate theory and entrepreneurship,and explaines how the government’s monetary policy cause the changes of the production structure.Because of the misleading of the monetary policy and over investment of the entrepreneurs,the materials wil flow for two times,and wrong configuration will exist as a result.The crisis will break out when the government monetary policy can’t keep going with the inflationary pressure caused by the rising of the price level. The Austria school gives a more accurate and convincing explanation of the economic crisis according to the cycle theory of their own. And because the school advocates liberalism, the government should not implement the variable of monetary policy, cause interference on the operation of the economy. So their countermeasures of the economic crisis is the nonfeasance of government,and let the market itself to complete the error configuration of resources.It has a special significance to reason the financial crisis causes when the impact of the financial crisis has not completely dissipated today,.Many thought that there will be a new crisis in the near future in some economic forum,the measures that the government adopted in the financial crisis will soon usher in a liquidation.The Austria school’s theory of the business cycle has made the corresponding analysis and early warning in the two big economic crisis--the great depression and the financial crisis in2008,and given some reasonable explanation about other economic crisis.It’s necessary that introduces the theory of the business cycle and applies it to the analysis of actual economy because it’s quite convincing. The innovation of this paper lies in the cycle theory of Austria school in a unique way with the subjective value, time preferences, production structure, interest rate theory and entrepreneurship as the theoretical basis. However, as this analysis is mainly about theory of the business cycle not many studies of other theories and viewpoints of Austria school, so there may be some omissions and deviation on the understanding.