The Austrian School's unorthodox theories led to many famous intellectual battles. The three presented here are considered the "Great Debates" of the Schools history.
Gustav von Schmoller's scathing review of Carl Menger's work led to a heated debate on the very role of economics. Menger "retired" from the Methodenstreit in the late 1880s to focus on other work.
Economics can help us understand human action
Economic theories are needed to help us interpret history
History is the only science suited to study human action
Economic theories are formed through the study of history
The first Austrian School criticisms of Karl Marx came from Eugen von Boehm-Bawerk, but the debate ended in 1922 with Ludwig von Mises' book, Socialism, which proved Marx's economic model fundamentally impossible.
Income distribution is an economic issue
A price system is necessary for any proper distribution of resources
Income distribution is a political issue
Centrally run governments can distribute resources effectively and properly
In the early 1930s, Friedrich A. von Hayek entered a lengthy debate on macroeconomics with Cambridge economist John Maynard Keynes through the journals they each edited. By 1940, the "Keynesian revolution" had won the battle; by the 1970s, however, Hayek's theories would win the war.
Free markets can and should be allowed to dictate business cycles
Supply and demand are determined by individual economic actors
Central banks and other institutions should manage business cycles
Supply and demand are analyzed by use of aggregate data