ABSTRACT
The most important of Vaughn’s recurrent themes is the necessity for current Austrian economics to consistently develop an analysis of economic institutions in the direction indicated by Menger and Hayek. Her book is written under the firm, and clearly argued, belief that the unorthodox component of Menger as a founder of the neoclassical paradigm-his theory of economic institutions-is the cornerstone of the Austrian approach. Thus, although equilibrium is the dominant organising principle in most economic theory, the Austrians, especially since Hayek’s reconsideration of Menger’s theory of the origin of economic institutions, have turned their attention to the more general notion of social order. The ultimate goal of this shift of focus is not, as the evolution of Hayek’s thought might suggest, the search for a qualitative notion of equilibrium to counterbalance the quantitative notion of the mainstream. (This has been argued even recently in Donzelli 1993 and Moss 1994.) In fact, Vaughn maintains, it is in the way order is conceived, as ‘a system of rules established to enable individuals to achieve their own objectives’ (123), that the impact of Hayek’s work (especially Law, Legislation and Liberty) can best be appreciated. A corollary of this view of order is that the objectives of individuals and the specific action they set in motion:
depend upon their [the individual’s] perception of opportunities,…but the process for taking these actions depends upon the legal and informal rules structure in which they operate, a rules structure that includes rules of business trading as well as of cultural norms and legal prescriptions.
