Understanding How Society Works

An Introduction to the Austrian School of Economics (Seminar)

Understanding how society works features a comprehensive innovative curriculum in Austrian Economics, LIECHTENSTEIN ACADEMY tries to get entrepreneurs, individuals and key opinion leaders in politics, the media, and academia interested. We are not awarding degrees. However, our world-class faculty will grant a degree for the individual modules if successfully mastered. The seminar is designed as a sequence of 8 self-contained modules and thus can be booked individually. To affirm an interactive and open-ended learning environment, we have limited the class size to 20 to 25 students. The instruction will be either in English and/or German. At a later stage, upon request all modules will also be offered in Spanish.


The contents of the individual modules represent a recommended minimum and thus may be subject to additions and change of emphasis by our instructors.

M1 – Economics
An introduction to the “Austrian School of Economics’

M2 – Philosophy
The methodology and the limits of the social science

M3 – Law
Selected topics in legal theory. The evolution of law, natural law and spontaneous order

M4 – Philosophy
Markets, moral and business ethics

M5 – Economics
Money, banking and behavioral finance; selected topics in monetary-, capital- and business cycle theory

M6 – Politics
Institutional economics and public choice analysis

M7 – Sociology
The problems of demography, immigration issues and social security systems; the illusion of the welfare state’ and alternative models

M8 – Economics
Environmental economics, property rights and the eminent domain problem. Public goods and “the tragedy of the commons’

Download the Course Flyer right here -> Liechtenstein Academy, Course Flyer (PDF, 3.0 MB).

The course will be held in German and English. Designed and Organized by LAF (Liechtenstein Academy Foundation). © All rights reserved by the LIECHTENSTEIN ACADEMY Foundation∙ Herrengasse 12 ∙ FL-9490 Vaduz∙ Tel. +423 235 2881∙ Email: contact@liechtenstein-academy.com

Economies need structural reform, not helicopter money

GIS statement by Prince Michael of Liechtenstein

Money facilitates trade and serves as remuneration for work. It also stores value. Money that is earned but not spent becomes savings, which can provide capital for investment. The effort expended in providing labor, services, or entrepreneurial activities, as well as the need for goods and investment, form the basis for the value we place in money.

Zhou Xiaochuan, governor of the People’s Bank of China, admitted at a press conference during the G20 summit in Shanghai that monetary measures have a limited scope for stimulating the economy. Structural reforms, though they hurt, are necessary. GIS experts have repeated this many times over the past few years, but at least the PBoC is willing to admit it officially, writes Prince Michael of Liechtenstein.

For years policymakers in governments, central banks and academia have preached easy money and inflation as a solution to the economic woes in Europe, the United States and Japan. But years of administering this medicine have had no effect on growth. Instead, it has led to an asset bubble, damaged savings (especially retirement funds) and motivated governments to delay painful but necessary reforms.

China tried the same tactics, and was also unsuccessful.

The reasoning behind implementing these measures was an oversimplification: Cheap, abundant money would incentivize businesses to invest and consumers to spend, further allowing banks to lend.

What was ignored, especially in Europe, was that the lack of reform to restrictive labor laws, oversized public sectors and bloated regulatory frameworks creates doubt about whether growth can be sustained. Businesses become reluctant to invest and consumers to spend. Japan and the U.S. are seeing similar effects.

The money therefore stays in the financial system and does not reach the rest of the economy. That some companies prefer to use the excess cash to buy back their own shares is significant: it shows they see a lack of viable options for investment. The blame for that lies not with business, but with bad government policies, which have stifled investment incentives.

In a well-run business, damaging the company, first by assessing the situation wrongly and then by not reacting when the mistake becomes clear, would be grounds for changing management (and their advisors). Not so with these policymakers.

EZB Draghi Helicopter Money
ECB Draghi

The European Central Bank continues with quantitative easing and negative interest rates, ignoring that such policies have not solved the problem. They will prove even less effective in the future, due to a decrease in marginal utility. Then there are all of the negatives already mentioned.

However, slowly, people are beginning to realize that the abundant, cheap money provided to the banks is not being injected into the economy. Instead of coming to the same conclusion as Mr. Zhou, some analysts are promoting the concept of “helicopter money”: central bank money, freshly printed, provided directly by the government to consumers as a gift – like throwing banknotes out of a helicopter.

That sounds wonderful and might stimulate consumption. But the populace could rightly see it as unsustainable, and might instead decide to save. In any case, such policies will only have a short-term effect and will further delay the necessary reforms. The underlying structural problems will remain.

“Helicopter money” policies may or may not be implemented, but that the discussion has come to this shows the difficulty of changing the mindset that economies can be stimulated purely through money supply. This mentality might lead to helicopter money but is certainly not a helicopter view. An efficient economy needs business, and not theoretical money supply equations.

It was refreshing to hear Mr. Zhou’s words. Such an obviously necessary change of paradigm would be welcome in the West.

Read the original statement “Economies need structural reform …”
here ->
GIS Statements

8th Vernon Smith Prize | Read Winning Essays

Vernon Smith Prize 2014
Austrian Econonmics Applied: 8th International Vernon Smith Prize 2015.

8th International Vernon Smith Prize 

Vaduz (FL), February 29, 2016. Essays of the winners of the 8th International Vernon Smith Prize 2015 have now been posted, since all three authors have defended their papers at a special festive event on February 15, 2016 in Vaduz, the Principality of Liechtenstein.

1st Prize: Daniel W. Issing (Germany); Essay:

The Snowden Disclosures: An Inquiry Into The Virtue Of Whistleblowing From An Austrian Economics Perspective
Download Essay here (PDF)

2nd Prize: Demelza Hays (USA); Essay:

The Ethics of Government Surveillance: Is Edward J. Snowden a Hero or a Villain?
Download Essay here (DOCX)

3rd Prize: Mats Ekman (Finland); Essay:

Heroic Leaks of Information: Quixotic or Practical?
Download Essay here (PDF)

The annual Vernon Smith Prize for the Advancement of Austrian Economics is sponsored and organized by ECAEF – European Center of Austrian Economics Foundation, Vaduz (Principality of Liechtenstein).  Topic of the 2015 Essay Competition was: Edward J. Snowden: Hero or Villain?

Reducing the role of cash will destroy the public’s trust in money

GIS statement by Prince Michael of Liechtenstein

Money facilitates trade and serves as remuneration for work. It also stores value. Money that is earned but not spent becomes savings, which can provide capital for investment. The effort expended in providing labor, services, or entrepreneurial activities, as well as the need for goods and investment, form the basis for the value we place in money, writes Prince Michael of Liechtenstein.

Today, that value is based on trust. People believe that the institutions which print or issue currency – such as central banks – will fulfill their obligation to protect its value. Most central banks have such an obligation written into their statutes. But they can only do so when they are independent: monetary policy must be kept separate from the government’s fiscal policy. When politicians gain control over monetary policy, the temptation to misuse the central bank’s ability to create money to fund all their wild spending desires might become too big to resist.

Unfortunately, when the fiscal crisis hit the U.S. and Europe, central banks started buying government debt. These were thinly disguised measures to give governments fiscal breathing room, and they were financed through the artificial creation of money. Money should represent value, but the new funds issued did not represent the creation of any new value. The amounts involved are so mind-boggling that people could begin to lose their respect for money altogether.

But there are a number of other signs that the value we put in money is becoming increasingly endangered. This goes especially for the euro, the U.S. dollar and the yen.

When central banks set interest rates at extremely low levels, and especially when interest rates are negative – as in the eurozone and in Japan – it erodes the incentive to save. Savers such as pension funds are punished. However, it helps governments reduce borrowing costs and thus rewards overspending.

The heads of the German Bundesbank and the Banque de France, both members of the board of the European Central Bank, have called for the introduction of a centralized European Ministry of Finance in order to save the euro. This is a sign of alignment of fiscal and monetary policy and a very strange call from central bankers. The only plausible reason for this appeal is the hope that an EU finance ministry would be more disciplined than national ones. Knowing politics, this is highly unlikely.

The entire global monetary system has become abstract and opaque. It is even difficult for economists to understand. This does nothing to increase confidence. Cash, in the form of physical notes and coins, however, are tangible, and can help maintain the public’s trust in money.

Calls to reduce the use of cash – and even to abolish it altogether – have become widespread. They can be heard from Harvard economists to bankers to European governments. Various pretexts are offered: fighting terrorism, simplifying transactions, improving hygiene. But abolishing cash won’t accomplish any of these things. Instead, the agenda appears to be twofold: first to facilitate the nationalization of private savings – a sort of legalized theft – and second, to give the state total control over citizens’ finances.

Getting rid of cash would eliminate the last physical point of contact between the broad public and money, and would finally destroy any remaining confidence in it. The result would be an expansion of the black market. In the end, this could prove beneficial, at least economically speaking, since it would create a “free” market. However, it would further erode the rule of law.

Moreover, as understanding of the monetary system and voter interest decrease, less accountability will be needed. This will allow governments to behave even more irresponsibly with public finances. The end of trust, combined with the loss of accountability, could destroy the world’s monetary system.

Read the original statement “Reducing the role of cash …” here -> GIS

Jacques Rueff Conference in Monaco

Jacques Rueff Conference in Monaco

“No religion spread as fast as the belief in full employment, and in this roundabout way, allowed governments that had exhausted their tax and borrowing resources to resort to the phony delights of monetary inflation.” Jacques Rueff (1896-1973), 7th Minister of State of Monaco

Irresponsible socio-economic and fiscal policy measures with alarming demographic problems and depleted state coffers have brought most of the European Welfare State to the brink of collapse. The explosive immigration issues lures masses of disenchanted citizens increasingly to populist rhetoric and confiscatory government actions that challenge the very foundations of a civil society, democratic principles, and the rule of law.

The I. International
Jacques Rueff Conference

Principality of Monaco, November 8, 2016

On the Worldwide Collapse of the Welfare State.
Will the End of a Daydream Turn into a Nightmare?

The I. International Jacques Rueff Conference is an academic one-day academic co-operation of CEPROM (Center of Economic Research for Monaco, MC) and ECAEF (European Center of Austrian Economics Foundation, FL).

Academic Director:  Kurt R. Leube, ECAEF (krleube@stanford.edu)
Administrative Director:  Emanuel Falco, CEPROM (cecile@mlp.mc)
Media Contacts: Nicolas Saussier, CEPROM (nsaussier@palais.mc)
Conference Date: November 8, 2016
Participation: by invitation only
Location: Musee Oceanographique de Monaco, Principality of Monaco
Conference Languages: English and French; simultaneous translation

Conference Venue:
09:00-9:30 Registration
09:30-9:45 Welcome: H.S.H. Prince Albert II. and H.S.H. Prince Michael of Liechtenstein

Session I: The End of a Daydream (9:45-12:15)
09:45-10:00 Chair: Pedro Schwartz (ES)
10:00-10:30 10:00-10:30 Unlike Socialism, the Welfare State cannot be Defined: Antonio Martino (I)
10:30-10:45 Discussion
10:45-11:15 Coffee break
11:15-11:45 The Fatal Illusion of ‘Social Justice’: Hardy Bouillon (D)
11:45-12:15 Discussion

12:15-14:15 Luncheon for speakers and invited guests

Session II: The Beginning of a Nightmare (14:15-16:30)
14:15-14:30 Chair: H.S.H. Prince Michael of Liechtenstein (LI)
14:30-15:00 Unintended Consequences of the Welfare State: Victoria Curzon-Price (CH)
15:00-15:15 Discussion
15:15-15:45 On the Looming Financial Fiasco: Pascal Salin (F)
15:45-16:00 Discussion
16:00-16:30 Coffee break

Session III: There is a Way Out! (16:30-18:40)
16:30-16:45 Chair: Pedro Schwartz (ES)
16:45-17:15 An Inspiring Revolution: Pension Savings in Personal Accounts: Carlos Gomez (Chile)
17:15-18:15 Panel discussion with Bouillon, Curzon-Price, Gomez, Klaus, Salin)
18:15-18:30 Discussion general
18:30-18:40 Farewell Remarks: Emmanuel Falco, CEPROM (MC)

18:50-19:50 Farwell Reception at the Palace for invited guest and speakers, hosted by H.S.H. Prince Albert II.