Mathieu Bedard recently brought my attention to the following quote from Robert Leonard's excellent Von Neuman, Morgenstern and the Creation of Game Theory:
From 1928, Hayek and Morgenstern had been the co-directors of the [Austrian Trade Cycle Institute], with its tiny staff. [...] Instead of resorting to public works as a means of countering depression, the Austroliberals promoted Autoflockerung – namely, price flexibility and the removal of market restrictions in the spheres of both production and employment. Elsewhere in the capital, public speeches by Mises and Hayek promoted the same economic philosophy.
So rather than a unique brand of 'depression economics', the economists at the Austrian Trade Cycle Institute relied on basic price theory and the self-adjusting process of a free market.
Robert Leonard refers to this as an economic philosophy. In some sense there is no doubt that it is a reflection of a certain perspective. But in another sense, this line of advise is simply the persistent and consistent application of price theory to problems in public policy. The production plans of some must mesh with the consumption demands of others, and this is done in a free market through the structure of incentives provided by property rights, the flow of information provided by relative prices, and the learning and necessary adjustments in decisions and allocations that are spured on by the lure of profit and the penalty of loss. Economics is, as Gerald O'Driscoll so famously put it, a coordination problem.
I imagine that if you read carefully the discussions in Vienna in 1928 they would sound very familar to those who have been reading the discussions in the US and UK since 2008. The minority position is the one insisting on the power of the price system to guide the recalculation process that must take place. The majority position is one that focuses on public spending and easing monetary policy. And like that period, the different positions held no doubt reflect different philosophical perspectives, but it is important to stress that they also reflect deep analytical arguments about the nature and significance of economic science. For those in the business of economic science, the differences in philosophical perspective while important are less so then the analyical arguments about the power of price theory in explaining the complex coordination of economic activity.