The Austrian school of economics is named that because Carl Menger (1840–1926), the founder of this school of thought in economics, and his followers were all from Austria. In the books Principles of Economics (1871) and Investigations into the Method of the Social Sciences (1883), Menger laid out the principles and methods of this approach. Menger’s theory is similar to Adam Smith’s, but Menger rejected the cost-based theory of value, which is at the core of the economic theory of Adam Smith.  Menger focused on the individual market participants and their choices, that, in his view, are governed by the perceived needs and wants of those participants. This approach to economics is called methodological individualism or methodological subjectivism. For Menger economic value derives from the purposes that some goods or services will have for individuals doing the valuing, rather than from the objective qualities of goods and services being valued. Because individuals value goods and services differently, trading in them allows both sides that are in a trade to gain. Direct exchange (goods for goods) historically lead to indirect exchange, and, over time, to the most commonly accepted medium of exchange (e. i. salt, cattle, or gold), which, eventually lead to the adoption of money as the universal medium of exchange. Other important representatives of Austrian economics are Eugen von Böhm-Bawerk (1851–1914), Ludwig von Mises (1881–1973), and Friedrich von Wieser (1851–1926).

Books:

Böhm-Bawerk, Eugen von. Capital and Interest (1889);

Menger, Carl. Principles of Economics (1871)

     -     Investigations into the Method of the Social Sciences (1883),

Mises, Ludwig von. Theory of Money and Credit (1912).