Building as an economic process: the Austrian approach revisited

Abstract

Bon's book Building as an Economic Process: An Introduction to Building Economics was an important step in the development of the economic theory of the built environment. The book's aim was to establish theoretical foundations for building economics, using the perspective of Austrian economics. The objective of this review is to assess the significance and impact of the book, and how successful Bon was in achieving his stated purpose. Each of the major topics in the book is discussed, with the Austrian approach as used by Bon on capital theory, the building process, and business and building cycles assessed. Bon proposed a significant research programme based on these ideas. The impact of the ideas is discussed before progress on the research programme is reviewed. The conclusion attempts to bring out the significance of the book's contribution.

Keywords:

• Building economics
• Austrian economics
• building process
• capital theory
• Ranko Bon

Acknowledgments

The author would like to thank three anonymous referees who provided valuable criticism. The paper has benefited from their comments.

Notes

1. Modern microeconomics has at its core the neoclassical theory of value and distribution operating through the market mechanism, and a widespread consensus exists on its usefulness and relevance. Also, for many years the ‘neoclassical synthesis’ developed by Samuelson (1948 and successive editions) was the basis of macroeconomics. However, while modern macroeconomics uses the general equilibrium model as the analytical foundation, it also draws on a wide range of different theories depending on the particular issue addressed. The consensus found in microeconomics is not present in macroeconomics.

2. It should be noted that most of the ideas found in these new macroeconomic theories have not yet been applied to the building and construction industry.