In the late nineteenth century, Austrian economics emerged in the Austro-Hungarian Empire from the debate over the role the state might play in fostering economic development following Germany's state-led growth spurt. The key figure here was Carl Menger, one of the first of the so-called marginalist economists, who saw economic value as a question of subjective utility and relative prices, rather than as a function of costs of production. More important for our purposes, he was also dead against the state being involved in helping capitalism along the way. Megner started a "methodological debate" (Methodenstreit) with members of Germany's Historical school of economics over these matters that led the Germans to label Menger and his followers "the Austrian school."

Mark Blyth, Austerity, loc. 382