Ron Paul, in his book "Liberty Defined," describes the history of this economic philosophy:
The school of thought is named for the country of its modern founder, Carl Menger (1840-1921), an economist at the University of Vienna who made great contributions to the theory of value. He wrote that economic value extends the human mind alone and is not something that exists as an inherent part of goods and services; valuation changes according to social needs and circumstances. We need markets to reveal to us the valuations of consumers and producers in teh form of the price system that works within a market setting. In saying these things, he was really recapturing lost wisdom that had earlier been understood by Frederic Bastiat (1801-1850), J.B. Say (1767-1832), A.R.J. Turgot (1727-1781), and many more throughout history. But history needs people like Menger to rediscover forgotten wisdom.Andrew Mellon and Jack Kemp were two economists who renewed interest in this philosophy, encouraging Calvin Coolidge and Ronald Reagan respectively to adapt it. Both Coolidge and Reagan reduced taxes and regulations, and with government out of the way, the American economies of the 1920s and the 1980s soared to its greatest heights in American history.
The Austrian school champions private property, free markets, sound money, and the liberal society generally. It provides a way of looking at economics that takes into account the unpredictability of human action (absolutely no one can quantitatively know the future) and the huge role of human choice in the way economies work (in markets, consumers drive decisions over production), and explains how it is that order can emerge out of the seeming chaos of individual action In short, the ustrian School provies the most robust defense of the economic system of the free society that has ever been made.The Austrian School "had achieved mainstream status before the so-called Keynesian Revolution of the 1930s swept away the older wisdom.