The Austrian school of economics, although officially born in Vienna in the 1870s under the impetus of Carl Menger, has its roots in a much older intellectual tradition. Contrary to popular belief, the theoretical principles of the market economy stem from the doctrinal efforts of the Dominicans and Jesuits of the Salamanca school in the 16th century. This historical rediscovery, made possible in particular by the work of Professor Bruno Leoni in the 1950s, reveals that the fundamental Austrian concepts were already being discussed by the Spanish scholastics, rooted in the Thomist tradition.

These theologians and jurists developed their economic theory in the context of the Spanish empire at its height. They sought to reconcile Catholic theology with the realities of growing international trade and the influx of gold from the Americas. Their approach was fundamentally different from the prevailing mercantilism. Where mercantilists saw the enrichment of a nation as a zero-sum game requiring state intervention, the Spanish scholastics were already developing a liberal vision of mutually beneficial exchange.

Diego de Covarrubias was one of the first thinkers to highlight the subjectivity of value. In 1555, he wrote that the value of a thing does not depend on its objective nature, but on the subjective appreciation of men, even if this appreciation is foolish. He took the example of wheat, which is worth more in India than in Spain, because men appreciate it more there, even though its objective nature is identical.

More than three centuries before Carl Menger, Covarrubias understood that value is not an intrinsic property of objects, but emerges from the subjective evaluation of individuals. This conception was radically opposed to the labor theory of value that culminated with Karl Marx. Luis Saravia de la Calle took this analysis a step further, demonstrating that costs tend to follow prices, rather than the other way round. He asserted that those who measure the right price according to labor are mistaken, since the right price arises from the abundance or shortage of goods. This idea prefigured exactly what the Austrian school would formalize concerning price formation.

The Jesuit Louis de Molina anticipated another great Austrian notion by developing the dynamic concept of competition as a process of rivalry between buyers and sellers. In his 1592 treatise, he broke with static visions of value and opposed the dominant mercantilist vision. Molina prefigured the analysis of markets as living processes, made up of the sum of personal interests and individual actions.

This dynamic conception directly anticipates that which Ludwig von Mises and Friedrich Hayek would develop three centuries later. The market is not a state of static equilibrium, but a constant process of adjustment and coordination. Molina understood that competition is not a mathematically defined perfect structure, but an entrepreneurial process by which players compete to serve consumers.

Juan de Lugo and Juan de Salas can be considered as precursors of the theory of dispersed knowledge. In 1647, Lugo concluded that the equilibrium price depends on specific circumstances that only God can know. This statement underlines the impossibility for a human being to grasp the multitude of circumstances that determine prices. Salas similarly asserted in 1617 that a precise understanding of the information created in the market process is a matter for God, not man.

Father Juan de Mariana deepened this analysis by demonstrating the impossibility of a government organizing civil society by means of coercive orders, due to a lack of information. He strongly criticized government action, stating that it is a great folly for the blind to guide the seeing. This early criticism of central planning resonates directly with Ludwig von Mises' argument that economic calculation is impossible in a socialist regime. The Austrian school did not invent these ideas ex nihilo, but is part of a long intellectual tradition spanning the centuries.