In this podcast episode, host John Golden talks with Dr. Thorsten Polleit, an expert in economics. Dr. Polleit is a professor at the University of Bayreuth in Germany and the Ludwig von Mises Institute president. They discuss why the Austrian School of Economics still matters today. This article breaks down their key points in simple terms.

Why the Austrian School Still Matters

Key Economic Theories

The Austrian School of Economics began in the 19th century in Vienna. Some people think it’s outdated, but Dr. Polleit explains why its ideas are still useful today. He highlights these key theories:

• Subjective Value Theory: The value of a product depends on how much a person wants it.
• Opportunity Cost: Every choice means giving up something else.
• Business Cycle Theory: The economy goes through natural ups and downs.
• Monetary Theory: Money and credit greatly impact the economy.

These ideas help explain how modern financial markets and business cycles work.

Business Cycles: The Austrian Perspective

What Causes Economic Fluctuations?

Many people understand that economies go through booms and busts. But what causes them? Dr. Polleit says that central banks play a big role. They pump money into the system and lower interest rates. This creates a temporary boom but often leads to a crash later.

The Boom-and-Bust Cycle

The Austrian Business Cycle Theory explains this process:

• Low Interest Rates: Central banks make borrowing cheap.
• Overinvestment: Businesses take on risky projects.
• Boom Phase: Companies hire more people and expand.
• Bust Phase: Bad investments become clear, leading to layoffs and losses.

Dr. Polleit believes this theory helps us understand past and present economic crises.

The Problem of Malinvestment

What is Malinvestment?

John asks about malinvestment, a common issue during economic booms. Dr. Polleit explains that businesses make bad investment choices because interest rates are too low. This leads to waste and financial instability.

Example: Spain’s Housing Market Crash

Dr. Polleit uses Spain as an example. After the euro was introduced, cheap credit led to a real estate boom. Builders put up too many homes, but there weren’t enough buyers. Eventually, the market crashed, leaving empty buildings and financial struggles. This is a classic example of malinvestment.

How Entrepreneurs Can Succeed

Challenges from Central Banks

John asks how businesses can succeed when central banks distort the economy. Dr. Polleit says that entrepreneurs must stay flexible. They need to watch market trends and avoid taking on too much risk.

The Power of Free Markets

The Austrian School believes in free markets. Entrepreneurs thrive when they can respond to real consumer needs instead of government policies. Dr. Polleit says that despite central bank interference, innovation and creativity still drive economic growth.

The Limits of Mainstream Economic Models

The Problem with Predictions

Many mainstream economists rely on complex models. But Dr. Polleit argues that human behavior is unpredictable. Unlike physics, economics deals with emotions, choices, and changing conditions.

The Issue of Information Gaps

He also points out that not everyone has access to the same information. This makes economic models unreliable. The Austrian School, instead, focuses on real human actions and decisions.

Lessons from the Financial Crisis

The Role of Central Banks

The financial crisis of 2008 is a perfect example of what happens when too much credit floods the system. Banks made risky loans, people borrowed more than they could afford, and the economy collapsed. Dr. Polleit believes these crises will keep happening unless we change how money is controlled.

The Future of Entrepreneurship

A New Age of Innovation?

John wonders if technology will create a golden age for entrepreneurs. Dr. Polleit agrees that the internet and digital tools help businesses grow. But he warns that government policies can still make things difficult.

The Power of Ideas

Dr. Polleit believes that ideas shape the economy. Social media and digital platforms allow entrepreneurs to share knowledge and create new opportunities, even in tough economic conditions.

Optimism for the Future

Despite the challenges, Dr. Polleit is hopeful. He believes that if people understand economics better, they can make smarter choices. This knowledge can help individuals and businesses succeed, even when the economy is uncertain.

Conclusion

This episode explains why the Austrian School of Economics is still relevant today. It helps us understand:

• How money and credit shape the economy.
• Why business cycles happen.
• How bad investments lead to crashes.
• Why free markets encourage innovation.

For those who want to learn more, Dr. Polleit’s work offers deep insights into today’s economic challenges. The Austrian School reminds us that real economic success comes from individual effort, sound money, and smart decision-making.

Our Host

John is the Amazon bestselling author of Winning the Battle for Sales: Lessons on Closing Every Deal from the World’s Greatest Military Victories and Social Upheaval: How to Win at Social Selling. A globally acknowledged Sales & Marketing thought leader, speaker, and strategist, he has conducted over 1500 video interviews of thought leaders for Sales POP! online sales magazine & YouTube Channel and for audio podcast channels where Sales POP! is rated in the top 2% of most popular shows out of 3,320,580 podcasts globally, ranked by Listen Score. He is CSMO at Pipeliner CRM. In his spare time, John is an avid Martial Artist.

Prime Economic Principles in Pipeliner CRM

Sales isn’t just about products and customers—economics plays a key role in every deal. This book simplifies essential economic principles and connects them to real-world selling. These insights aren’t just theory; they’re built into Pipeliner CRM, giving you the tools to make smarter, data-driven sales decisions.

Principle 1: Managing Sales Risk and Sunk Costs

Sunk costs refer to the money, time, and effort already invested in a product, service, or sales deal. In sales, this includes the hours spent nurturing leads, making calls, and presenting proposals. The key to reducing risk is recognizing when a deal isn’t progressing and knowing when to walk away.

Pipeliner CRM helps sales teams track buyer behavior, analyze past opportunities, and identify early warning signs that a deal may not close. By using real-time insights, salespeople can avoid wasting resources and focus on high-potential leads.

Principle 2: Understand Opportunity Cost

Every sales decision comes with an opportunity cost—the resources used to pursue one deal could have been invested elsewhere. If sales teams don’t account for these costs, they risk making deals that aren’t profitable.

Pipeliner CRM provides tools to accurately assess opportunity costs, helping sales professionals determine the lowest viable price for a deal without compromising profit margins. By being aware of these hidden costs, teams can make smarter pricing decisions and maximize revenue.

Principle 3: Why Subjective Value Matters in Sales

The value of a product or service isn’t fixed—it’s shaped by the customer’s unique needs, challenges, and perceptions. What one buyer sees as essential, another may view as unnecessary.

Salespeople can leverage Pipeliner CRM to understand how different stakeholders within an organization perceive value. By tailoring their pitch to each decision-maker’s priorities, they can clearly communicate why their solution is the best fit, increasing the likelihood of closing deals.

Principle 4: Playing to Your Team’s Strengths

Comparative advantage is an economic principle that applies to sales teams as well. Instead of expecting every salesperson to excel at every task, managers should assign roles based on individual strengths.

Pipeliner CRM helps managers track performance metrics and identify where each team member shines—whether it’s lead generation, negotiation, or closing. By aligning tasks with strengths, managers can create a more efficient, high-performing sales team.

Principle 5: Long-Term Value Drives Sales Success

Sustainable value is about creating ongoing benefits for both customers and sellers. For buyers, it means investing in a product or service that consistently delivers. For sellers, it means building lasting relationships that drive repeat business.

Pipeliner CRM features like Account Health and Automatizer help businesses maintain strong customer connections, ensuring long-term value creation. When companies prioritize customer success in every interaction, they build loyalty and increase lifetime value.

Afterword 1: Why Salespeople Matter More Than You Think

Salespeople do more than close deals—they drive trade, create economic stability, and contribute to a thriving middle class. Their work fuels business growth, fosters industry innovation, and even promotes global economic peace by enabling fair exchanges of value.

At its core, sales is about building trust and solving problems. In a world driven by commerce, salespeople play a vital role in shaping markets and economies.

Afterword 2: The Austrian School of Economics

The principles in this book are inspired by the Austrian School of Economics, a movement that emphasizes free markets, subjective value, and individual decision-making. Key thinkers like Carl Menger, Ludwig von Mises, and Friedrich August von Hayek explored how human choices shape economies.

A central idea of this school is that economic freedom comes with responsibility—businesses must create real value, not just seek short-term profits. By applying these insights, sales professionals can make more informed, ethical, and effective business decisions.