Was the Austrian school and Hayek specifically in the first half of the last century considered mainstream, if not why?

“Until the end of the 1870s there was no Austrian School, there was only Carl Menger,” Ludwig von Mises once wrote. Nonetheless, the small school of thought out of Vienna, originally dubbed as the “Austrians” only in a ridiculing way by the German Historicist School, its fiercest opponent in the early phases, quickly developed into one of the most dominant economic schools of thought during the early 20th century. In a pluralistic AustroHungarian Empire, known for its impressive extent of freedom of thought and speech, the early “Austrians” quickly gained steam: Carl Menger taught Crown Prince Rudolph, Eugen von Boehm-Bawerk was finance minister, and with them, intellectuals like Ludwig von Mises, Friedrich von Wieser, and Joseph Schumpeter arose who would influence the economic discipline like none other at the time. Mises is still credited to this day as the man, who put an end to the validity of classical socialist arguments, when he pointed out the “calculation problem” in his monumental work Socialism from 1922. The most significant member of the Austrian School however, was Friedrich A. von Hayek. He and Mises founded the influential Austrian Institute for Business Cycle Research in Vienna, but his stardom truly took off in the famous debates with John Maynard Keynes in the 1930s. Hayek taught at the London School of Economics, Keynes at Cambridge, and despite their friendship, their fierce debates were analyzed and judged not only during the Great Depression, but still to this day. In the end, the “Austrians” lost out. The Great Depression was fought against by economic stimuli from the state, most notably by Herbert Hoover and Franklin D. Roosevelt, and after a devastating World War II, which had led most “Austrians” – being often Jewish – in the 1930s to flee their homes and find a new place to live. Keynesianism meanwhile prevailed. It is thereby no surprise that in 1947 the Mont Pelerin Society was founded by the likes of Hayek, Mises, Friedman, and Popper to try to stop the increasing power of the state. “The position of the individual and the voluntary group are progressively undermined by extensions of arbitrary power,” the “Statement of Aims” said in a worried tone. And so the “Austrians” fought on – though with much less leverage than just two decades before.