Below is an amazingly simplistic explanation of the core principles of Austrian Economics. These are not my own words but are taken from an article called Austrian Economics, Laissez-Faire, and Consumer Primacy.
If you can grasp the following four paragraphs then you might just start to understand the core principles behind the political agenda of Ron Paul. The principles expressed here can be largely credited to the work of Carl Menger and Ludwig Von Mises.
“The singular tendency of the market economy, as it is seen in the Austrian perspective, is to provide for individuals the satisfaction of their wants according to the extent of their contribution to the satisfaction of the wants of others. Through the market process, the consumers tend to reward each producer according to his contribution to consumer satisfaction. Thus in the market economy, individuals are encouraged to, in their own interest, ever adjust their choices of roles and actions so as to ever improve their contribution to the satisfaction of human wants.
The relative importance of some consumers’ wants are greater than that of others in this process. But, as Mises stresses, the relative importance of any given consumer’s wants, insofar as that relative importance has been determined on the market, is a function of how much he contributed to satisfying the wants of other consumers in his role as a producer.
Thus, under capitalism, human choices, through their interplay, coordinate each other so as to provide for human welfare as fully as possible.
Every state intervention into the market nexus — every tax, regulation, redistribution, or expansion of bureaucracy — only slackens the ties linking contribution and income, thereby hampering the instrumentality of the market by making producers less responsive to consumers, and thus leading to reduced consumer satisfaction. And because, with regard to economic provision, we are all consumers first and foremost and producers only subordinately, reduced consumer satisfaction means reduced public welfare.”
Here is a free PDF book called “Principles of Economics” by Carl Menger.