It happens that once in a while someone asks in the comments for a good book on a particular subject within Austrian economics. I thought it would be worthwhile to make a list of books that made an impact on my understanding of the subject, and/or, are a good source for beginners.
*This list in no way attempts to be objective, it is comprised only of books that I happened to have read and hold to be of extraordinary quality.
*The difficulty level attached to each book has NOTHING to do with intelligence but is rather only an indication of the level of acquaintance that the reader should have with the subject before reading the book.
*Some descriptions I wrote by myself and some are partly inspired by either the description over at Mises.org or on the backcover.
Economic Treatises
Principles of Economics – Carl Menger (1871) Intermediate
This book established the Austrian school of economics with its unique emphasis on methodological individualism, subjectivism, and causal-realist analysis as distinguished from all other schools of thought. In it, Menger traces back the source of value to the actions of individuals as being choices between marginal units of scarce goods and the phenomenon of prices to freely interacting individuals on the market. Using a causal-realist approach as opposed to a mathematical and mutual-deterministic one, Menger was able to uncover universally valid laws of human action which stem from the reality of scarcity and the need of man to economize to satisfy his most valued wants. Furthermore, Menger brings forth a brilliant explanation for how money came about on the market because of self-interested individuals acting in a system of the division of labor, thus rejecting the view that money is a creature of the state.
Capital and Interest – Eugen von Böhm-Bawerk (1890) Advanced
The great economist and finance minister of the Austro-Hungarian Empire is a pillar of the Austrian School. As a champion of the new marginalist school, this great work brought him more fame than even Carl Menger had in his day. With depth and lucidity, Böhm-Bawerk surveys and critiques failed theories of interest from antiquity to modern times, presents a full theory of the structure of production, and defends the importance of capital in production and time in the determination of the interest rate. The book is divided into seven parts: 1) The Development of the Problem, 2) The Productivity Theories, 3) The Use Theories, 4) The Abstinence Theory, 5) The Labor Theories, 6) The Exploitation Theory, 7) Minor Systems of Thought.
Human Action – Ludwig von Mises (1949) Advanced
Mises's magnum opus. Mises starts, like all great economists before him, to first analysis the status of economic propositions and the validity of the economic science as such. He arrives at the conclusion that economics is not a separate discipline which touches only some certain aspects of human life, but rather that it is part of a more fundamental science of human action “praxeology” which deduces universally valid laws of human action from a-priori true axioms. He then applies this to the actions of the isolated individual to show how most concepts of economic analysis such as value, price, cost, profit and more, are already implied in the notion of action, i.e., purposeful behavior; and how when combined with a few empirical observations, can they eventually explain to us the complete interworking of the market economy and all other proposed economic systems. Laden with devastating criticisms of historicism, empiricism, Marxism and other anti-capitalistic schools of thought; on top of dazzling historical analysis, this book is one of the most rigorous defenses of a free society ever to be written.
Man, Economy, and State, with Power and Market– Murry N. Rothbard (1962) Intermediate
Relaying on the methodological framework which was earlier established by von Mises, Rothbard deduces the entire corpus of economic theory step by step from its theoretical foundation to its applications. Yet Rothbard doesn’t stop there. He surpasses von Mises in his elaborations of production theory and fixes faulty theories such as that of monopoly and banking. Done in crystal-clear prose with a systematic approach, this book is the best source for whoever wishes to acquaint himself with Austrian economics.
Introductions
Economics in One Lesson - Henry Hazlitt (1946) Introductory
This book will make you think like an economist. Written over 70 years ago, this book is a true gem and still frequently read up to this day. Hazlitt goes through all the economic fallacies one can think of and demolishes one after the other. Hazlitt wrote for the layman who might found himself bamboozled with either government and union propaganda or the highly mathematized and jargon-laden language of the professional economists. Whether you are a beginner or have already some knowledge in the field, this is the book for you.
Lessons for the Young Economist – Robert Murphy (2010) Introductory
A well-constructed and readable textbook-like introduction to economics from an Austrian perspective. Murphy does a good job of capturing the essence of economics as a science that teaches us of universally valid laws of human action which are logically deduced; and shows how it can be used by everyone to better understand daily affairs in such a way that might be counterintuitive to most people. Originally written for high school students yet not “dumb down” in any sense. Suitable for all ages.
The Concise Guide to Economics - Jim Cox (1995) Introductory
A very fun and straightforward book which briefly surveys numerous economic topic such as unions, the price system, price fixing, monopoly, money, the gold standard, taxes, entrepreneurship, and much much more. The last part of the book is dedicated to clearing up a lot of nonsense surrounding economic theories or part of them such as “the multiplier”, cost shifting, and the Phillips curve. Only 119 Page long!
Monetary Theory
Theory of Money and Credit – Ludwig von Mises (1912) Advanced
Published for over 100 years ago, this book established Mises as one of the greatest minds in Vienna at the beginning of the 20th century, and not for no reason! In this book Mises accomplishes what all economists before him failed to achieve, namely, to integrate money into the general theory of “neoclassical” marginal economics. With the help of the foundations which were laid down before him by Menger, Mises is able to explain how the value of money is determined on the market. Besides building a systematic framework of money that will be used by Austrians up to this day, Mises also presents in the last part of the book a theory of banking. Here is where we encounter the first attempt to formalize what came to be known as the Austrian Theory of the Business Cycle. My favorite book by Mises.
The Mystery of Banking – Murry N. Rothbard (1983) Intermediate
The key to the book is that, following his mentor Ludwig von Mises, he integrates monetary theory with the basic principles of value theory that apply to all goods and services. He begins with a discussion of supply and demand. Once you understand how prices are determined in a free market, you are in a position to understand how the same principles apply to the demand and supply of money. With his characteristic clarity and incisiveness, Rothbard explains the origins of money. Mises’s regression theorem shows that money had to originate as a commodity. Rothbard next shows how banking got started. He shows the difference between loan banking and deposit banking. Fractional reserve banking allowed credit expansion, but so long as there was no central bank, inflation of the money supply was limited. Filled with historical considerations and devastating criticisms of other schools of thought - even of those who would call themselves Austrians.
Money, Bank Credit, and Economic Cycles – Jesús Huerta de Soto (2006) Advanced
Jesús Huerta de Soto, professor of economics at the Universidad Rey Juan Carlos, Madrid, has made history with this mammoth and exciting treatise. He integrates sweeping history and rigorous theory to make the good-as-gold case that the institutions of money and banking can be part of the free market — without a central bank, without bailouts, without inflation, without business cycles, and without the economic instability that has characterized the age of government control. Such a book as this comes along only once every several generations: a complete comprehensive treatise on economic theory. It is sweeping, revolutionary, and devastating — not only the most extended elucidation of Austrian business cycle theory to ever appear in print but also a decisive vindication of the Misesian-Rothbardian perspective on money, banking, and the law.
Money: Sound and Unsound – Joseph T. Salerno (2010) Advanced
This book might be considered an intermediate text on the topic. If you have read Menger, Rothbard, Mises, or Hayek on the topic of money and you want to know what is next, this is your answer. Joseph Salerno is the master of the subject, and he demonstrates absolute virtuosity in these pages. It is comprised of many articles which Salerno wrote throughout the years on a verity of subjects within monetary theory and history. The first one “Two Traditions in Modern Monetary Theory: John Law and A.R.J. Turgot” is one of my all-time favorites.
Epistemology and Methodology
Epistemological Problems of Economics – Ludwig von Mises (1933) Advanced
Mises first attempt at stating the status of economics propositions as a-priori and universally valid. He goes over the ruling theories of his time such as empiricism, historicism, and behaviorism, showing that neither one is logically consistent and cannot be used as a proper method for the economic science.
Theory and History – Ludwig von Mises (1957) Intermediate
Mises’s unjustly neglected masterpiece. In it, Mises analyzes thoroughly the meaning of economics as a science and the difference between it and the natural sciences; describing the proper method for the sciences of human action as “methodological dualism” for the reason that, among others, ideas cannot be, in the current understanding of the natural sciences, traced back to something of which they must seem to us as a necessary consequence. This he describes as the “ultimate given” of the sciences of human action. Furthermore, this book contains an extremely engaging criticism of Marxism as well of other “philosophies of history”.
The Counter-Revolution of Science – Friedrich von Hayek (1952) Intermediate
The problem that Hayek deals with reaches to the core of how economists think about their discipline. There was once such a thing as the human sciences of which economics was part. The goal was to discover and elucidate the exact laws that govern the interaction of people with the material world. It had its own methods and own recommendations. Then something changed. Science became entirely positivistic in its orientation. Economics was changed from a human science into a poor cousin of the natural sciences that applied positivist methods, and to no great end, for human beings do not move about like molecules but rather engage in choices and unpredictable actions. What Hayek does in this treatise is link the change in methodology to a change in politics. The economy and people began to be regarded as a collective entity to be examined as if whole societies should be studied as we study planets or other non-volitional beings. It then began to make mistakes, treating facts as theories and theories as contingent. And thus is the state invited in to treat society as a laboratory.
The Economic Science and the Austrian Method – Hans Hermann Hoppe (1995) Intermediate, so to speak
This book is made up of 2 parts. In the first one, Hoppe summarizes the position of the Misesian branch of the Austrians school on epistemology and methodology in a crystal-clear manner. In the latter part, he tries to “break new ground” by carrying on from where Mises left in his “Ultimate Foundations” on the subject of the epistemological justification for the a-priori of action and its relation to knowledge as such. Demonstrating Austrian economics to be a part of the larger tradition of Western Rationalist thought.
Socialism
Socialism: An Economic and Sociological Analysis – Ludwig von Mises (1922) Advanced
This book turned Hayek into a liberal. A monumental achievement by Mises, in which he analyses and criticizes every kind of socialism ever proposed. The main argument here is the impossibility of economic calculation under a system of common ownership of the means of production. Though this book is much more than that, it is a treatise which deals with various aspects of society: The family, ideology, property rights, the State, division of labor and the meaning of society.
Economic Calculation is the Socialist Commonwealth – Ludwig von Mises (1920) Introductory
Here Mises brings forth an a-priori, value-free economic argument against socialism, demonstrating its impossibility to function as a system of economic organizing in a society operating under the division of labor. Mises argues that since there will be no private property in the means of production, then there can be no buying and selling thereof, and therefore, no prices emerging with which the state planners of the socialist nation could compare the relative productivity of different modes of production. They could not answer the most basic economic questions that are being answered daily by the market: What to produce? How to produce? By whom? And for whom?
A Theory of Socialism and Capitalism – Hans Hermann Hoppe (1988) Intermediate
This book contains a study on the economics, politics and morals of socialism and capitalism as a systematic treatise on political theory. Interdisciplinary in scope, it discusses the central problems of political economy and political philosophy: how to organize society so as to promote the production of wealth and eradicate poverty, and how to arrange it so as to make it a just social order.
The Fatal conceit - Friedrich von Hayek (1988) Advanced - Didn’t find a link ):
Keynesianism
The Failure of the New Economics – Henry Hazlitt (1959) Intermediate
A point-by-point refutation of Keynes’s General Theory. Hazlitt does a great job of capturing the absurdity of the General Theory, not only in its economic logic, but also in its constantly changing definitions, contradictory passages, and dismissive approach to other economists without any justification whatsoever. If there is a reason for someone to read the General Theory, then it is only so he could better appreciate this book.
The Critics of Keynesian Economics – Edited by Henry Hazlitt (1960) Advanced
Hazlitt gathers the best anti-Keynesian articles written up to his time into a single volume that should be on everyone’s bookshelf. Starting from the classical economists like Say and Mill, through neoclassicists such as Knight, up to more and lesser known Austrians like Hutt, Anderson, Röpke and more. Containing 2 articles from Mises and Hayek each.
Dissent on Keynes – Edited by Mark Skousen (1992) Advanced
A more modern collection of essays from a number of great economists and philosophers which scrutinize Keynesian economics from various angles. Including the philosophy of the General Theory, the personal history of Keynes, the relation between Keynesianism and Milton Freidman, and criticisms of the Phillips curve, the multiplier and the accelerator. A true gem.
