The genre of introductions to Austrian economics has always been a troublesome one. Leaping right into the core books of the school has frequently been a problem for non-specialists. Thankfully, the last decade or so has seen several attempts to fill this gap, and all five of the books I’ll discuss below are worth your time for different reasons. My list proceeds from the most “introductory” to the least and tries to provide a sense of their differences and their appropriateness for different audiences.
Best Beginners Books for Austrian Economics:
Here is our list of the first five books that a student in free market economics should start with.
- The Law, by Frederic Bastiat
- Economics in One Lesson? by Murray N. Rothbard
- How an Economy Grows and Why It Crashes – by Peter Schiff and Andrew Schiff
- What Has Government Done to Our Money? by Murray N. Rothbard
- The Case Against The Fed. by Murray N. Rothbard
1. The Law, by Frederic Bastiat
The 19th-century Frenchman, Frederic Bastiat, dedicated his life to articulating the principles undergirding a free society. Towards the end of Bastiat’s eventful career as a journalist, economist, and politician, and despite suffering from tuberculosis, he penned one of his most famous essays, simply entitled The Law. France needed Bastiat’s clarity and simplicity; between 1789-1848, France cycled through three monarchies, two republics, and one tyrant. After so much bloodshed and fruitless experimentation with new complex political systems, Bastiat aimed to convince his readers to end where they should have begun by trying liberty.
For Bastiat, the defining features of humans are personality, liberty, and property. Some liberals since have argued that private property and liberty are inventions of the state, but Bastiat sharply disagrees. He writes, “It is not because men have made laws that personality, property and liberty exist.” In fact, for Bastiat this trio pre-date laws; laws were then created and instituted to protect these three gifts, which are “anterior and superior to all human legislation.”
Legal plunder has two roots: One of them, as I have said before, is in human greed; the other is in false philanthropy.
In The Law, written in 1850, the year of his death, Bastiat recognises the central importance of the law and morality in a free society. He was concerned that government was using the ‘law’ to become too active a participant in the economy whilst devoting too little attention to protecting life and liberty.
2. Economics in One Lesson? Murray N. Rothbard
Considered among the leading economic thinkers of the “Austrian School,” which includes Carl Menger, Ludwig von Mises, Friedrich (F.A.) Hayek, and others, Henry Hazlitt (1894-1993), was a libertarian philosopher, an economist, and a journalist. He was the founding vice-president of the Foundation for Economic Education and an early editor of The Freeman magazine, an influential libertarian publication. Hazlitt wrote Economics in One Lesson, his seminal work, in 1946. Concise and instructive, it is also deceptively prescient and far-reaching in its efforts to dissemble economic fallacies that are so prevalent they have almost become a new orthodoxy.
Many current economic commentators across the political spectrum have credited Hazlitt with foreseeing the collapse of the global economy which occurred more than 50 years after the initial publication of Economics in One Lesson. Hazlitt’s focus on non-governmental solutions, strong — and strongly reasoned — anti-deficit position, and general emphasis on free markets, economic liberty of individuals, and the dangers of government intervention make Economics in One Lesson, every bit as relevant and valuable today as it has been since publication.
Everything we get, outside of the free gifts of nature, must in some way be paid for. The world is full of so- called economists who in turn are full of schemes for getting something for nothing. They tell us that the government can spend and spend without taxing at all; that it can continue to pile up debt without ever paying it off, because “we owe it to ourselves.
The understanding of economics to this day is a precarious one. People believe in certain economic myths, simply because they do not understand the repercussions of the same. Henry Hazlitt decided to write a comprehensible book with teachings of economics based on the thinking’s of Bastiat and Mises. Considered a must-read amongst those interested in delving into economics; Economics in One Lesson is an easy-to-read book that debunks economic fallacies in a simple and understandable way.
3. How an Economy Grows and Why It Crashes – by Peter Schiff and Andrew Schiff
In this Collector’s Edition of their celebrated How an Economy Grows and Why It Crashes, Peter Schiff, economic expert and bestselling author of Crash Proof and The Real Crash, once again teams up with his brother Andrew to spin a lively economic fable that untangles many of the fallacies preventing people from really understanding what drives an economy. The 2010 original has been described as a “Flintstones” take economics that entertainingly explains the beauty of free markets. The new edition has been greatly expanded in both quantity and quality. A new introduction and two new illustrated chapters bring the story up to date, and most importantly, the book makes the jump from black and white to full and vivid color.
With the help of colorful cartoon illustrations, lively humor, and deceptively simple storytelling, the Schiff’s bring the complex subjects of inflation, monetary policy, recession, and other important topics in economics down to Earth. The story starts with three guys on an island who barely survive by fishing barehanded. Then one enterprising islander invents a net, catches more fish, and changes the island’s economy fundamentally. Using this story the Schiffs apply their signature take-no-prisoners logic to expose the glaring fallacies and gaping holes permeating the global economic conversation. The Collector’s Edition:
Provides straight answers about how economies work, without relying on nonsensical jargon and mind-numbing doublespeak the experts use to cover up their confusion
Includes a new introduction that sets the stage for developing a deeper, more practical understanding of inflation and the abuses of the monetary system
Adds two new chapters that dissect the Federal Reserve’s Quantitative easing policies and the European Debt Crisis.
Gold actually has properties – you can use gold for all sorts of things. People value gold for the metal. Nobody values bitcoin for the bitcoin; they value it because they believe that they can exchange it for something else.
Colorizes the original book’s hundreds of cartoon illustrations. The improved images, executed by artist Brendan Leach from the original book, add new vigor to the presentation
Has a larger format that has been designed to fit most coffee tables.
While the story may appear simple on the surface, as told by the Schiff brothers, it will leave you with a deep understanding of How an Economy Grows and Why It Crashes.
Below is a great Animated video introduction to How an Economy Grows and Why It Crashes
4. What Has Government Done to Our Money? Murray N. Rothbard
When this gem first appeared in 1963, it took the form of a small paperback designed for mass distribution.
Innumerable economists, investors, commentators, and authors have learned from this book through the decades. After fifty years, it remains the best book in print on the topic, a real manifesto of sound money.
Rothbard boils down the Austrian theory to its essentials. The book also made huge theoretical advances. Rothbard was the first to prove that the government, and only the government, can destroy money on a mass scale, and he showed exactly how they go about this dirty deed. But just as importantly, it is beautifully written. He tells a thrilling story because he loves the subject so much.
The passion that Murray feels for the topic comes through in the prose and transfers to the reader. Readers become excited about the subject, and tell others. Students tell professors. Some, like the great Ron Paul of Texas, have even run for political office after having read it.
Rothbard shows precisely how banks create money out of thin air and how the central bank, backed by government power, allows them to get away with it. He shows how exchange rates and interest rates would work in a true free market. When it comes to describing the end of the gold standard, he is not content to describe the big trends. He names names and ferrets out all the interest groups involved.
Since Rothbard’s death, scholars have worked to assess his legacy, and many of them agree that this little book is one of his most important. Though it has sometimes been inauspiciously packaged and is surprisingly short, its argument took huge strides toward explaining that it is impossible to understand public affairs in our time without understanding money and its destruction.
Inflation may be defined as any increase in the economy’s supply of money not consisting of an increase in the stock of the money metal.
Rothbard explains how money was originally developed, and why gold was chosen as the preferred commodity to use as money. The author also explains how the gold standard makes money a commodity, and how market forces create a stable economy. Rothbard shows that many European governments went bankrupt due to World War I and left the gold standard in order to try to solve their financial issues, which was not the right solution. He also argues that this strategy was partially responsible for World War II and led to economic problems throughout the world.
5. The Case Against The Fed. Murray N. Rothbard
The most powerful case against the American central bank ever written. This work begins with a mini-treatment of money and banking theory, and then plunges right in with the real history of the Federal Reserve System. Rothbard covers the struggle between competing elites and how they converged with the Fed. Rothbard calls for the abolition of the central bank and a restoration of the gold standard. His popular treatment incorporates the best and most up-to-date scholarship on the Fed’s origins and effects.
The drum-fire of propaganda that the Fed is manning the ramparts against the menace of inflation brought about by others is nothing less than a deceptive shell game. The culprit solely responsible for inflation, the Federal Reserve, is continually engaged in raising a hue-and-cry about ‘inflation,’ for which virtually everyone else in society seems to be responsible. What we are seeing is the old ploy by the robber who starts shouting ‘Stop, thief!’ and runs down the street pointing ahead at others.
Bonus Reads:
6. Anatomy of the State by Murray N. Rothbard
#1: What the State Is and Isn’t. The State is an organization that systematically acquires wealth through “political means”, seizing goods and services and undermining prosperity.
#2: Tools of State Preservation. The State preserves its powers through four main tools: ideology, fear, guilt, and tradition.
#3: History’s Race Between State Power and Social Power. Throughout history, great technological leaps forward have propelled greater power for individuals, only to be later seized upon as an opportunity to return power to the State.
7. The Road to Serfdom by Friedrich A. Hayek
In The Road to Serfdom F. A. Hayek set out the danger posed to freedom by attempts to apply the principles of wartime economic and social planning to the problems of peacetime. Hayek argued that the rise of Nazism was not due to any character failure on the part of the German people, but was a consequence of the socialist ideas that had gained common currency in Germany in the decades preceding the outbreak of war. Such ideas, Hayek argued, were now becoming similarly accepted in Britain and the USA.
8. Democracy: The God That Failed by Hans-Hermann Hoppe
The central idea is that the democratic institutions tend to corrupt the politicians elected to them. That is because a politician is renting rather than owning the apparatus of the state. His goal therefore becomes to extract the present income of the country to benefit his client class, typically, the poor, and, of course, benefit himself. Much better is monarchy where the princes and the king are owners of property just like anyone else; they want to increase the capital value of the country.
9. The Anti-Capitalistic Mentality by Ludwig von Mises, 1956
The Anti-Capitalistic Mentality by Austrian School economist and libertarian thinker Ludwig von Mises is an investigation into the psychological roots of the anti-capitalistic stance that is widespread in segments of the general population of the capitalist world. Von Mises suggests various reasons for this mentality, primarily his claim that free competition in the market economy allows no excuses of one’s failures. Rather, he argues, it creates great incentive for one’s desire for improvement and greater effort to succeed, as well as a greater reward for that success.
10. End the Fed by Ron Paul, 2009
Most people think of the Fed as an indispensable institution without which the country’s economy could not properly function. But in End the Fed, Ron Paul draws on American history, economics, and fascinating stories from his own long political life to argue that the Fed is both corrupt and unconstitutional. It is inflating currency today at nearly a Weimar or Zimbabwe level, a practice that threatens to put us into an inflationary depression where $100 bills are worthless. What most people don’t realize is that the Fed — created by the Morgans and Rockefellers at a private club off the coast of Georgia — is actually working against their own personal interests. Congressman Paul’s urgent appeal to all citizens and officials tells us where we went wrong and what we need to do fix America’s economic policy for future generations.
