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Rating: 
Summary: Austrian macro-economics without any criticisms
Review: A lovely succinct account from four towers in a tradition of economics that is widely represented in the financial markets. Roger Garrison - himself a leading light in modern times - leads off with a brief overview. The nice thing is that Garrison manages to get it all across without resorting to waffle - another Austrian tradition. In fact, in my view, Garrison is the star of this review since his ability to keep it simple is a tremendous asset. Anyone familiar with the dark mutterings of academics in Austrian academic journals will know exactly what I'm talking about.
Aside from Garrison, the pieces by Rothbard and Harberler are the best since they tackle the central issue of Trade Cycle theory - that any system run by central bankers is inherently unstable since their tinkering with interest rates leads directly to the business cycle. Much better to have a competitive banking system without a central bank and a curency tied to gold. That way credit expansions will never be explosive. Of course, what they don't tell you is that their proposals are inherently deflationary and force deficit countries to do all adjustment when they experience balance of payments problems. Rothbard's piece sets out the mechanics of the Trade Cycle especially well and everyone should be able to understand what he's getting at without too much difficulty. It's no more difficult than the average economics course on an MBA programme. That's hardly difficult, is it? Readers wishing to understand the micro-economics of the Austrian school should also check out some of the recent publications of one Israel Kirzner.
Rating:
Summary: Austrian macro-economics without any criticisms
Review: A lovely succinct account from four towers in a tradition of economics that is widely represented in the financial markets. Roger Garrison - himself a leading light in modern times - leads off with a brief overview. The nice thing is that Garrison manages to get it all across without resorting to waffle - another Austrian tradition. In fact, in my view, Garrison is the star of this review since his ability to keep it simple is a tremendous asset. Anyone familiar with the dark mutterings of academics in Austrian academic journals will know exactly what I'm talking about.
Aside from Garrison, the pieces by Rothbard and Harberler are the best since they tackle the central issue of Trade Cycle theory - that any system run by central bankers is inherently unstable since their tinkering with interest rates leads directly to the business cycle. Much better to have a competitive banking system without a central bank and a curency tied to gold. That way credit expansions will never be explosive. Of course, what they don't tell you is that their proposals are inherently deflationary and force deficit countries to do all adjustment when they experience balance of payments problems. Rothbard's piece sets out the mechanics of the Trade Cycle especially well and everyone should be able to understand what he's getting at without too much difficulty. It's no more difficult than the average economics course on an MBA programme. That's hardly difficult, is it? Readers wishing to understand the micro-economics of the Austrian school should also check out some of the recent publications of one Israel Kirzner.
Rating:
Summary: The Austrian School in a Nutshell
Review: At last! An anthology from one of the most important schools of libertarian economics in a portable form! This book can be easily incorporated into a course on economics or banking.
And yet, "The Austrian Theory of the Trade Cycle" is a narrowly useful tool. It's like a tire gauge, that means everything when there's a problem with the tire, but tells nothing about gas or oil levels. I see few times when the average production supervisor, Sunday-school teacher or working mom would have occasion to read it.
In the introduction, Roger Garrison spells out the differences between the Austrian School and other movements in free-market economics. The Austrian School emphasizes the role of time in decision making. To think of an example, Joe wants to buy a car now that the interest rates are low. But if the interest rates are high, he'll put his money in the bank and wait a year until he replaces the family car.
Ludwig von Mises' essay, which lends its name to the book, reveals the international character of the Austrian School. The essay was translated out of the French, points back to the British Currency School, and alludes to the contribution of Knut Wicksell from Sweden. This theory was, nevertheless, developed by Austrians, beginning with Carl Menger. References to the University of Chicago and to the Ludwig von Mises Institute in Auburn, Alabama, bring the movement to a home in America.
The key point is that a boom produced and prolonged by easy bank money with government support will sooner or later contract into a bust when the easy money turns hard. Just ask any farmer who bought machinery on credit years ago, when inflation was rampant.
Gottfried Haberler demonstrates that economics is, in fact, difficult to reduce to mathematics. He points to how money is needed at different times as a product moves out of the ground through its production phases to the end user.
In contrast, Murray Rothbard tells us with sparkling satire why we no longer have "panics" and "depressions." He also gives insight on how a change in time preference changes interest rates; interest rates fall if enough buyers become savers.
Friedrich Hayek points to an insidious effect of inflation. Not is it more fun to be a debtor on a fixed-rate loan when inflation is high, but taxable profits are much higher than the profits are worth in reality. Easy money gives rise to inflation.
Roger Garrison finally draws a couple of price/quantity graphs in his summary, savings/investment graphs to be specific. Money created by the government has the same short-term effect as a genuine increase in savings, but genuine savings are lower because savers are coolly greeted by lower interest rates for their hard-earned money. The bust after the boom is a real let-down.
With my MBA from Campbell, this material is clearer and livelier to me than it would be to the man on the street.
Rating:
Summary: The Austrian School in a Nutshell
Review: At last! An anthology from one of the most important schools of libertarian economics in a portable form! This book can be easily incorporated into a course on economics or banking.
And yet, "The Austrian Theory of the Trade Cycle" is a narrowly useful tool. It's like a tire gauge, that means everything when there's a problem with the tire, but tells nothing about gas or oil levels. I see few times when the average production supervisor, Sunday-school teacher or working mom would have occasion to read it.
In the introduction, Roger Garrison spells out the differences between the Austrian School and other movements in free-market economics. The Austrian School emphasizes the role of time in decision making. To think of an example, Joe wants to buy a car now that the interest rates are low. But if the interest rates are high, he'll put his money in the bank and wait a year until he replaces the family car.
Ludwig von Mises' essay, which lends its name to the book, reveals the international character of the Austrian School. The essay was translated out of the French, points back to the British Currency School, and alludes to the contribution of Knut Wicksell from Sweden. This theory was, nevertheless, developed by Austrians, beginning with Carl Menger. References to the University of Chicago and to the Ludwig von Mises Institute in Auburn, Alabama, bring the movement to a home in America.
The key point is that a boom produced and prolonged by easy bank money with government support will sooner or later contract into a bust when the easy money turns hard. Just ask any farmer who bought machinery on credit years ago, when inflation was rampant.
Gottfried Haberler demonstrates that economics is, in fact, difficult to reduce to mathematics. He points to how money is needed at different times as a product moves out of the ground through its production phases to the end user.
In contrast, Murray Rothbard tells us with sparkling satire why we no longer have "panics" and "depressions." He also gives insight on how a change in time preference changes interest rates; interest rates fall if enough buyers become savers.
Friedrich Hayek points to an insidious effect of inflation. Not is it more fun to be a debtor on a fixed-rate loan when inflation is high, but taxable profits are much higher than the profits are worth in reality. Easy money gives rise to inflation.
Roger Garrison finally draws a couple of price/quantity graphs in his summary, savings/investment graphs to be specific. Money created by the government has the same short-term effect as a genuine increase in savings, but genuine savings are lower because savers are coolly greeted by lower interest rates for their hard-earned money. The bust after the boom is a real let-down.
With my MBA from Campbell, this material is clearer and livelier to me than it would be to the man on the street.
Rating: 
Summary: Real Economics
Review: I ordered this book as a part of a course I am designing for myself on economics. It is a good introduction to the Austrian school but provides information that even those familiar with the subject will find useful. Rothbard addresses many fallacies regarding the free market and provides a clear explanation of the Austrian theory of the trade cycle and other theories, relating them to history and comparing them with classical and Keynesian theories. This is a helpful comparison, as it reveals some inherent flaws in the latter and outlines the eventual results of the acceptance of those theories. This book does not give an in-depth analysis of its subject, but provides a cohesive picture and points for further examination. It is also a helpful text for understanding capitalist theory and the history of the Austrian school.
Rating:
Summary: Useful primer on Austrian Theory
Review: With the economy on the brink of a major collapse, there would seem to be no better time than the present to become reacquainted with the Austrian theory of the trade cycle, since this theory is nearly the only one which can come close to explaining the present crisis. Whereas most academic economists, under the influence of Keynes, believe that the economy, if manipulated in the right ways by the central banking authorities, can be kept in a state of expansion indefinitely, the Austrians argued for what has been called, by one critic, the "hangover theory," according to which any attempt to artificially stimulate the economy through a policy of credit inflation and low interest rates is bound to fail in the long run, so that any attempt to prevent a recession by lowering the interest rate can only wind up making things worse. Now while the Austrian theory in all its manifold details may not provide us with an entirely adequate description of economic reality, it is difficult to argue with the premise that artificially lowering the interest rate through easy money policies must lead to serious economic dislocations down the road. The cluelessness in regard to this issue demonstrated by most academic economists and by investment analysts merely proves the inveterate irrationality of the majority of the human race and the tremendous influence of wishful thinking on those who do not have the guts to see things as they are. There is no better introduction to Austrian trade cycle theory than this modest book which includes essays by von Mises, Hayek, Halberler, and Rothbard. The theory is presented in a clear, succinct manner, so that even economic illiterates have a chance to understand it. Roger Garrison provides an excellent introduction and summary. Although I regard the Austrian theory as the best so far promulgated, this should not be construed as a full-hearted endorsement of the theory. In many important respects, the theory is flawed. Specifically, the theory suffers from two major shortcomings: (1) it is derived entirely from rationalistic speculation based on oversimplified generalizations of economic reality; and (2) it tacitly assumes that human behavior and motivation is far more rational than the facts would suggest. Given these weaknesses, it's not surprising that only the extreme rationalists within the Austrian movement except the theory in toto, and that many who once accepted (including even Haberler, one of the contributors to this volume) later rejected it. Perhaps the main reason for this rejection is the view that what causes the recession (or depression) is misallocation of resources within the capital structure. When interest rates are artificially lowered, this leads (according to the Austrian theory) to over-investment in more durable over less durable capital industries and for temporally more remote rather than less remote stages of production. This part of the theory has not sit well even with those economists who might otherwise be sympathetic to it. This is a pity, because this portion of the theory is not even necessary for explaining the phenomenon of economic recessions. In fact, they can be explained in virtue of credit expansion alone. The key is to merely understand that credit expansion through fractional reserve banking (or the equivalent thereof) is equivalent to debt expansion, since debt is merely the obverse side of credit. But it should be obvious to those whose common sense has not been debauched by too much Keynsianism that expansion of debt through fractional reserves cannot be carried on indefinitely, since debt of this kind is tantamount to leveraged debt and becomes more and more like a ponzi scheme the longer the banking and treasury authorities allow it to go on. An excellent and important little book. Highly recommended.
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