Economics is a very important subject to learn, whether you own a business or you’re active in politics. As famous 20th century Austrian economist Ludwig von Mises defined it, economics is a sub-category of praxeology, the study of human action. Economics can explain both minute and intricate elements of our society.
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Indeed, there are various schools of economic thought, including Keynesian, Chicago and Austrian. In recent years, there have been vehement debates between the likes of Ron Paul, Paul Krugman and Thomas Sowell that have made mainstream television. Imagine that! Economics at the front of political discourse.
In layman’s terms, Keynesian economics is mostly what you see today in Canada, the United States, Great Britain and a lot of developed, Western countries: government intervention, public stimulus spending and money-printing.
Chicago economics is more the conservative line of thinking: limited government, low taxes and free market principles but with Federal Reserve intervention.
Austrian economics is the most libertarian school around: zero taxes, government involvement only when private property laws or contracts have been broken and competing currencies in the free market.
Many people are indifferent to economics. Most individuals only took economics in high school and just learned the basic aspects like supply and demand. Interested in learning more? These are the eight definitive economics books you need to read today.
The Wealth of Nations by Adam Smith
Usually referred to as the Bible of capitalism and economics, “The Wealth Nations” is a superb introduction to the world of economics. Adam Smith introduced many concepts to the general public, such as systems of political economies, the powers of labor and the nature, accumulation and employment of stock. Overall, it’s a tough read but it can give you the basics to economics.
Economics in One Lesson by Henry Hazlitt
In schools, whether at the secondary of post-secondary level, we are only taught one side of economics. It’s actually quite rare to be given lessons on economics from either the Chicago or Austrian side.
This is why “Economics in One Lesson” is such an important book because it opens your mind to a completely different viewpoint on economics. Henry Hazlitt, an important economic thinker of the 20th century, teaches us how the minimum wage isn’t as helpful as its proponents claim, how income taxes discourage production and how free market prices are essential to society.
Human Action by Ludwig von Mises
Mises published so many books and essays in his time. But one of the most important books he ever penned was “Human Action,” a study of human decision-making (again, praxeology is the topic at hand). Although Mises as well as Murray N. Rothbard (see below) were complex writers, Human Action teaches us and stresses the importance of entrepreneurship, profits, economic calculation and dynamics in the overall economy. It’s around 800 pages, but well worth it.
America’s Great Depression by Murray N. Rothbard
Since the Great Depression in the U.S., there have been so many arguments, debates, books and ideas about it’s cause. One side blames it on the free market policies of President Herbert Hoover that had to be rectified by his successor, President Franklin Delano Roosevelt. Another side claims it to be a failure of business and the government had to intervene to save us all.
However, Rothbard makes the assertion, backed up with data, figures, charts and statements from public officials, that it was the fault of the Federal Reserve System. Simply put: expansion of credit and money-printing led to numerous distortions of the free market, and government policies that were meant to quash any economic downturn actually exacerbated the depression.
In other words, a recession (or a market correction) turned into a full-blown depression when government imposed itself.
Man, Economy & State by Murray N. Rothbard
Published in 1962, Rothbard brings us another important book, “Man, Economy, and State,” about economic principles and laws. It instructs us about monopolies and competition, money and its purchasing power, the fundamentals of human action and much more. Think of it as another edition of Mises’s “Human Action.”
Road to Serfdom by Friedrich Hayek
If you’ve ever been exposed to economics then you like heard about Friedrich Hayek’s “Road to Serfdom.” One of the most well-known books of the 20th century, it provides the reader with warnings “of the danger of tyranny that inevitably results from government control of economic decision-making through central planning.” Hayek, who claimed that socialism shocked his generation, was a vehement opponent of the ideology because he understood what it ultimately leads to: oppression, tyranny and suffering.
Free to Choose by Milton Friedman
What can one say about Milton Friedman’s “Free to Choose”? Any conservative economist will concede to the fact that this was the book that brought them into the world of economics. This was Friedman’s magnum opus as it gave the reader a buffet, if you will, of economic principles and ideas, including the minimum wage, monetary policy and the welfare state. Although Friedman has been criticized over his support (at the time) of the U.S. central bank, the rest of the book is a fantastic read.
There was also a PBS series with the same name, which brought about thought-provoking debates from the right and the left. You’ll even see a few notable people, including Sowell and former Defense Secretary Donald Rumsfeld. So if you don’t want to read the book then watch the series.
The General Theory of Employment, Interest and Money by John Maynard Keynes
If you ever want to find out the original material that guided the principles of most political leaders since the Second World War then this is it. “The General Theory of Employment, Interest and Money” has defined political decision making and the way government works since the 1930s/1940s. It is a dry, difficult read but it’s still an important book because you want to understand just why it is believed money-printing, deficit-spending and war (broken windows) generate prosperity.
See Also: Paul Krugman on the minimum wage: 1998 vs. 2005
Final Thoughts
The general public often criticizes their peers’ paucity of understanding when it comes to personal finance. But there is one area that ignorance and illiteracy is even higher: economics. Watching CNBC or reading monetary reports may cause you to fall asleep, but introducing yourself to economics is exciting and mentally exhilarating. Try out these books and you will see for yourself.
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