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The Advantage That Austrian Economists Enjoy

Written by Gary North on August 15, 2014

A GaryNorth.com site member asked for advice on books that introduce people to the logic of the free market economy. He wanted books on economics, which in the point of view of this website, would be books on the free market economy.

One of the tremendous advantages that we possess, and which the Keynesians do not possess, is that we can express our ideas without equations and jargon. The classic example of such a book is Henry Hazlitt’s 1946 book, Economics in One Lesson, but there have been other examples since his.

Several books were recommended by participants on the forum.

I am not convinced that most educated readers are Keynesians in terms of their commitment to any particular economic theory. In fact, I would say that overwhelmingly, people are not Keynesians in terms of the logic of economics. Rather, they are implicit Keynesians, as are the vast majority of politicians. This is because Keynes invented his theory in the mid-1930’s, and what he proposed was exactly what presidents and prime ministers around the world were doing, namely, increasing government spending. Their governments were running deficits. They were using government money to make purchases of labor and capital in the marketplace. Keynes provided an intellectual justification for what governments were already doing. In order to do this, he reverted back to mercantilistic economic concepts.

Hazlitt wrote a refutation of Keynes, but it came too late. It was published in 1959, and it was published by an obscure publishing house. It is never cited in professional economics journals. Its title was a giveaway: The Failure of the “New Economics.” Hazlitt was taking on virtually the entire economics profession in 1959. He had never attended college. He was an outsider. Those inside the camp of Keynesianism could afford to ignore him. This is exactly what they did.

In terms of clarity, Keynes could never compete with Mises or Hayek. Yet he was a very clear writer in other areas. His classic book, The Economic Consequences of the Peace, published in 1919, is a model of clarity. So were the essays in Essays in Biography. This is a tip-off that there is something fundamentally wrong with The General Theory (1936). Hazlitt took that book apart, chapter by chapter. When he was done, there was nothing left of it, theoretically speaking. But he suffered the fate of those who criticize Keynes. He was ignored. He was not refuted; he was merely ignored.

The academic world loves its jargon. Jargon is the way that professional guilds keep outsiders at bay. Sociologists are notorious for this, but economics since about 1950 has caught up with sociology. The more arcane the economists become, the less the public understands them. They gain their influence, not by clarity of presentation, but by a kind of priestly authoritarianism. Yet the old line is true: where there are five economists, there will be six opinions. They cannot come to any agreements on policy. They agree only on the general conclusions of Keynesianism, and they do not agree on how to get these conclusions across to the common man.

When students take economics in college, they almost universally complain that the textbook is unreadable. That is because the textbook is Keynesian. It is possible to write a clear textbook. I’m using one in the course on economics that I’m teaching to high school students enrolled in the Ron Paul Curriculum. The textbook is aimed at high school students. It was written by Robert Murphy, Lessons for the Young Economist. There is also a teacher’s guide that comes along with it. Both can be downloaded for free.

(For the rest of my article, click the link.)

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2 thoughts on “The Advantage That Austrian Economists Enjoy

  1. I suppose Austrian economics isn’t that popular because common sense isn’t that common.

  2. I didn’t read Henry Hazlitt’s book, I listened to it on CD while driving to work and back. Imagine, learning economics from a book on CD. No calculus, no differential equations, no GARCH models, no graphs – none of that is necessary. Economics is nothing more than common sense.