17 of 17 people found the following review helpful:
5.0 out of 5 stars
Understandable and thought provoking, September 10, 2007
Skousen's explanation of the workings of the economy in terms of the 'aggregate production structure' is, in his own words,' a complete general description of economic activity, taking into account aggregate demand at every level or stage of production (p 364).
This fascinating book helps to explain, in simple terms, how the economy works and attempts to come to grips with various aspects of interrelated micro and macro concepts;tying them all together to provide a logical and realistic system of economics.
Does he succeed? I still have many questions. And some he himself have been highlighted in the closing chapter on 'The Future of Economic Research'. But what the author does is turn our attention to the important role of capital in the structure of production, and the effects of various monetary policy on this structure. Now the author does much more, but to my mind, these are the two most important contributions that he has made.
Skousen also highlights, through his painstaking examination of various authors and theories, that economic development and wealth are only created through due attention to the capital section of an economy. There is no quick way to national development. In doing so, he domolishes the Keynesian allusion that we can 'consume' our way to prosperity- either as a policy of 'national growth' or as a solution to a recession.
This book is a must for the serious economics reader. It is readable and understandable. There is no maths and some graphs which are well explained. But there is plenty of is good, solid, verbal economic analysis. Buy this book and you won't be disappointed!
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1 of 1 people found the following review helpful:
5.0 out of 5 stars
Best Book on The Process of Capital Creation, January 14, 2012
The myths associated with "Supply side economics" are legion. Just the name itself is bound to give people the wrong idea of what is actually being proposed. Have you ever been in a debate and someone calls you a "trickle down theorist," "Thatcherite" or a "Reaganite" and thinks that is the end of the debate? Your view has been lumped in with the myths associated with a complex and realistic look at capital theory that gets boiled down to this in the minds of most liberals who know a few basic facts about economics:
"Supply side economics is when the government gives money to rich people so they will some how trickle down the money back to the workers and consumers."
Before I go into my take on this and the books take. Let me say as an aside because the book says nothing about this. The unfortunate association of this theory with certain politicians in the eighties has no relevant bearing on whether it actually works or not. As I hope this review can shed some light on things, this stigmatized version is not what the idea actually states. The economic policies enacted weren't even close to the myth though and they definitely weren't close to the real version of what is said here. Reagan and Thatcher did the policies that most politicians have done in key positions in my lifetime, used opportunistic means to get money for them and their constituent companies that helped them get into power. Sure they said rhetoric while they did so about how much they love the free market, but their policies and attitudes say otherwise.
Now that you have heard my view on those politicians and the simplified boiled down mythos of what the Austrian capital theory proposes. Here is my definition and the one this book supports.
"Supply side economics is the idea that refocusing are attention on the industry and capital aspects of market forces which make up two thirds of the GDP are far more relevant to the economy and how it functions, rather than the consumer and their spending."
This books main aim was a refocusing and retooling of the Hayekian/Austrian capital theories and those that came shortly after him in explaining how aggregate demand or Keynes's "consumer side economics" comes up short in examining the market as a whole. It offered new tools and ideas in examining the investment and interest rate structures of complex economies.
The main focus though was in bringing back the importance of time and showing that things like research, new technologies and a shortening or retooling of the capital process in the market makes positive and negative changes in the wealth distribution. Something that is just seen as arbitrary in most other economic theories.
He gives many examples of this historically and shows evidence of it through scientific and logical means. One of the best expositions of the importance of the capital/distributive side of economics can be seen in the essay, I PENCIL, by Leonard Reed. Which unfortunately I cant link here...
Leonard Reed's, I PENCIL. This shows how the manufacturing process is more complex and expensive on even the simplest products then most people realize. The time and effort taken to make a pencil is extremely relevant to how fast and easy the consumer are able to get it. Imagine shortening the time on an even more industrious or capital relevant product. The ramifications and positive effects on the economy are only examined in the capital method outlined by the Austrians.
Skousen did a great job of bringing together the disparate Austrian views and even some ideas from rival schools in his synthesis that has unfortunately been misused and like I said before mythologized as more simplistic and less important then it really is.
This book is an important historical landmark and conceptual adage in the Austrian economic theory. To bad people are too interested in "consumption and monetary side economic theories that only focus on having the government trickle down money to the poor people through a magical process..." J/k We can all see now how easy it is though to oversimplify and misunderstand an idea. I highly recommend this book to those interested in economics or politics.
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1 of 1 people found the following review helpful:
5.0 out of 5 stars
Common sense in economics, September 16, 2010
This review is from: The Structure of Production (Hardcover)
I've read this excellent book and I regard it a very serious analysis of "the way things work" in economics. I think is the best available explanation to the actual crisis, and it explain also the "highly improbable" (TALEB) as something that is normal if you had the correct instrument of analysis, the cycle theory of Mises, Hayek, and other of the Austrian school of economics, and you don't forget that if you increase the credit the crisis is unavoidable.
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