Customer Reviews

Vienna & Chicago, Friends or Foes?: A Tale of Two Schools of Free-Market Economics

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Finally, there is a book to compare the agreements and disagreements of the Austrian and Chicago schools of economics. This will definitely be required reading for my university students in History of Economic Thought courses. I am especially thrilled to see such an evenhanded approach to so many issues, from causes of the Great Depression to types of monetary systems. Skousen is insightful, humorous, and always full of interesting tidbits that are available in no other source...because he knew so many of the players. His books are always user friendly and this is no exception. He also offers his views, but is ever respectful to all.

This is a heady book - you really have to be interested in economic history and policy to dissect the finer points between the Austrian and Chicago schools of free market economics. Mark Skousen, a free market economist with strong sympathies to both camps (perhaps Austrian in the end?) writes of the history and differences between the two.

The book sides with the Chicago school on it's focus on empirical data, where the Austrians prefer theoretical and logical arguements. The Chicago school suggests business cycles are purely a function of money, while the Austrian school gets solid marks for it's explanations of the temporal (capital overinvestment over time) natures of business cycles.

The book is balanced enough that one can learn and make the most out of both schools. It's rooted in both the history of the ideas, as well as how they've fared over time. It also covers how the ideas have changed over time. (Chicago was initially anti-concentration of industry, but changed over time, as the data suggested industry concentration rarely created true pricing power.) Take the book with a warning though - it's not an introductory textbook, and not aimed at the uninitiated. But for those interested in various approaches to free market economics (it's not a monolith) it's an outstanding resource.

This is one of the best economics books I have read. It provides a good overview of the ongoing debate on some of the most relevant and still unresolved issues confronting economists today. But, unlike many economists, Skousen avoids verbosity and jargon; he presents quite complex issues simply and clearly. I also greatly enjoyed one of his other books, 'The making of modern economics'. Together, these books have challenged my views on many issues, including the causes of the great depression, the role of government in the economy, and the merits of a gold standard. The contribution of the Chicago and Austrian schools was badly neglected by my university lecturers, and I found 'Vienna & Chicago' a thoroughly fascinating read.

This book is a lovely addition to the history of economic thought, and aptly describes the modern 'methodenstreit' between the Austrian and Chicagoan schools. Skousen fails only in one regard: his understanding of Misesian apriorism is horrific. Granted, Mises was not clear enough and reintroduced arcane terms into his exposition on method (i.e. rationalism vs empiricism; see on this the source 3, provided below) that have largely obfuscated his contributions, and indeed some of his writings were incorrect. However, even an undergraduate in Economics myself with a modest understanding of praxeology can see massive holes in the author's understanding. Austrians emphasize the value and necessity of theory in interpreting data which has no voice of its own. Contra Skousen, they do not disregard history or empirical evidence. That is nonsense, and his writings on Mises show an utter misunderstanding (he does not even sufficiently disentangle Mises from Ricardo and other classical economists.) It is praxeological theorems (e.g. law of demand) that are necessary to approach statistical data, and formulate complete economic theorems, and are themselves logical truths. It is a common misunderstanding that Austrians completely disregard empirical data, and I was hopeful that Skousen would not repeat it - yet he does, and more ineptly than usual even. Economists serious about understanding the Austrian School comprehend this. It was Mises' position that neither mathematics nor statistics can yield praxeological truths. This does not mean that math and statistics can't be useful in understanding particular historical episodes (in fact the author realizes this -as did Friedman,- when he makes reference of faulty studies going counter to economic wisdom, which were later corrected by theoretically informed economists.) Nor does it mean dogmatic adherence to "broken" theories, which lack explanatory power (which are a signal either of faulty deduction or induction.) Rather than relegating Mises -whose theorems largely stand correct- to the status of crank, Skousen could've put more effort into understanding Mises. He is right to laud Austrians for engaging in more empirical studies, wrong in his understanding of what the Austrian method is. Empirical studies, statistical methods and graphs are wonderful tools in relaying information and insuring that our theories possess explanatory power, all of which Austrians have put to use without compromising their stance on praxeological theorems. He also misrepresents Mises' position on free will, which at most is compatibilist (http://www.mises.org/books/ufofes/ch3~4.aspx)

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Other than this and some minor errors, the book is great. The author skilfully recounts the birth of both schools, and provides a balanced assessment of their respective strengths and weaknesses, where he is equipped to do so (he is best on the business.) For a brief history of free market economics (and economics more generally), this book is excellent; for a philosophical treatise on method in Economics, it ought to be avoided. Readers will appreciate the author's exposition of certain basic concepts of economics in his work.

The Austrian and the Chicago schools of economic thought have both made important contributions to our understanding of economics. Dr Skousen has, in an understandable and entertaining manner, presented these contributions to the general reading public.

I thought Dr Skousen was very game in suggesting that the Mises Institute had a siege mentality when it came to the defense of the Austrian school. I would also suggest that their partisan position is actually hindering further research and developments based upon the Austrian paradigm.When you regard your leader or school as been the final repository of truth and wisdom, where can you go from there? This may be one reason why most Austrian economists find it so hard to get good positions in top universities. They are regarded by their peers as being closed minded!

I also thought this book so good I gave it away to one of my graduate students who was leaning towards the church of Keynes. This book helped save him!

A great buy and a great read!

In this book Mark Skousen compares and contrasts the ideas of the two most prominent schools of free market economics. That is, the Austrian School (Carl Menger, Eugene Bohm-Bawerk, Ludwig Von Mises, Friederich Hayek, etc.) and the Chicago School (Milton Friedman, George Stigler, etc.) This book is an invaluable resource to any fan of free market economics who seeks a more in depth understanding of the intellectual history behind this subject.

Mark Skousen, a prolific, pro-free-market economist and writer, is a highly qualified individual to take up this important task. He has authored over 20 books on this subject, has studied free market economics in depth and has had extensive contact with both Milton Friedman and Friedrich Hayek.

From reading this book, you will not only get a nice overview of the history of free market economics including brief discussion of the important roles of precursors such as Adam Smith and Jean-Baptiste Say but you will also understand the finer points of both the Austrian view and the Chicago view. In particular, you will obtain a thorough understanding of the issues on which both schools passionately disagree, including their contrasting views on monetary policy, the cause and effect of business cycles and most importantly, what each school views as the proper methodology for obtaining economic truths.

The only shortcoming of this book that I noticed is very minor but will be of importance to a few readers. For an individual as well versed in free market thought as Mark Skousen, he often displays a clumsy understanding of the philosophy of Ayn Rand. For example, in this book, Skousen parenthetically comments how Ayn Rand would describe Immanuel Kant's concept of reason as "objective" reason. However, those who have studied the ideas of Ayn Rand knows that she has vociferously rejected the analytic-synthetic dichotomy of Immanuel Kant, which amounts to saying that reason is utterly useless in discovering truths in what Kant calls the noumenal world (that is, an unknowable world that exists independent of our consciousness). However, this should not detract from this fantastic book he has written.

I recommend this to anyone with a strong interest in laissez-faire economics and who wants to understand the finer but important contrasts between the ideas of the Austrian School and the Chicago School. If you are interested in the history of economic thought, I also recommend Mark Skousen's "The Big Three in Economics".

There is a frustrating, and ridiculous, amount and quality of typos in this book that renders it almost unacceptable. If you can get over that, this is an excellent survey of the similarities and differences between the Austrian School of Economics (Hayek, Rothbard, Mises) and the Chicago School Of Economics (Milton Friedman). Even for the neophyte who has an interest in liberty or economics (one invariably will lead to the other), this is an excellent place to start, with chapter-by-chapter biblographies to lead you to the next steps. Now, if only Skousen could find a decent publisher.

This book by Mark Skousen is a very well written and readable description and comparison of the Vienna (Austrian) and Chicago schools of economics. Mr. Skousen succeeds in writing an objective guide the history, theory, and differences of the two schools of economics. He also brings to light many similarities. The book is a real education in economics.

And the book is so readable that I wish he had also discussed Keynesian economics into which I was educated as an economics student.

The book is an invaluable exposition.

A book I have wanted to read for quite sometime. The author explores the similarities and differences of the two pro free market economic schools. I was surprised that most of the time I agreed with Skousen's viewpoints in this regard. Maybe I shouldn't have been that surprised, his other book THE STRUCTURE OF PRODUCTION is a masterpiece and he uses the same keen eye for analysis used in that book on establishing an Austrian/supply-side view of wealth creation and cost reduction to examining these two schools here. I myself am an Austrian and while I largely agreed with his analysis, I did have some disagreements and will be talking mostly about those in this review.

I agreed with his views that the Austrian's have a better explanation of business cycles, but I would go as far to say, the Chicago school method is less accurate then even the Keynesian's when detecting market failure. This shouldn't be a surprise though, relying on history to give indicators of market failures, means we can only see things from hindsight in their method. In the recent recession Austrian and Keynesian economists were accurately predicting economic collapse while Chicago school economists sat on their hands and said nothing. Before the great depression, we had largely the same scenario, Keynes and Hayek were foreshadowing market failure while the ancestors of the Chicago school were calling it a temporary or slight downturn. I'm sure everyone versed in economics knows the comically laughable statements of people like Irving Fisher just days before the main events of the great depression and the Chicago school borrows quite a bit from those classical economic viewpoints and methods.

Despite being an Austrian, I think he is right in giving the nod for the Chicago school having a better overall methodology. I think Economists before the Chicago school had far too much faith in philosophy and I'm saying that as a philosophy major. The majority of the philosophical tenants and ideas Keynesian and Austrian ideas rest on have largely been debunked or shown to be less important then was believed. Deductive arguments can only be used to show good form, not new truths. Cartesian and Kantian rationalism has been under heavy scrutiny for centuries now and hasn't stood up to that scrutiny. The moral philosophies of each major school of capitalism haven't stood up to scrutiny either. Austrian Deontology/Utilitarianism, Chicago utilitarianism and Keynesian virtue ethics all have major philosophical hurdles to solve and none of them look promising to say the least. Despite the smug talk of most contemporary Keynesians their methods are based on modeling and false philosophical conjectures as much as the early Austrians were, the only difference was they added mathematical failures to their own list. The Chicago school is based on bad philosophy as well. Popperian fallibilism hasn't fared well in philosophical circles either, but its stronger and more contemporary then a lot of the other ideas used to bolster these economic theories. I think a method that uses the historical and mathematical views of the Chicago school and the Austrian views of time and information, mostly from Hayek can overcome a lot of these problems. I also think that on the margins the Austrian view of information is much more important and modern then people give it credit for. The views of Mises and Hayek on information and applying the evolutionary metaphor for it are extremely important to contemporary ways of looking at things. Foreshadowing some of the ideas in memetics and evolutionary psychology. So while I think the methodological front is somewhat dire in regards to economic schools I think some strands of it can be rehabilitated and reworked to be more fitting for today's intellectual trends and to better predict economic disasters in the future.

I disagreed with his views on currency, but I also disagree with alot of the answers my fellow Austrians have given on that issue as well. I think the book is somewhat dated in this regard, most people would not advocate the Rothbardian pure 100% gold answer for currency on the Austrian side anymore. They would advocate allowing for a "market currency" whatever the market chooses to exchange goods would be the best form of currency. Which could be gold, but it could also be something else. I don't think we should implicitly accept Keynesian arguments about saving as many in the Chicago school have done. Milton Friedman of course famously went against them in promoting the view that people make long run economic choices in regards to doing whats best for their families. Calling America not a nation of individuals, but of family orientated groups who look towards their legacy when making economic decisions. Most Chicago school economists aren't that forward thinking hold Keynes view on saving instead. I think many people have a lack of imagination in this regard even Austrians, because we view gold as the only alternative to Fiat money. But with the idea of market standards coming into the general talk of alternatives, fiat doesn't seem as convenient as it is touted as being. Especially considering it takes force, to make it have any value at all.

I largely agreed with the rest of what Skousen had to say. There was a time, when I was much more Rothbardian and would of had more disagreements, but I think his views are much more rational and necessarily nuanced then most people in these economic circles would be willing to admit is necessary. I would highly recommend this book to those interested in these schools or economics in general.

Any student of economics should read this fascinating book. Skousen covers a neglected school of thought known as Austrian economics--a discipline rarely discussed on TV or in the classroom. (I never heard a word about in any of the economics classes I took in college). taking economics classes. Skousen discusses the philosophical disagreements between the Chicago and Austrian schools objectively, with no obvious bias either way.

If you think all free market-leaning economists have the same views, you'll change your mind after reading the book. The two schools widely differ on a number of issues--the cause of the Great Depression, the wisdom of antitrust laws, how to revive the economy during a recession, and many others. Vienna & Chicago is one of the best economic books of the last few years.