One of the most common criticisms of the Austrian-school of economics is that it is stuck in the past. For me this inexcusably ignores some excellent work that has been done “post revival” (i.e. since 1974). Indeed my own research on monetary theory is grounded in the following books, which – read together – demonstrate the relevance of Austrian ideas for a progressive research programme:
O’Driscoll, Gerald and Rizzo, Mario, 1985. The Economics of Time and Ignorance, Routledge
Cowen, Tyler, 1997. Risk and Business Cycles: New and Old Austrian Perspectives, Routledge
Lewin, Peter, 1999. Capital in Disequilibrium: The Role of Capital in a Changing World, Routledge
Horwitz, Steve, 2000. Microfoundations and Macroeconomics, Routledge
Garrison, Roger, 2001. Time and Money: The Macroeconomics of Capital Structure, Routledge
Note that they have all been published as part of the “Foundations of the Market Economy” series edited by Mario Rizzo and Larry White through Routledge. This is testimony to the influence of the NYU programme and the power of the SDAE as a professional organisation. A thorough reading of these books provides an excellent understanding of the unique contributions of the Austrian school, but one that is embedded within the state of the professional debate. More importantly, they are bursting with ideas to take this research forward, and beg to be applied to the current economic climate. They provide fertile pathways for the future of the Austrian-school.
2015 “The financial crisis in the United Kingdom. Uncertainty, calculation and error” in Boettke, Peter J., and Coyne, Christopher J., (Eds) The Oxford Handbook of Austrian Economics, Oxford University Press
I recommend these readings as entertainment and not punishment. I am conscious that most of my students do not intend to forge an academic career, and therefore my aim isn’t to develop technical capabilities, but to confront intuition and stimulate interest. I am continuously updating this list, so please let me know what you think.
Also: Harford, T., 2016 “Incentives” Ch 6 in Messy
2. Cost and choice
Drucker, Peter (1995), “The Information Executives Truly Need” Harvard Business Review Vol 73, Issue 1, pp.54-62 – Understanding how companies can use information to engage in genuine wealth creation.
Bastiat, Frederic (1850) “The Broken Window” (Part I of That Which is Seen and That Which is Not Seen) – The classic articulation of opportunity cost thinking.
3. Market exchange
The Bidding game, National Academy of Sciences, March 2003 – A good, short, overview of auction theory and practice.
Tabarrok, A., and Cowen, T., “The End of Asymmetric Information” Cato Unbound, April 6th 2015 – A discussion around the claim that technological developments are reducing the problem of asymmetric information.
Roth, Alvin E., “Art of designing markets“, Harvard Business Review, Oct 1st 2007 – Examples of market design from the master.
4. Prices and economic calculation
McAfee, Preston “Price Discrimination“, in 1 Issues in Competition Law and Policy 465 (ABA Section of Antitrust Law 2008) – A theoretical treatment of alternative types of price discrimination.
Malone, Thomas W., “Bringing the Market Inside” Harvard Business Review, April 2004 – Pros and cons of companies that decentralise decision making and set up internal markets.
Fisman, R. and Sullivan, T., 2013, “What Management is Good For” (Chapter 5) in The Org: The Underlying Logic of the Office, Twelve – A defence of the practice of management, and an account of its continued importance.
Howes, Anton, “Why the General Election Result Barely Matters“, Capitalism’s Cradle, April 26th 2015 – A short but empirically grounded article explaining how important the trend rate of growth is and why we should avoid being distracted by short term policy choices
Obstfeld, M., & Rogoff, K. (1995). The Mirage of Fixed Exchange Rates. The Journal of Economic Perspectives,9(4), 73-96. – A theoretical explanation for the fragility of fixed exchange rate systems – there is usually no technical constraint on governments providing sufficient reserves to cover base money, however it is almost impossible to credibly signal that they will ignore the resulting domestic economic hardship (due to high interest rates) and an interesting case study of Mexico 1994.
Lambert, Craig “The Marketplace of Perceptions”, Harvard Magazine, March-April 2006 – A summary of chief insights from behavioural economics and neuroeconomics
Poundstone, W., (2011) “Prospect Theory” (Chapter 16) and “Ultimatum Game” (chapter 18) from Priceless: The Hidden Psychology of Value, One World – Good introductions to key concepts
Tabarrok, A., “A Phool and His Money” Review of PHISHING FOR PHOOLS: The Economics of Manipulation and Deception, by George A. Akerlof and Robert Shiller, Princeton University Press – A defence of standard economic theory against behavioural claims.
Leighton, Wayne and Lopez, Edward, “Public Choice”, Chapter 4 in ‘Madmen, Intellectuals and Academic Scribblers’, Stanford University Press 2013 – An engaging history of the subject.
Laar, Mart “The Estonian Economic Miracle” Heritage Foundation, Backgrounder No. 2060, August 7th 2007 – A case study of Estonia’s post-Soviet economic reforms.
Isern, Joseph and Pung, Caroline “Driving Radical Change” McKinsey Quarterly 2007, Issue 4, pp.24-35 – Parallels between economic transition (e.g. shock therapy) and initiating change within an organisation.