Advanced Introduction to the Austrian School of Economics.

• Author: Tarko, Vlad
• Position: Book review

* Advanced Introduction to the Austrian School of Economics

By Randall G. Holcombe

Cheltenham, U.K.: Edward Elgar, 2014.

Pp. xi, 126. $27.95 paperback.

Following the fall of socialism in eastern Europe and the past two recessions, the Austrian School of economics has received unprecedented interest. The Austrians have long argued that socialism cannot allocate resources efficiency against mainstream claims that central planning can deliver faster growth than capitalism (see David Levy and Sandra Peart, "Soviet Growth and American Textbooks," Journal of Economic Behavior & Organization 78 [2011]: 110-25). Similarly, the past two recessions have made it clear that aggregate supply and demand do not tell the whole story and that the causes of specific capital misallocations need to be understood (Lawrence H. White, The Clash of Economic Ideas [Cambridge: Cambridge University Press, 2012]). But the Austrian School is more than just these two instances of going against the mainstream. The most interesting aspect of the school is that it claims to provide a coherent account of the entrepreneurial market process from which such contrarian ideas logically follow.

Randall Holcombe's "advanced introduction" is, hence, a very welcome contribution to the literature on the Austrian School. The book is aimed toward readers who are already familiar with the neoclassical equilibrium framework but are curious to learn more about the Austrian theory of what happens outside the equilibrium. Other recent introductions to Austrian economics have been either at a more introductory level (Gene Callahan, Economics for Real People [Auburn, Ala.: Ludwig von Mises Institute, 2004]) or at a far more encyclopedic level (Peter Boettke, ed., The Elgar Companion to Austrian Economics [Cheltenham, U.K.: Edward Elgar, 2004]; Peter Boettke and Christopher Coyne, eds., The Oxford Handbook of Austrian Economics [Oxford: Oxford University Press, 2015]). By contrast, Holcombe's book is geared toward those who aren't yet sure whether to invest the time to read the Austrian literature.

Does the book succeed? The challenge to provide a very concise account of an increasingly large literature is considerable. Furthermore, because Austrian economics goes against some key elements of neoclassical economics, both in terms of foundations and in terms of policy implications, to be convincing a sympathetic presentation needs to avoid straw-manning neoclassical economics. In my view, with a few exceptions, Holcombe does an outstanding job in meeting both challenges. His book is by far the best short...