Analyst’s Crucible (Economics)
Three Books That Will Clarify and Broaden Your Understanding
This is the third installment of the Analyst’s Crucible series. Having covered Statistics and Cognitive Science, it is time to take on the more dismal science. If you are brand new to Economics, you may want to start with the recommendations made here.
Crucible articles are designed to inspire self-learning and challenge your current education. In the next few paragraphs, I will introduce you to three masters of economics and some excellent books that will help you understand why. The books represent separate schools that exist within the economic discipline. There are well more than three — so don’t consider this exhaustive.
The Austrian School
Among the various schools of economic theory, Austrian economics is not the most prolific. There are a rare handful of books that win acclaim in this space and only one that is held in highest regard. Part of the reason, Henry Hazlitt’s work is such a complete offering.
It doesn’t hurt Hazlitt’s cause that the Austrian school employs a very simple and logical model of economic theory. They are often criticized for it being too simple. Hazlitt’s ‘Lesson’ is the perfect place to get started, but feel free to read more by such authors as Bastiat, Hayek, Mises, and even Ron Paul.
The Chicago School
Milton Friedman is a legendary presence in economics and the most influential member of the Chicago School of Economics. He may not have originated its theories, but few others have communicated them so effectively and succinctly.
The Chicago School remains quite popular today. It is often referred to as supply-side or the more maligned trickle-down. Both nicknames are vast over-simplifications that not even and Austrian Economist would agree with! There are plenty of other books available should you choose to dig deeper. That includes other authors and other books by Friedman as well.
Information Theory
Those with a background in Economics are about to yell — foul! George Gilder is technically a member of the Chicago School and was a big part of Reagan’s economic team. But his more recent books provide great insight into the new economic theories predicated on information.
In Knowledge and Power, George will reference his credentials (it is sort of a mandatory thing), but the book is representation of a very new way of thinking. Unlike the more classic schools, Information Theory is still evolving and many of its advocates still disagree on the fundamentals. If you want to dig deeper, consider Claude Shannon — a mathematician. You can also read offerings by Sims, Sargent, Stiglitz, and Akerlof. Each offers perspectives that borrow from other schools of economic thinking.
The Unmentioned
There are plenty of economists, even Nobel Prize winners, that I did not mention in this article. It is an article intended for analysts and logic-driven decision makers. Under that banner, the three books highlighted here were chosen for their logical models and ability to clearly articulate their schools of thought.
It is also under that banner that at least one school was specifically skipped. If you want to learn more on Keynesian Economics, don’t look here. I am a big proponent of researching and understanding schools of thought, even when you disagree with them. It is the only way to honestly pursue truth. When you disagree with a school of thought specifically because it lacks logic and clarity — it makes it difficult to provide any recommendation.
