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Economics for Real People: An Introduction to the Austrian School Paperback – Jun 2004

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Product details

  • Paperback
  • Publisher: Ludwig Von Mises Inst; 2nd edition (Jun. 2004)
  • Language: English
  • ISBN-10: 0945466412
  • ISBN-13: 978-0945466413
  • Product Dimensions: 1.9 x 15.2 x 22.2 cm
  • Average Customer Review: 4.5 out of 5 stars  See all reviews (2 customer reviews)
  • Amazon Bestsellers Rank: 891,751 in Books (See Top 100 in Books)

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1 of 1 people found the following review helpful By Amazon Customer on 12 Jun. 2009
Format: Paperback Verified Purchase
If you want a good overview of Austrian economics then this is the book. It explains all the basic concepts in an easy to understand format. My reason for not giving five stars is the use of confusing analogies, fried and boiled rats as a form of exchange sort of put me off from the main thrust of Callaghan's arguement. I've got no problem with using analogies, it's been part of storytelling for eons but sometimes I felt they got more complicated than if he had stuck to just explaining the economics.
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By Rumpty on 21 Aug. 2011
Format: Paperback
A very good description of the basis of Austrian Economics. The author uses various analogies which seem just basic common sense when you're presented with them, yet he explains that some of the concepts are not accepted or understood by classical economists.
He also includes a very brief history of the Austrian School.
Very enlightening.
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5 of 6 people found the following review helpful
What A Great Book! Made Me Hungy For More! 20 Feb. 2009
By Joao Cortez - Published on
Format: Paperback
Wow! This was definitely the best book on Economics I have ever read! It was so addictive that I could not stop reading it. It's well written, very accessible, easy to read, entertaining and extremely stimulating as the ideas presented go against conventional wisdom. The ideas are not only logical but they are grounded on real life episodes. It presents Economy as a human social system, centered around the individual free choice. It stresses the importance of looking beyond what is seen to look at what is not seen, which is just important. Today, with the current crisis, more than ever this book is fundamental in order to understand how the world came to this point, and where it's moving towards to. A few key points:
- Real economic growth can only be achieved through Production and Savings and not through Consumption and Debt
- The only real money is attached to a real collateral, such as gold as opposed to the current paper money that the central banks are happy to print out of air
- Central banks should not have the power to "print money" or fix interest rates
- Government intervention should be minimal - subsidies, protectionism, price fixing, regulation, public spending are to be avoided
- Free Markets with the Law of Supply and Demand will tend to maximize the value and wealth of both the individual and society
3 of 4 people found the following review helpful
A very good introduction to Austrian economics 13 April 2010
By Frank Reibold - Published on
Format: Paperback
This book provides an introduction to Austrian economics which is sometimes funny to read.

The first parts lay the philosophical (logical) foundations of Austrian economics and build up a picture of the market economy. This is done by looking at a person living alone on an isolated island (like Robinson Crusoe). Later more people, goods, and money are introduced. In my opinion, this is one of the best explanations of Ricardo's "Law of Comparative Advantage" and the history of money.

According to Austrian economics, the market process does never establish a general equilibrium. Sure, there will sometimes be equilibria in distinct markets, but these cannot last for long. The price informs entrepreneurs of new profitable undertakings, thus destroying the equilibrium. New data will have the same effect. The price will cause entrepreneurs to gradually adjust to their customers' wishes. There is thus no need for a general equilibrium (nor does is actually exist) as in conventional economics for the market process to be beneficial. Unlimited information, perfect competition, and instantaneous action aren't necessary either. The market process consists of learning, discovering opportunities, and adapting to new information. Austrian microeconomics is much more realistic than neoclassical models. (You might guess from this that there are no figures of demand and supply curves within this book. Your guess is correct.)

Later parts introduce the government and show its role in manipulating prices and money, regulations, minimum wages, etc. Callahan's explanation of inflation and deflation is much better than in conventional economics textbooks. The market process will destroy monopolies, because their profits attract new competitors. Only monopolies privileged by the government will survive. Therefore, Austrian economics rejects antitrust laws.

The "Austrian Theory of the Business Cycle" states that recessions are caused by central banks via manipulation of interest rates. Artificially low interest rates cause entrepreneurs to think that there are a lot of savings which they can use for investments. Later on, the central bank detects an "overheating economy" and raises the interest rates, thereby initiating a recession during which unemployment is likely to occur. According to Austrian economics, all agents (consumers, capitalists, workers, and entrepreneurs) have a time preference which causes aggregate savings and investment to equal in the loan market. The resulting price for time is the interest rate. If the central bank alters the interest rate, the capital structure of the economy (consumption today versus future consumption via investment) is distorted and does not correspond to consumers' wishes any longer. The subsequent recession merely restores the normal structure of capital. Thus the problem is the artificial boom and not the inevitable bust following it. Callahan considers critics of the "Austrian Theory of the Business Cycle" and refuses them by pointing to their fallacies. In my opinion, the "Austrian Theory of the Business Cycle" seems to be correct. It is much better than the conventional theories we discussed at university.

I recommend this book to all readers interested in economics. It is especially illuminating for students of economics.
3 of 4 people found the following review helpful
Perfect introduction to Austrian economics 23 Sept. 2009
By somebloggerdude - Published on
Format: Paperback Verified Purchase
The author writes in any engaging style and uses many of the same instructional models used in the "canon" of Austrian economics. The style is so snappy that it is easy to forget Mr. Callahan is covering a tremendous amount of tremendously important ideas. This is the first book I recommend to anyone who wants a quick and easy introduction to the Austrian school in particular, or economics in general.
3 of 4 people found the following review helpful
A Must Read! 12 Jan. 2009
By Mike Mark - Published on
Format: Paperback Verified Purchase
This book should be required reading at the high-school junior-senior level. This will teach you what money is, what your personal role in the economy can be, what the government's role should be and how to consider the current events happening in the world. Open your eyes to a whole new world!
It all led me to... the AUSTRIANS 8 April 2014
By Miroslav Krajnak - Published on
Format: Paperback Verified Purchase
Is it the ECONOMICS itself that is complex and dismal, or are such the (mainstream) economists' explanations?

Why is there so much fuss about HEALTH CARE? What is the difference between health care AND SHELTER OR FOOD? (both shelter and food are just as vital as healthcare, but as far as I know, I pay for my rent and grocery bills myself)

What is the difference between a BANK AND a SHOE STORE?

Every economic DEBATE on central banking and money in the (mainstream) media is about the same: Is the FED's (or ECB's) current monetary policy too tight or too loose? Will the FED (or ECB) raise or lower interest rates? NO ONE QUESTIONS THE WHOLE CONCEPT OF CENTRAL BANKING. No one discusses fiat paper money vs. commodity money (such as gold standard). WHY?

Is job a right?

Aren't POLITICIANS PLAYING GOD by trying to "beat" the system of free prices - the only system that can solve the problem of alternative allocation of limited resources to meet thousands of different preferences, wants and desires?

If I reject to pay TAXES (because I do not want to support wars and bailouts of politically well-connected businesses, for instance) or SOCIAL SECURITY contributions (because I simply do not believe in the scheme and prefer to plan and save for my retirement myself, or because I do not see why I should sponsor parasits of society) or HEALTH CARE contributions (because I have a private health insurance and do not use state hospitals/doctors, or because I simply choose to have only "catastrophic insurance" - that is, I choose to have a TRUE insurance), I will most likely end up behind bars. WHY?

Is EURO an economic project or a political one?

Do the (true) capitalists (and entrepreneurs) become rich at the expense of the poor (=there is a fixed amount of wealth and the only way for me to have more is to take from you) or because they make the "economic pie" larger?

Isn't there a lot of CONFUSION all around us? Isn't A confused with B?
- CAPITALISM with CRONYISM (people blame capitalism for the current mess, but they do not realize we do not have capitalism - a true, free market capitalism)
- LIBERTY with LICENSE (before visiting a doctor, you call the government to ask if she is licensed, or you ask a family member, neighbor or colleague to see what their experience with her is?)
- EDUCATION with SCHOOLING (when it comes to (macro)economics, I learned much more by self-study than at the University)
- CHOICE with DISCRIMINATION (from 2013 insurance companies can no longer use gender as a risk factor in premium calculations - EU gender directive. It would be discrimination...)
- MODERATES with EXTREMISTS (for instance, if I voted against a budget deficit on the grounds that it would increase debt, I might be called an extremist. But aren't extremists those who vote for it because what they are actually doing is voting for the extreme levels of debt?)
- etc.

What is FREEDOM?

Isn't FULL EMPLOYMENT a little bit of a strange goal? For one thing, legal aspect aside, it does not take into account economic actors operating on the black market. Furthemore, all it takes for the governement to achieve it is to split the unemployed into two groups and have one dig out holes and the other fill them in. But doesn't the value of work/a job and, by extension, allocation of limited resources happen to matter?

If I decide to give all my cash holdings to a charity and move in the middle of the forest to spend the rest of my life doing mathematics, AM I BEING IRRATIONAL?

Are ECONOMICS and MATHEMATICS related? If so, how? Is the economics related more to applied mathematics or pure mathematics? In other words, is the connection between the two fields to be found in (pages of) equations or in logic being used?

Is (true) capitalism compatible with CHRISTIANITY?

Isn't MINIMUM WAGE actually hurting economy? Doesn't it substitute unemployment for low(er) wages? What are the determinants of real wages? Don't they result from processes on the production's side (capital accumulation, effective management, better education and training on the part of workers, etc.) rather than that of government (arbitrary laws)?

There are PROTESTS in many places in the world. If I protest, it means I am not happy with the current state of affairs; so, say, it is "clear" what those protestors are protesting against. But how about the "for part?" What are they protesting FOR? Yes, they want a change, but what exactly? Party B in control instead of party A? What's the difference, really? What's the difference between the left and the right? True, the left want "egalitarian" society and for the right it is all about "growth," but they both want state interventions (and power). Shouldn't it be about (ever-growing) government vs. no (or low) government?

Who are the SOCIALISTS, anyway? The rich? The middle class? The poor?

What really is at the center of (growing) INCOME INEQUALITY? Is it state or capitalists? And is it actually income inequality that concerns the left liberals, or is it wealth inequality? Maybe it depends on which one gives a bigger contrast. And how about all those analyses and surveys conducted and used to prove it? Is everything kosher with them?

Why would the FUNDAMENTAL ECONOMIC PRINCIPLES that apply to an individual (or family) be no longer valid when applied to a group of people (or society)?

Why is it all about ECONOMIC GROWTH, as measured by GDP? What is an "economic growth" anyway? What is actually GDP? Is it really production (measured in units/quantities of goods and services, including their quality which, by the way, is subjective) - as the name of this statistical construct would suggest - or is it spending (captured in mere monetary terms)? Malinvestment, while increasing GDP, at the end of the day means wasted capital. Similarly, increasing costs of health care can contribute to the increase in GDP even if the quality of the services goes down. How perverse!

Which system is better suited for the ENVIRONMENT around us, our planet?

Doesn't DEPOSIT INSURANCE create moral hazard by encouraging banks to take more and bigger risks with deposits? Isn't it just an illusion of protection anyway? After all, it guarantees the nominal value of deposits, not its real value, right?

Why are there so many uninsured people in the U.S.? Why is the COST OF HEALTH CARE INCREASING? Is free market to be blamed, or is it different regulations that are responsible for that (such as those forcing insurance companies to accept all risks including pre-existing conditions, price controls, government-mandated coverages, bariers to entry, etc.)?

Who/what exactly is the cause of BUBBLES, such as the most recent housing bubble in the U.S. or public sector bubble in Greece?

Why is a (price) DEFLATION such a menace for economists (those close to politicians anyway)? What's wrong with falling prices? (I haven't heard anyone complaining about falling prices in electronics or special medical procedures left to free market forces such as LASIK or plastic surgery. Have you?) Isn't falling prices the VERY essence of (true) capitalism?

The list of questions is endless.

As I kept contemplating all those questions popping up in my head, I realized that my preferences or gut feelings were not sufficient to give me, let alone to the others, satisfactory answers. I needed something more. I needed tools based on LOGIC and common sense.

And that's exactly what the AUSTRIAN ECONOMICS will arm you with. The Austrians' style of writing and the CLARITY of their explanations are IMPRESSIVE.

As for 'Economics for real pepole' in particular, it is more of a popular read than systematic treatise, which makes it a good place to start for those new to the Austrian tradition.

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