Vienna and Chicago, Friends or Foes?: A Tale of Two Schools of Free Market Economics [Paperback]

Understanding the difference between the Austrian and the Chicago schools of thought in economics can be tricky, and at times confusing. Since both of these schools advocate a free-market economy, unregulated capitalism and hold a classical liberal position on political and economic matters, the differences are more technical, marginal and of secondary-importance for someone who is not familiar with both schools of thought.

Mark Skousen has generally succeeded in writing a book that demonstrates the differences between the Austrian and the Chicago school of thought to the average reader. He begins by explaining the origins of these two seperate schools of thought, their theoretical development and the contribution they have made to modern economic theory. He then moves on to the various areas of economics that they hold contrasting opinions. Dividing the book into thematic chapters, he describes the differences on monetary theory, business cycle theory, methodology, support of the free-market mechanism, the role of the government, and even the differences they have on the importance of the major economic thinkers on economics. Overall, the book has a clear outline, extensive reference to the various economists that have contributed to each school of thought, and a casual tone which makes the subject matter easier to comprehend.

However, the book has a number of secondary weaknesses. While Skousen shows great familiarity with free-market economics, his understanding of other concepts or ideas that come up in his book seems less clear. For example, at one point he argues that Mises designed his praxeological approach based on the pure idealism advocated by Kant. While Mises was influenced by the a priori concept of knowledge found in Kant, Kant was never a pure idealist. His philosophy of knowledge is a fusion of the empiricism and idealism of the 19th century, and to claim that Kant advocates either one or the other of these two philosophical traditions is a clear misunderstanding of the essence of Kant's philosophy.
Marxism is another subject which Skousen seems to be unfamiliar with. He often seems to equate Marxist and Keynesian economics, showing that he lacks a clear understanding between these, often very contrasting, economic traditions. This is understandable to an extend, since he comes from a fundamentally different point of view, and from the fact that Marxist economics have very little popularity compared to Keynesian economics, of which Skousen clearly has a sound understanding.
Another mistake of secondary importance is to attribute Say's law to Say. The theory existed before Say, but the name was stack to it since he published his book with the theory included.

I strongly recommend this book for those who are interested in free-market economics or the history of economic ideas. I give it four stars, due to the minor mistakes I have mentioned above.