Vienna & Chicago, Friends or Foes?: A Tale of Two Schools of Free-Market Economics

Mainstream economics enjoyed a period of peace and calmness during the years of the great moderation (1980-2007). Then, the 2008 crisis hit, taking most economists by surprise. Critics did not take too long to voice their opinions and the attacks came in from every direction. From an academic standpoint, the criticism was focused on both the assumptions and the methodology used in the creation of modern macroeconomic models. On the other hand, the less academic debate was centered around the fact that the government could have done more to prevent the crisis (left) or did too much at the point of distorting the proper functioning of the market (right). The whole situation led many people to rediscover some economic theories that had lived outside of the mainstream tradition for many decades. In particular, those coming from the Austrian School and the Post Keynesian one (Minsky).The interesting aspect about these two schools of thought is that, since their theories are built upon logic and observation (as opposed to oversimplified mathematical equations), they were able to provide an explanation about the source of the crisis. Given the inclination that many people have towards free-market economics, the next natural step was to try to understand what this Austrian school was all about. And, in particular, how it differed from the better known free-market Chicago school. Well, you have it all in this book.This book is not only original, but also very well researched. The author does a wonderful job presenting the material and the organization of the book is spot on -starting with the history of each school, then analyzing how they differ in terms of methodology and on issues like monetary standard, business cycles, and the proper role of government. Overall, a very enjoyable and informative read.

This well written book is very helpful for those who are confused about the various claims about what drives the economy. Skousen compares and contrasts the theories of the Chicago school and the Austrian school as well as the Keynesian line of thought. He traces their histories, their leaders, and rates various economic axioms as favoring either Chicagoian or Austrian ways of thinking. Topics covered include the gold standard vs. fiat money, the business cycle, the proper role of government, faith versus rationalism and much more. The book is easy to read without regard to whether you are an economist or not. Some ideas may be a bit obtuse on occasion, but it is good for the mind to think on these things. I liked the book and thought it would be a good supplemental reader for college students and for those in the financial services industry.

In this book Mark Skousen compares and contrasts the ideas of the two most prominent schools of free market economics. That is, the Austrian School (Carl Menger, Eugene Bohm-Bawerk, Ludwig Von Mises, Friederich Hayek, etc.) and the Chicago School (Milton Friedman, George Stigler, etc.) This book is an invaluable resource to any fan of free market economics who seeks a more in depth understanding of the intellectual history behind this subject.Mark Skousen, a prolific, pro-free-market economist and writer, is a highly qualified individual to take up this important task. He has authored over 20 books on this subject, has studied free market economics in depth and has had extensive contact with both Milton Friedman and Friedrich Hayek.From reading this book, you will not only get a nice overview of the history of free market economics including brief discussion of the important roles of precursors such as Adam Smith and Jean-Baptiste Say but you will also understand the finer points of both the Austrian view and the Chicago view. In particular, you will obtain a thorough understanding of the issues on which both schools passionately disagree, including their contrasting views on monetary policy, the cause and effect of business cycles and most importantly, what each school views as the proper methodology for obtaining economic truths.The only shortcoming of this book that I noticed is very minor but will be of importance to a few readers. For an individual as well versed in free market thought as Mark Skousen, he often displays a clumsy understanding of the philosophy of Ayn Rand. For example, in this book, Skousen parenthetically comments how Ayn Rand would describe Immanuel Kant's concept of reason as "objective" reason. However, those who have studied the ideas of Ayn Rand knows that she has vociferously rejected the analytic-synthetic dichotomy of Immanuel Kant, which amounts to saying that reason is utterly useless in discovering truths in what Kant calls the noumenal world (that is, an unknowable world that exists independent of our consciousness). However, this should not detract from this fantastic book he has written.I recommend this to anyone with a strong interest in laissez-faire economics and who wants to understand the finer but important contrasts between the ideas of the Austrian School and the Chicago School. If you are interested in the history of economic thought, I also recommend Mark Skousen's "The Big Three in Economics".

Overall, I really liked this book. The opportunity to gain insight into the differences and similarities between the two big free-market schools of economic thought from one of the premier insiders in the freedom movement makes the read definitely worthwhile. I disagreed with some of his conclusions. In fact, I thought the cases he built in some of the chapters actually should have led to the opposite conclusion, but it is, after all, an opinion piece and not an objective study. As an Austrian, it is difficult to hear that being right is not always as important as fitting in...but that seems to be the case. I would recommend this book as a good primer for those who have not pinned down their philosophical loyalty.

very useful

著者は、ある会議でフリードリッヒ・ハイエク称揚のスピーチをしたところ、シカゴ派の経済学者たちに批判を受け、首を傾げた。ウィーン派経済学とシカゴ派経済学は共に自由市場資本主義ではないか。何故敵対するのか？かつてマルキシズムとナチズムによって未曾有の脅威にさらされていた古典派経済学を救出したのはウィーン学派たちだった。その大ボスはルードヴィッヒ・フォン・ミーゼス。ナチスを逃れて渡米したミーゼスを迎えた当時の米国は亡命左翼知識人の巣窟であったが、ミーゼスは不撓不屈の精神で自由市場経済理論の伝播に努める。彼の元に集ったのは、シュンペーター、ミルトン・フリードマン、マレー・ロスバード、アイン・ランド、アラン・グリーンスパンetc。そして、ウィーン学派の血を受け継いだシカゴ学派の戦いは20世紀半ばから始まる。目指すは「打倒ケインズ！」である。両者の相違点を巡る経済学の話は知識のある方向き。先験主義でセオリー重視のウィーン派に対してシカゴ派は経験主義でデータ重視であるという。通貨政策、ビジネスサイクル論、資本形成論、マクロ経済モデル、大恐慌の要因、政府の役割等々、両者のそれぞれの主張を取り上げて話が進むが、ビジネスサイクル論などはまず素人は太刀打ち出来ない。通貨の話は結構面白く、ウィーン派の不換紙幣廃止・金本位制復活の主張などもうすこし詳しく知りたい感じも。ウィーン派学者たちが、「経済学は自然科学を模倣してはならない」と、数学モデルの構築を徹底して忌避したという話も興味深い。大きく育った子供（シカゴ派）の横で見る影もなくなってしまったウィーン派に向けたエールの本という印象だった。素人の私の印象に残った下りは、ウィーン派がシカゴ派に比べて純粋主義で内向き、そして何より「世界観が暗い」という著者の指摘。まぁそれは、帝国の黄昏と崩壊を見てきた人たちだからなぁ、というのは安易な感慨だろうか。