#2709—American 50:1—File: 50209-Weber-BR

BOOK REVIEW Vienna & Chicago: Friends or Foes, A Tale of Two work in the 1930s (with the school coming into its Schools of Free-Market , by Mark Skousen, own in the 1960s), again with an attempt to bring eco- Washington, DC: Regnery Publishing, 2005 nomics back to its classical roots. is the most well-known economist from the Austrian As the title suggests this book will be of interest to school and Milton Friedman is the most well-known social scientists interested in the history and current from Chicago—both are Nobel Laureates. thinking of free-market economics and of political Skousen’s writing is unusual, interesting and illu- economy in general. Most economic thought taught in minating. He describes the methodological differences academia uses Keynes as the point of departure so this in the schools; the Austrians prefer theory over empir- easily read, and personal yet objective, book can give ical analysis whereas Chicago is profoundly quantita- a fresh perspective to both experts and lay readers tively-based. Both schools see a limited role for gov- alike. ernment in the economy though waiver over certain Skousen, a prolific business and economics writer, specific, and differing, interventions. He describes investment advisor (Forecast & Strategies) and profes- how the great each have their own unique sor (’s business school), uses a take on the causes and prolongation of the Great compare and contrast approach to describing the two Depression (this chapter provides the most analysis, leading schools of laissez-faire economic thought with highlighting the importance of the Great Depression in specific chapters on theoretical and empirical approaches, monetary policy, macroeconomics and American, and world, economic history). Skousen the business cycle, anti-trust policy and the role for gives insights into the character and personalities of government in the economy, and “faith and reason” in the leading lights of these two schools through his own economics, with faith in this case being faith in Adam interaction with the economists and through others’ Smith’s concept that the rising tide raises all boats first-hand accounts. (translation: that economic growth lifts the poor out of Also of benefit is that the author gives recommen- poverty). Skousen then uses the compare and contrast dations for further research in the area of macroeco- methodology to make his own judgment as to which of nomics, specifically in the areas of capital formulation the two schools has the more sound approach to each and stages of production (the foundations for econom- of these fundamental economic topics. ic growth) but unfortunately this section of the book is The book begins with a brief history of economics also the weakest. Most of the book is accessible to lay as a discipline and the state of societies as economics readers and what analysis there is is clear and well developed, from to , and then laid-out. However, when Skousen inserts his own and introduces the two schools in their historical context. other current advancements in macroeconomic theory “Vienna” (more commonly referred to as the Austrian the analysis and graphical representations are less school) is the school of economic thought founded at well-explained and seem to be more of an afterthought the University of Vienna in the 1870s by than the comprehensive compare and contrast in response to Marxism and to rejuvenate the then approach and easy-to-follow content of the majority of seemingly dead-end, ‘dismal science,’ classical the book. Nonetheless this book is recommended for approach with what is now known as the ‘marginal both scholars interested in alternative economic revolution’; that economic decision-making is made at thought and for lay persons interested in a well-told the margins, and not through all-or-nothing decision- history of economics. points. “Chicago” is of course based at the University CAMERON M. WEBER of Chicago and developed as a response to Keynes’s New School University

Vol. 50, No. 2 (Fall 2006) 85