Free Market Textbooks Reign!

A Special Report from APEE Meetings in Las Vegas
by Mark Skousen

On April 2, 2012, I moderated a panel at the annual APEE meetings in Las Vegas.  APEE (Association of Private Enterprise Education) is the gathering place of free-market academic economists, and this year a record group of 500 showed up from colleges and institutions around the world.  (Go to www.apee.org for more information.) 

The panel’s theme was “Squaring the Mises Circle:  How to Integrate Austrian Economics into Mainstream Textbooks,” and we had a SRO crowd. 

It’s amazing how economics textbooks have changed in one generation.  When I was going to college, the principal textbook was Paul Samuelson’s Economics, which promoted the Keynesian themes of paradox of thrift, deficit spending, progressive taxation, and the welfare state. 

In 1991, I wrote a book called “Economics on Trial” (McGraw-Hill), which surveyed the top ten textbooks in economics at the time, and most were still Keynesian. 

Today Keynesian textbooks are still out there (Krugman, Baumol & Blinder), but there are a whole bunch of free-market textbooks, including ones by Roger Leroy Miller, Greg Mankiw, and the four highlighted at the APEE panel.  I spent a couple of days reviewing them in preparation for the panel, and was amazed how they all included new material from the great Austrian economists, especially the ideas of Friedrich Hayek. 

Peter Boettke talked about how he and co-author David Prychitko have integrated the market process and business cycle themes of Mises-Hayek-Rothbard in updating the late Paul Heyne’s classic “Economic Way of Thinking.”  It’s now in its 12th edition.  It is a great introduction to economics.  It traditionally been considered a “micro” only textbook, but lately has beefed up its macro chapters.  

Jim Gwartney’s and Richard Stroup’s “Economics:  Private and Public Choice” have now gone through 15 editions.  It offers an excellent summary of the best of the free-market schools of the Chicago school (Milton Friedman, Gary Becker, Robert Lucas, et al.), the Austrians, and supply-side (Arthur Laffer).  The latest edition includes a “Keynes-Hayek” debate popularized by a rap song developed by GMU’s Robert Russell.  I especially like the Special Topics in the back of the book, which cover the 2008 financial crisis, lessons from the Great Depression, and Japan vs. Canada.  Gwartney and Stroup rival Roger Leroy Miller’s as the premier free-market textbook in sales.

“Modern Principles of Economics” by Tyler Cowen and co-author Alex Tobarrok (both at GMU) is a new textbook in its 2nd edition.  Adam Smith is the favored economist in their textbook, but they reference several free-market economists such as Joseph Schumpeter, Friedrich Hayek, Vernon Smith as well as a special focus on MIT’s Robert Solow and the Solow growth model. 

At the end of the panel, I spent some time introducing my own textbook, “Economic Logic” (Capital Press, 2010), now in its 3rd edition — I’m working on the 4th edition, which will be out later this year.  EL goes further than the other textbooks in attempting to fully integrate all aspects of Austrian economics into the mainstream.  EL starts with the profit-and-loss income statement to explain the dynamics of the global economy, and to introduce supply and demand.  It also introduces a new “Austrian” aggregate statistic, Gross Domestic Expenditures (GDE) to supplement GDP, as well the origin of money, the international gold standard, and the Austrian theory of the business cycle.  It also has a major critic of Keynesian economics.  Finally, it offers show bios famous free-market economists, both of the Chicago school (Friedman, Becker, et al) and the Austrian school (Carl Menger, Eugen Bohm-Bawerk, Schumpeter, Mises, Hayek, and  Rothbard).  For more information see “Economic Logic.”