Reading Capitalism

The Austrian School of Economics has published a number of great treatises.  These include books such as Ludwig von Mises’ Human Action, Friedrich Hayek’s Prices and Production, Jesús Huerta de Soto’s Money, Bank Credit and Economic Cycles and Murray Rothbard’s Man, Economy and State.  These four aforementioned titles are probably the most well known Austrian magnum opera.  There if a fifth, I believe, worthy of mention, and that is George Reisman’s Capitalism.  I picked up this title during the Mises Circle at Newport Beach on 14 November (a whopping $95 well spent), and read part of the preface immediately.  Although I was immediately impressed, I did not pursue further reading, because at the time I was reading Joseph Stiglitz’ Making Globalization Work for my book review, and I was planning on reading Murray Rothbard’s Economic Thought Before Adam Smith (a book I am supposed to finish by 31 December).  Besides, Capialism is rather intimidating.

I keep the copies of these stated magnum opera (or, at least the ones I own; I am missing Rothbard’s treatise, although I hope to correct this lapse soon enough) side by side on my “economics bookshelf” (separate from my “Second World War bookshelf”).  Money, Bank Credit and Economic Cycles is not a small book; it runs to nearly one thousand pages, and is replete with invaluable information on Austrian monetary theory, the history of money, capital theory and critiques of opposing viewpoints.  Side by side with Capitalism, however, Huerta de Soto’s seminal theoretical work seems almost unworthy (only in the sense of the physical size of the volume, of course).  It is not just Huerta de Soto’s book which Capitalism physically overshadows, but the extremely important Human Action.  So, just by the size of the book, Capitalism proves to be very intimidating.

Even so, one realizes that it is worth reading.  A casual glance inside will only work to reinforce this belief.  George Reisman covers the role of the division of labor, and the role of prices in resource distribution.  Capitalism goes over the concept and usage of money, the role of savings and spending, investment, production and unemployment.  He offers a punishing critique of Keynesian thought (although, these are not lacking within Austrian literature, to be quite honest).  This, of course, is just a very brisk overview.  On these topics, and more, he spends nearly one thousand pages (each oversized page organized into two columns).  This ten-year (or more) project should not be taken lightly.  It is perhaps one of the most complete volumes on the topic of Capitalism.  It is also noteworthy that its author was a student of Ludwig von Mises (PhD student, at that) and was also a disciple of Ayn Rand.

The mixture of intellectual influence on George Reisman makes him a very objective scholar.  He seeks to reunite Ricardian theory with Austrian economic thought, and although not all of his conclusions are necessarily Austrian (or were formerly within the Austrian framework), his book nevertheless remains Austrian in nature.  Indeed, any seemingly conflicting ideals can actually be considered as complements.  By simply reading the preface, one gains an understanding on why George Reisman is such an important figure in the history of economic thought.  You realize why Capitalism is such an important book to read, whether you are for free markets, mixed markets or completely planned markets.  It is a book which all academic economists should consider reading.

I, however, have much reading on my plate already!  I have already mentioned on this blog that I am looking forward to expanding Wikipedia’s article on Richard Cantillon.  Apart from all the reading necessary to write such an article (and take it to featured article status), I am also planning to begin reading Friedrich Hayek’s Prices and Production in January, after finishing Murray Rothbard’s Economic Thought Before Adam Smith (I will have to leave the second volume of An Austrian Perspective on the History of Economic Thought until later).  So, focusing on Reisman’s book will prove impossible.  There is simply too much to read, and too little time.  To make matters worse, I will have all my university classes to worry about (although none should prove particularly difficult).  I figure, though, that if I don’t being reading Reisman’s magnum opus now, I will probably never get to it (I tend to buy more books than I have time to read).

A month ago, the Ludwig von Mises Institute’s online community began a reading club group.  Deciding to take advantage of the existence of such a group, I have proposed a “group reading” of Capitalism.  The reading will be done individually, of course, since all of the interaction is done through the computer screen, but the purpose is to give motivation to read the book.  Ideally, every participant will read a beforehand agreed upon number of pages of the book each month.  At the end of the month, the participants will join together online and discuss what they learned, what they disagreed with, or what they enjoyed in regards to the portion of Capitalism read.  Ideally, there would be very little reading per month.  The book would be read over a period of some eight to twelve months.  However, given the time to read, the understanding garnered from the readings would be far greater than that which one would gather if reading individually and not virtually coerced into taking notes.  Besides, it allows us to read other books while congruently reading Capitalism.

Talk on this project has only just begun, but I invite all those interested to join the Mises community and join the reading group.  It will prove to be quite an enlightening program.

Updated:  For those interested, we are reading chapters 1–4 between 1 January and 15 February 2010.