With Economics for Real People: An Introduction to the Austrian School (Ludwig von Mises Institute, June 2004, ISBN ISBN 0-945466-41-2), Gene Callahan does an admirable job of making economic reasoning accessible to the layman, and of explaining the specific ideas of Austrian economics, an important school of economic thought. Along the way, he introduces the reader to prominent Austrian thinkers such as Carl Menger, Ludwig von Mises, Friedrich Hayek, Murray Rothbard, and Israel Kirzner.
Fundamental Economic Principles
He begins with the nature of economics itself. He explains the Austrian School’s approach, which rejects the idea that purposeful human action can be understood by mimicking the methods of natural sciences such as physics. Thus, the Austrian School eschews the use of complex mathematical models and instead focuses on reasoning out the implications and consequences of basic axioms about human beings and the nature of purposeful action itself, a method most commonly called praxeology.
Callahan starts by imagining the simplest scenario possible, a single isolated person. He uses this to illustrate the nature of subjective value, how preferences are revealed through action, the principle of marginal utility, and what it means to say that all economic choice is made “on the margin.”
