But it didn’t have to be this way. This kind of financial devastation has been predicted again and again—decade after decade—by proponents of the Austrian School of economics. Ludwig von Mises, one of the most prominent Austrian economists, summed up the perennial crisis in the title of one of his many books, Planned Chaos (1947). Mises, especially in The Theory of Money and Credit(1912) and Human Action (1949), maintained that the boom-and-bust cycle that has afflicted modern economies is both unnatural and unnecessary. It worsens living conditions for just about everyone. Since the publication of his books, abundant scholarly studies have validated the Austrian view. Yet few people—even among those teaching economics in colleges and universities worldwide—know or understand the Austrian School.
I wrote the new book It Didn’t Have to Be This Way to help solve that problem.
If there is a bright spot in the most recent economic crisis, it is this: people everywhere are giving much more serious thought to foundational questions about the economy. What caused our woes, and more important, how can we prevent future calamities?
To answer those questions, we need to understand the Austrian School of economics. I have had the unique opportunity both to see how economics operates in the real world (as a businessman who co-owned an automotive supply company for many years) and to study its theory and practice from the ivory tower (as a professor of economics at Walsh College and the University of Detroit Mercy). Over the course of my career, it became clear that much of the economics establishment badly misunderstands the forces that cause economic crisis.
CONTINUED at the Ludwig von Mises Institute. Written by Harry Veryser.