Robert Murphy has the right frame of mind and mastery of the subject matter to provide the best possible pedagogy. The logic is super clear. The organization is impeccable. It achieves a great balance between “plain old” economics and that aspect of economic thought that is considered particularly Austrian. Therefore, it prepares the student for both conventional economic studies in the future and provides the logical rigor and policy clarity that only the Austrian School perspective can offer.

Most of the attempts at such texts falter because they are either too dry and technical for the young reader or they are littered with attempts to keep the student entertained with references to pop culture or cheesy passages that attempt to “speak the child’s language” but only end up sounding patronizing.

Dr. Murphy’s text has none of this. The prose has relentless fire without needless fireworks. What drives it forward is intellectual passion born of his love of the topic. What’s also nice is that he is nowhere self-consciously trying to sound like someone he is not. It is his real voice, explaining everything point by point. For this reason, the text is warm and engaging.

Here is the product of vast experience and daily writing. This permits the voicing of the book to achieve a remarkable integration page to page, chapter to chapter. Though he is drawing from the whole history of the development of economics, the text ends up being strikingly original. His approach is not based on anything but his own sense of how to teach this subject.

This book will not be boring or useless even for people who think they already know the subject. Every page or two, there are fresh insights. For example, on the problems with barter, he shows that in the real world, most goods and services would not have come into existence at all (so that there would be no trading of tractors for cobbler services because there would be no tractors or repairable shoes). In another place, he points out that one of the advantages of the division of labor is that it makes the advantages of automation more readily apparent.

Maybe these points appear in other introductory texts but the way he works them into a logical and seamless system is very impressive. It has a much larger market than just high-school students. Anyone can enjoy this book and learn from it. The appropriate age here is probably 13 and up but any adult will love this book.

Murphy wrote the first study guides to Human Action and Man, Economy, and State. He can now add another medal to his chest. It is a big one. There is every reason to believe that this book will still have powerful legs decades from now.

As for the price, it is close to being a miracle for a textbook of this size and expanse. The conventional publishers of bad books at high prices don't stand a chance against this landmark.

PART I: FOUNDATIONS

1. Thinking Like an Economist . 3

1. Thinking Like an Economist 3
2. Is Economics a Science? . 5
3. The Scope and Boundaries of Economic Science . 5
4. Why Study Economics? . 8

2. How We Develop Economic Principles . 13

1. Purposeful Action versus Mindless Behavior 13
2. The Social versus the Natural Sciences 15
3. The Success of the Natural Sciences versus the Social Sciences 17
4. How We Develop Basic Economics 22

3. Economic Concepts Implied By Action . 31

1. Introduction 31
2. Only Individuals Act 32
3. Individuals Have Preferences 36
4. Preferences Are Subjective 37
5. Preferences Are a Ranking, Not a Measurement Using Numbers 39
6. Different Individuals’ Preferences Can’t Be Combined . 42

4. “Robinson Crusoe” Economics . 49

1. Introduction 49
2. Crusoe Creates Goods With His Mind Powers 50
3. Consumer Goods versus Producer Goods 52
4. Land, Labor, and Capital Goods . 53
5. Income, Saving, and Investment . 55
6. Goods Are Valued Unit by Unit 59
7. Pulling It All Together: What Should Crusoe Do With Himself? . 61

PART II: CAPITALISM: THE MARKET ECONOMY

5. The Institution of Private Property 71

1. Society Requires Rules . 71
2. Capitalism: This Is Private Property 73
3. The Market Economy and Free Enterprise . 74
4. 6. Direct Exchange and Barter Prices 81
5. Why Do People Trade With Each Other? 81
6. Direct Exchange / Barter . 82
7. Prices 83
8. How Prices Are Formed in Barter . 84

7. Indirect Exchange and the Appearance of Money . 99

1. The Limitations of Direct Exchange . 99
2. The Advantages of Indirect Exchange . 101
3. The Advantages of Money 104
4. Who Invented Money? 106

8. The Division of Labor and Specialization 113

1. The Division of Labor and Specialization . 113
2. Why Specialization Makes Labor More Productive . 115
3. Enriching Everyone By Focusing on Comparative Advantage . 117

9. Entrepreneurship and Competition . 125

1. Entrepreneurship 125
2. Competition Protects Customers 127
3. Competition Protects Workers . 128

10. Income, Saving, and Investment 135

1. Income, Saving, and Investment . 135
2. Investment Increases Future Income 136
3. How Saving and Investment Increase An Economy’s Future Output . 141

11. Supply and Demand . 147

1. Supply and Demand: The Purpose . 147
2. Demand: Its Definition and Its Law . 148
3. Supply: Its Definition and Its Law 153
4. Using Supply and Demand to Explain the Market Price 155
5. Using Supply and Demand to Understand Price Changes .159

12. Interest, Credit, and Debt . 175

1. Interest: It’s About Time 175
2. Savings, Investment, and Economic Growth . 177
3. Common Credit Transactions 180
4. The Pros and Cons of Debt . 183

13. Profit and Loss Accounting 191

1. Profit and Loss Guide Entrepreneurs . 191
2. Interest Versus Profit 193
3. The Social Function of Profit and Loss Accounting 195
4. The Limits of Profit and Loss Accounting . 199

14. The Stock Market . 205

1. The Stock Market 205
2. Why Issue Stock? (Debt versus Equity) . 206
3. The Social Function of Stock Speculation 209

PART III: SOCIALISM: THE COMMAND ECONOMY

15. The Failures of Socialism—Theory . 221

1. The Vision of Pure Socialism 221
2. Socialism’s Incentive Problem . 223
3. Socialism’s Calculation Problem . 229

16. The Failures of Socialism—History . 239

4. Economic Theory and History . 239
5. Communism vs. Fascism 241
6. Socialism’s Body Count . 242

PART IV: INTERVENTIONISM: THE MIXED ECONOMY

17. Price Controls 255

1. The Vision of Interventionism . 255
2. Price Ceilings . 256
3. Price Floors . 261

18. Sales and Income Taxes  271

1. Government Spending  271
2. How Government Finances Its Spending . 275
3. Sales Taxes 277
4. Income Taxes 279

19. Tariffs and Quotas . 287

1. Mercantilism 287
2. The General Case for Free Trade . 289
3. Tariffs . 293
4. Import Quotas . 299

20. The Economics of Drug Prohibition 305

1. Drug Prohibition . 305
2. Drug Prohibition Corrupts Government Officials 307
3. Drug Prohibition Fosters Violence 314
4. Drug Prohibition Reduces Product Safety 320
5. Money Inflation vs. Price Inflation . 325

21. Inflation . 325

1. How Governments Make Prices Rise . 329
2. The Danger of Government Price Inflation 336

22. Government Debt 345

1. Government Deficits and Debt 345
2. Government Debt and Inflation 350
3. Government Debt and Future Generations 353

23. The Business Cycle 361

1. The Business Cycle . 361
2. How Governments Cause the Business Cycle . 363
3. The Inevitable Bust Following an Artificial Boom 368
4. The Causes of Mass Unemployment 369

Glossary  377