The subject of this book is the principles of economics. Its theme is that the application of these principles to the service of human life and well-being requires the existence of a capitalist society.
The purpose of this introduction is to enable the reader to classify the present book in relation to the wider body of procapitalist economic thought and of economic thought as such.
1. Procapitalist Economic Thought, Past and Present
Procapitalist economic thought and economic thought as such are essentially synonymous. The substance of both is to be found in the same two main sources, namely, the writings of the British (and French) classical economists and the Austrian neoclassical economists. All other schools of economic thought are essentially either just prescientific gropings or nothing more than misguided criticisms of the positive truths established by the classical and Austrian schools.
Among the classical economists are, above all, Adam Smith (1723-90), David Ricardo (1772-1823), James Mill (1773-1836), and John Stuart Mill (1806-73), and the Frenchmen Jean-Baptiste Say (1767-1832) and Frederic Bastiat (1801-50). The nineteenth-century Englishmen Nassau W. Senior (1790-1864), John R. McCulloch (1789- 1864), and John Cairnes (1824-75) also deserve mention as important members of this group. Important close allies of the classical school are the Manchester school, led by Richard Cobden (1804-65) and John Bright (1811- 89), who were the parliamentary leaders of the British free-trade movement in the mid-nineteenth century, and the currency school, which included the English economists Lord Overstone (1796-1883) and Robert Torrens (1780-1864), and the American monetary theorists William Gouge (1796-1863) and Charles Holt Carroll (1799- 1890). The classical school incorporated important economic truths previously identified by Richard Cantillon (1680- 1734), David Hume (1711-76), and, above all, the French Physiocrats. The Physiocrats flourished around the middle of the eighteenth century. The leading members of the school are François Quesnay (1694-1774), Pierre Du Pont de Nemours (1739-1817), Robert Jacques Turgot (1727-81), and Mercier de la Rivière (1720-93). The great merit of the Physiocrats was to have identified the existence of natural economic laws (physiocracy means the rule of nature) and, on the basis of their understanding of those laws, to have reached the conclusion that the government should follow a policy of laissez faire, a term which they originated.
The most important members of the Austrian school are Carl Menger (1840-1921), Eugen von Böhm-Bawerk (1851-1914), and Ludwig von Mises (1881-1973). Other important members are Friedrich von Wieser (1851- 1926); F. A. Hayek (1899-1992), who was the most prominent of von Mises's students and who won the Nobel prize for economics in 1974; Henry Hazlitt (1894- 1993); Murray Rothbard (1926-95), who was one of von Mises's later students; and, among the later students of von Mises who are still alive, Hans Sennholz and Israel Kirzner.
Closely allied with the Austrian school on many points . . .