Principles of Economics: an Austrian Critique

The first edition of Gregory Mankiw’s Principles of Economics (1997) textbook has not only made the book’s author rich and famous, but has also gained notoriety for textbook authors in general and for the discipline of economics in particular. The author reportedly received $1 million in advance, the largest advance ever paid to a textbook author. The press reported that the publisher, no doubt to justify this rich advance, initially targeted 20 percent of the economics textbook market for the first edition. Many experts opined that the publisher had a good chance of succees. For some of us who teach undergraduate economics and who have used Mankiw’s text, the media excitement is not surprising. There are several innovations in this book that help set it apart and put it in front of the several dozen other economic principles textbooks on the market, including the most famous of all modern economics textbooks, Professor Paul Samuelson’s Economics (1998). Most notably, despite their titles, Mankiw’s text is one of the few true principles-level economics textbooks that is built squarely around a set of fundamental principles of economics. Mankiw, in the first chapter, introduces “ten principles of economics.” Throughout the text, the author refers back to one or more of these principles. It would have been better if the book had only ten chapters or subsections, each dealing primarily with one of these principles. In addition to the ten principles or “theory” chapters, some other chapters could have been added as “application” chapters. However, this approach would be a radical change, given that most other textbooks currently in the