Just a heads up - the theory explained in that book (Austrian school) is 100% fringe economics. It's very popular with libertarians, but not really considered to produce very useful outcomes by pretty much any other school of economics.
You either haven't read the book or you you misunderstand how much of the book is Austrian economics. Yes, modern Austrian economics is considered fringe. However, historically the foundational results of early Austrian economics has been fully integrated into mainstream economics. From Wikipedia (https://en.wikipedia.org/wiki/Austrian_School):
> Among the theoretical contributions of the early years of the Austrian School are the subjective theory of value, marginalism in price theory and the formulation of the economic calculation problem, each of which has become an accepted part of mainstream economics.
> The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.
Probably the biggest reason the Austrian School is "fringe" (a fairer descriptor is "heterodox") is that there's no money in it.
Economics is a value free science, at least how Austrians practice it, but happens to show that government intervention is usually harmful. For example, Keynesians believe that the business cycle is an inherent failure of markets with no known cause and that government must intervene heavily to correct such errors. By contrast, the Austrian Theory of the Business Cycle takes nearly the opposite position -- that intervention, mainly in form of credit expansion causes booms. A bust is a correction of errors made during the boom and should not itself be corrected with more easy money, starting the cycle all over again.
Now, the vast majority of working professional economists derive all or much of their income from the government in one way or another. Many work for the federal government or the Federal Reserve Bank or consult with them. Or they work in government funded universities doing research with money from government grants.
Early last century, Hoover then FDR discovered and embraced John Maynard Keynes who offered a general theory that supported heavy government intervention. The Keynesian prescription just happened to provide an intellectual basis for policies that would require government to grow much larger and more powerful. Before long government began to fund more and more professional economist jobs. And no surprise, those jobs went to Keynesians.
A few decades later Milton Friedman (not an Austrian) said, "We are all Keynesians now" -- not as an admission that the theories were correct but a concession that in practical terms it's nearly impossible to work in the field and not be a Keynesian.
Do you have an opinion as to what you think is wrong with it, or just bandwagon fallacy?
What for example, do you think of Subjective Theory of Value or the Theory of Marginal Utility, which were developed by the father of the Austrian School, Carl Menger, in the latter part of the 19th century? Or the Austrian Theory of the Business Cycle, for which Friedrich Hayek won the Nobel Prize in 1974?
Yes. It’s all very plausible sounding, neat, and internally consistent, but you can’t derive a useful macroeconomic model from it that matches real-world, empirical observations. (Of course, the same could be said for a lot of mainstream stuff).
Part of it is probably just the historical context - monetary systems in the modern economy are very different than the gold-standard, fixed exchange rate kind of environment the book was written in, for example, which changes a lot of how things operate. But even then I think it still would have suffered from the fallacy of composition, where you can’t start from a description of interaction between two people and just scale it up - the emergent behaviour is almost always surprisingly different.
Could you provide a concrete example where it breaks down?
With regards to Austrian economics, as far as I remember, the school is not even mentioned in Hazlitt's book, but you are right that he was heavily influenced by it. But the book and its propositions stand on their own, I think.
