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Austrian Economics

The Fatal Conceit, by Friedrich A. Hayek - University of Chicago Press
F.A. Hayek (nobel prize winner) argues that socialism is mistaken on scientific, factual, and logical grounds and that the repeated failures of socialist ideas applied to real-life is the direct outcome of these scientific errors. Further, as morality emerge among people, socialism is always a potential risk. Socialism in all it's forms, collectivism, altruism, religion, etc., emerge when humans pursue ends intended to serve small groups or known fellows as opposed to pursuing ends where the common good may not even have been considered. Socialism means the end of modern civilization.

The Use of Knowledge in Society, by Freidrich A. Hayek. American Economic Review, 1945, vol. XXXV, no. 4, pp. 519-30.
Understanding the economic problem of society is critical to understand how knowledge can be used in society. Knowledge is distributed among individuals and cannot be known to central planners. So, the fundamental problem is the utilization of knowledge which is not given to anyone in its totality. Available online.

The Constitution of Liberty, by Friedrich A. Hayek, 1978 - University of Chicago Press
Hayek shows that free markets can exist without needing to ignore social needs. Hayek provides justification for policies such as a negative income tax (for poor people to buy their food, clothing, shelter, health insurance, etc.), anti-trust legislation (to prevent monopolies from using coercion), anti-corporatism (governments should not waste money promoting private enterprise since private enterprise is capable of promoting itself), the ending of patent law (why should smart people need the government to grant them a monopoly on ideas they simply happen register first), support for activism (people's movements are free to try and change the value systems of the market), and criticism of supercilious arrogance from socialist planners. -Amazon

Human Action, 4ed, by Ludwig von Mises - Fox & Wilkes
Mises provides a strong defense of capitalism and the unhampered market, and a sizzling critique of the principles underlying the interventionist welfare state. We have a commanding case for freedom, encyclopedic in scope, a true classic that remains as relevant today as the day it was written. Fallacy after fallacy from nineteenth century classical economics are corrected. Every rationale for economic statism and government intervention is refuted. -Amazon

Ludwig von Mises, by Murray N. Rothbard - Ludwig Von Mises Institute
Murray Rothbard's eloquent tribute to his teacher sub-titled Scholar, Creator, Hero. This moving tribute remains the most definitive biographical account thus far. Rothbard covers Mises's childhood, intellectual background, the Austrian chamber of commerce, the Mises seminar in Vienna, his influence on other European scholars, his move to the United States, and his continuing legacy. Also covered are Mises's contributions to economic theory, his strategy for victory, and his strict adherence to principle. -Amazon

Institutional Economics

The Economic Institutions of Capitalism, by Oliver E. Williamson, 1987 - Free Press
Probably Williamson's most important contributions to transaction cost economics. Williamson assumes that economic agents are opportunistic (want more, not less) and limited rational (sometimes lazy, forget, incompetent, and so on). This creates heavy costs of negotiating and safeguarding against fraud, abuse, etc. The costs increase when critical resources are traded frequently.

The transaction cost concept is useful to understand a wide range of issues in ecommerce, including why affiliate networks and free shipping to customers, both are costs of trading online, sometimes makes sense, sometimes don't.

Institutions, Institutional Change and Economic Performance, by Douglass C. North, 1990 - Cambridge University Press
The development of institutions in an economic context is analyzed through a simple yet strong transaction cost framework. The book is part of a series titled Political Economy of Institutions and Decision. Very readable and highly recommended. North is a nobel prize literate.

Basics

Economics in One Lesson, by Henry Hazlitt - Fox & Wilkes
90 percent of the book explains economic consequences of Hazlitt's classic lesson, while the lesson in itself is simple:

Every group has certain economic interests identical with those of all groups and certain economic interests that differ from those of all other groups (selfish interests).
Some public policies would in the long run benefit everybody, other policies benefit one group only at the expense of all other groups.
Groups that whould benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently.
Men see only the immediate effect of a given policy, or its effects only on a special group, and neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups (fallacy of overlooking secondary consequences).

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