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| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Free Market | Keynesianism | Rothbard III 778 Free Market/Keynesianism/Rothbard: KeynesianismVsFree market: Therefore, the elaborate attempts of the Keynesians to demonstrate that free-market expenditures will be limited - that consumption is limited by the "function," and investment by stagnation of opportunities and "liquidity preference" - are futile. For even if they were correct (which they are not), the result would be pointless. There is nothing wrong with hoarding or dishoarding, or with "Iow" or "high" levels (whatever that may mean) of social money income. >Hoarding/Rothbard, >Consumption function/Keynesianism. Employment/unemployment: The Keynesian attempt to salvage meaning for their doctrine rests on one point and one point alone - the second major pillar of their system. This is the thesis that money social income and level of employment are correlated, and that the latter is a function of the former. This assumes that a certain "full employment" level of social income exists below which there is correspondingly greater unemployment. Rothbard III 780 The nub of the Keynesian critique of the free market economy (…) rests on the involuntary unemployment allegedly caused by too Iow a level of social expenditures and income. Problem: But how can this be, since we have previously explained that there can be no involuntary unemployment in a free market? >Free market/Rothbard, >Unemployment/Rothbard. Solution: The Keynesian "underemployment equilibrium" occurs only if money wage rates are rigid downward, i.e., if the supply curve of labor below "full employment" is infinitely elastic.(1) >Elasticity. Thus, suppose there is a "hoarding" (an increased demand for money), and social income falls. The result is a fall in the monetary demand curves for labor factors, as well as in all other monetary demand curves. >Hoarding/Rothbard. We would expect the general supply curve of labor factors to be vertical. Since only money wage rates are being changed while real wage rates (in terms of purchasing power) remain the same, there will be no shift in labor/leisure preferences, and the total stock of labor offered on the market will remain constant. At any rate, certainly no involuntary unemployment will arise. >Purchasing power/Rothbard. Rothbard III 1023 Free market/Keynesianism/Rothbard: The Keynesians depict the free market's monetary-fiscal system as minus a steering wheel, so that the economy, though readily adjustable in other ways, is constantly walking a precarious tightrope between depression and unemployment on the one side and inflation on the other. It is then necessary for the government, in its wisdom, to step in and steer the economy on an even course. RothbardVsKeynesianism: (…) it should be evident that the true picture is just about the reverse. The free market, unhampered, would not be in danger of suffering inflation, deflation, depression, or unemployment. But the intervention of government creates the tightrope for the economy and is constantly, if sometimes unwittingly, pushing the economy into these pitfalls. >Business cycles/Rothbard, >Inflation/Rothbard, >Free market/Rothbard. 1. Thus, see the revealing article by Franco Modigliani, "Liquidity Preference and the Theory of Interest and Money" in Hazlitt, Critics of Keynesian Economics, pp. 156-69. Also see the articles by Erik Lindahl, "On Keynes' Economic System - Part I," The Economic Record, May, 19 54, pp. 19-32; November, 1954, pp. 159-71; and Wassily W. Leontief, "Postulates: Keynes' General Theory and the Classicists" in S. Harris, ed., The New Economics (New York: Knopf, 1952), pp. 232-42. For an empirical critique of the assumed Keynesian correspondence between aggregate output and employment, see George W. Wilson, "The Relationship between Output and Employment," Review of Economics and Statistics, February, 1960, pp. 37-43. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Free Market | Rothbard | Rothbard III 176 Free market/contracts/Rothbard: (…) contracts assigning away the will of an individual cannot be enforced in such a market, because the will of each person is by its nature inalienable. >Goods/Rothbard. On the other hand, if the individual made such a contract and received another’s property in exchange, he must forfeit part or all of the property when he decides to terminate the agreement. We shall see that fraud may be considered as theft, because one individual receives the other’s property but does not fulfill his part of the exchange bargain, thereby taking the other’s property without his consent. This case provides the clue to the role of contract and its enforcement in the free society. Contract must be considered as an agreed-upon exchange between two persons of two goods, present or future. >Contracts. Rothbard III 177 On the other hand, take the case of a promise to contribute personal services without an advance exchange of property. Thus, suppose that a movie actor agrees to act in three pictures for a certain studio for a year. Before receiving any goods in exchange (salary), he breaks the contract and decides not to perform the work. Since his personal will is inalienable, he cannot, on the free market, be forced to perform the work there. Further, since he has received none of the movie company property in exchange, he has committed no theft, and thus the contract cannot be enforced on the free market. >Invasion of Property/Rothbard. Rothbard III 616 Free market/Rothbard: International Trade/Rothbard: trade.” In a purely free market, (…) there can be no such thing as an “international trade” problem. The laws of the free market (…) apply, (…) to the whole extent of the market, i.e., to the “world” or the “civilized world.” Wages: Wage rates will tend toward uniformity for the same labor in different geographical areas in precisely the same way as from industry to industry or firm to firm. >Geographical factors. Rothbard III 622 VsFree market/VsRothbard/Rothbard: Many people criticize the free market as follows: Yes, we agree that production and prices will be allocated on the free market in a way best fitted to serve the needs of the consumers. But this law is necessarily based on a given initial distribution of income among the consumers; some consumers begin with only a little money, others with a great deal. The market system of production can be commended only if the original distribution of income meets with our approval. Distribution/RothbardVsVs: This initial distribution of income (or rather of money assets) did not originate in thin air, however. It, too, was the necessary consequence of a market allocation of prices and production. It was the consequence of serving the needs of previous consumers. (…) after the initial period, the effect of unjust incomes becomes less and less important. For in order to keep and increase their ill-gotten gains, the former robbers, now that a free economy is established, have to invest and recoup their funds so as to serve consumers correctly. If they are not fit for this task, and their exploits in predation have certainly not trained them for it, then entrepreneurial losses will diminish their assets and shift them to more able producers. >Consumer’s Sovereignty/Hutt, >Consumer’s Sovereignty/Rothbard. Rothbard III 640 Free market/Rothbard: Criticism of steel owners for not producing "enough" steel or of coffee growers for not producing "enough" coffee also implies the existence of a caste system, whereby a certain caste is permanently designated to produce Steel, another caste to grow coffee, etc. Only in such a caste society would such criticism make sense. Yet the free market is the reverse of the caste system; indeed, choice between alternatives implies mobility between alternatives, and this mobility obviously holds for entrepreneurs or lenders with money to invest in production. >Cartels/Rothbard, >Cartels/Mises. Rothbard III 748 Free market/patens/copyright/inventions/Rothbard: On the free market, there would therefore be no such thing as patents. There would, however, be copyright for any inventor or creator who made use of it, and this copyright would be perpetual, not limited to a certain number ofyears. Obviously, to be fully the property of an individual, a good has to be permanently and perpetually the property of the man and his heirs and assigns. If the State decrees that a man's property ceases at a certain date, this means that the State is the real owner and that it simply grants the man use of the property for a certain period of time.(1) >Patents/Rothbard, >Copyright/Rothbard, >Inventions/Rothbard, >Research funding/Rothbard. Rothbard III 803 Purely free market/Rothbard: In a purely free market where fraud cannot, by definition, occur, all bank receipts will be genuine, i.e., will represent only actual gold or silver in the vaults. In that case, all the bank's money-substitutes (warehouse receipts) will also be money certificates, i.e., each receipt genuinely certifies the actual existence of the money in its vaults. The amount of gold kept in bank vaults for redemption purposes is called its "reserves," and the policy of issuing only genuine receipts is therefore a policy of " 100-percent reserves" of cash to demand liabilities (liabilities that must be paid on demand.(2) Reserve: However, the term "reserve" is a misleading one, because it assumes that the bank owns the gold and independently decides how much of it to keep on hand. Actually, it is not the bank that owns the gold, but its depositors.(3) >Bank Reserve/Rothbard. 1. For a legal hint on the proper distinction between copyright and monopoly, see F.E. Skone James, “Copyright” in Encyclopedia Britannica (14th ed.; London, 1929), VI, 415–16. For the views of nineteenth-century economists on patents, see Fritz Machlup and Edith T. Penrose, “The Patent Controversy in the Nineteenth Century,” Journal of Economic History, May, 1950, pp. 1–29. Also see Fritz Machlup, An Economic Review of the Patent System (Washington, D.C.: United States Government Printing Office, 1958). 2. Time deposits are, legally, future claims, since banks have a legal right to delay payment 30 days. Moreover, they do not pass as final media of exchange. The latter fact is not determining, however, since a secure claim to a money-substitute is itself part of the money supply. "Idle" cash balances are kept as "time deposits," just as gold bullion is a more "idle" form of money than coins. The deciding factor, perhaps, is that the 30-day limit is virtually a dead letter, for if a "savings" bank should impose it, a bankrupting "run" on the bank would ensue. Furthermore, actual payments are sometimes made by "cashiers' checks" on time deposits. Thus, "time" deposits now function as demand deposits and should be treated as part of the money supply. If banks wished to act as genuine savings banks, borrowing and lending credit, they could issue I.0.U's for specified lengths of time, due at definite future dates. Then no confusion or possible "counterfeiting" could arise. 3. Such items as bills oflading, pawn tickets, and dock warrants have been warehouse receipts rooted in the specific objects deposited, in contrast to the loose "general deposits" where a homogeneous good can be returned. See W. Stanley Jevons, Money and the Mechanism ofExchange (16th ed.; London: Kegan Paul, Trench, Trübner & Co., 1907), pp. 201-11. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
| Unemployment | Keynesianism | Rothbard III 778 Unemployment/free Market/Keynesianism/Rothbard: KeynesianismVsFree market: Therefore, the elaborate attempts of the Keynesians to demonstrate that free-market expenditures will be limited - that consumption is limited by the "function," and investment by stagnation of opportunities and "liquidity preference" - are futile. For even if they were correct (which they are not), the result would be pointless. There is nothing wrong with hoarding or dishoarding, or with "Iow" or "high" levels (whatever that may mean) of social money income. >Hoarding/Rothbard, >Consumption function/Keynesianism. Employment/unemployment: The Keynesian attempt to salvage meaning for their doctrine rests on one point and one point alone - the second major pillar of their system. This is the thesis that money social income and level of employment are correlated, and that the latter is a function of the former. This assumes that a certain "full employment" level of social income exists below which there is correspondingly greater unemployment. Rothbard III 780 The nub of the Keynesian critique of the free market economy (…) rests on the involuntary unemployment allegedly caused by too Iow a level of social expenditures and income. Problem: But how can this be, since we have previously explained that there can be no involuntary unemployment in a free market? >Free market/Rothbard, >Unemployment/Rothbard. Solution: The Keynesian "underemployment equilibrium" occurs only if money wage rates are rigid downward, i.e., if the supply curve of labor below "full employment" is infinitely elastic.(1) >Elasticity. Thus, suppose there is a "hoarding" (an increased demand for money), and social income falls. The result is a fall in the monetary demand curves for labor factors, as well as in all other monetary demand curves. >Hoarding/Rothbard. We would expect the general supply curve of labor factors to be vertical. Since only money wage rates are being changed while real wage rates (in terms of purchasing power) remain the same, there will be no shift in labor/leisure preferences, and the total stock of labor offered on the market will remain constant. At any rate, certainly no involuntary unemployment will arise. >Purchasing power/Rothbard. How then can the Keynesian case arise? How can the supply of labor remain horizontal at the old money wage rate? In only two ways: 1) if people voluntarily agree with the unions, which insist that no one be employed at Iower than the Old money wage rate. Since selling prices are falling, maintaining the old money wage rate is equivalent to demanding a higher real wage rate. We have seen above that the unions' raising of real wage rates causes unemployment. >Trade Unions/Rothbard. But this unemployment is voluntary, since the workers acquiesce in the imposition of a higher minimum real wage rate, below which they will not undercut the union and accept employment. Or 2) unions or government coercively impose the minimum wage rate. But this is an example of a hampered market, not the free market to which we are confining our analysis here. >Free Market/Rothbard, >Minimum wage/Rothbard. 1. Thus, see the revealing article by Franco Modigliani, "Liquidity Preference and the Theory of Interest and Money" in Hazlitt, Critics of Keynesian Economics, pp. 156-69. Also see the articles by Erik Lindahl, "On Keynes' Economic System - Part I," The Economic Record, May, 19 54, pp. 19-32; November, 1954, pp. 159-71; and Wassily W. Leontief, "Postulates: Keynes' General Theory and the Classicists" in S. Harris, ed., The New Economics (New York: Knopf, 1952), pp. 232-42. For an empirical critique of the assumed Keynesian correspondence between aggregate output and employment, see George W. Wilson, "The Relationship between Output and Employment," Review of Economics and Statistics, February, 1960, pp. 37-43. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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