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The author or concept searched is found in the following 15 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Barter Economy | Hayek | Kurz I 111/112 Barter Economy/Money/Hayek/KeynesVsHayek/Kurz: [Keynes] took issue with Hayek’s claim that the possibility of a difference between own rates of interest and thus a divergence of some rates from the “equilibrium” or “natural” rate is a characteristic of a money economy that is absent in a barter economy (Sraffa 1932, p. 49)(1). >Barter economy/Sraffa. Kurz I 113 Equilibirium/SraffaVsHayek: In equilibrium the spot and forward price coincide, for cotton as for any other commodity; and all the “natural” or commodity rates are equal to one another, and to the money rate. But if, for any reason, the supply and the demand for a commodity are not in equilibrium (i.e. its market price exceeds or falls short of its cost of production), its spot and forward prices diverge, and the “natural” rate of interest on that commodity diverges from the “natural” rates on other commodities. (ibid.) Therefore, out of equilibrium, there is not only one “natural rate,” as Hayek had wrongly maintained, but there are many natural rates. Sraffa added that “under free competition, this divergence of rates is as essential to the effecting of the transition [to a new equilibrium] as is the divergence of prices from the costs of production; it is, in fact, another aspect of the same thing”. (Sraffa 1932, p. 50)(1). 1. Sraffa, P. (1932). “Dr. Hayek on Money and Capital,” Economic Journal, 42, 42-53. Kurz, Heinz D. „Keynes, Sraffa, and the latter’s “secret skepticism“. In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
| Barter Economy | Sraffa | Kurz I 112 Barter Economy/Sraffa/Kurz: With reference to Wicksell’s definition (Wicksell 1898, pp. 93ff)(1) that interest is the surplus in real units of the exchange of physically homogeneous goods across time, Sraffa emphasized that If money did not exist, and loans were made in terms of all sorts of commodities, there would be a single rate which satisfies the conditions of equilibrium, but there might be at any moment as many “natural” rates of interest as there are commodities, though they would not be “equilibrium” rates. The “arbitrary” action of the banks is by no means a necessary condition for the divergence; if loans were made in wheat and farmers (or for that matter the weather) “arbitrarily changed” the quantity of wheat produced, the actual rate of interest on loans in terms of wheat would diverge from the rate on other commodities and there would be no single equilibrium rate. (Sraffa 1932, p. 49)(2). Next Sraffa illustrated his argument in terms of two economies, one with and the other without money. In both economies, loans can be made in terms of all goods for which forward markets exist. Assume that a cotton spinner at time t borrows a sum of money M for θ periods hence in order to buy on the spot market a certain quantity of cotton at price pt which he at the same time sells on the forward market θ periods later at a price pt+θ. This means that the cotton spinner in fact borrows cotton for θ periods. Sraffa expounds: The rate of interest which he pays, per hundred bales of cotton, cotton, is the number of bales that can be purchased with the following sum of money: the interest on the money required to buy spot 100 bales, plus the excess (or minus the deficiency) of the spot over the forward prices of the 100 bales. (Sraffa 1932, p. 50)(2) >Barter economy/Hayek. Kurz I 113 Equilibirum/SraffaVsHayek: In equilibrium the spot and forward price coincide, for cotton as for any other commodity; and all the “natural” or commodity rates are equal to one another, and to the money rate. But if, for any reason, the supply and the demand for a commodity are not in equilibrium (i.e. its market price exceeds or falls short of its cost of production), its spot and forward prices diverge, and the “natural” rate of interest on that commodity diverges from the “natural” rates on other commodities. (ibid.) Therefore, out of equilibrium, there is not only one “natural rate,” as Hayek had wrongly maintained, but there are many natural rates. Sraffa added that “under free competition, this divergence of rates is as essential to the effecting of the transition [to a new equilibrium] as is the divergence of prices from the costs of production; it is, in fact, another aspect of the same thing”. (Sraffa 1932, ibid.)(2). 1. Wicksell, K. (1898). Geldzins und Güterpreise, Jena: Gustav Fischer. 2. Sraffa, P. (1932). “Dr. Hayek on Money and Capital,” Economic Journal, 42, 42-53. Kurz, Heinz D. „Keynes, Sraffa, and the latter’s “secret skepticism“. In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge. |
Sraffa I Piero Sraffa Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). Cambridge 1960 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
| Capital | Kaldor | Rothbard III 497 Capital/Kaldor/Rothbard: Kaldor defined capital as a reproducible resource which it is economically profitable to produce. In that case, obsolete machines would no longer be capital goods. (Would they be “land”?) RothbardVsKaldor: The definition should be: physically reproducible resources. >Reproducibility/Rothbard, >Land/Rothbard, >Reproducibility/Hayek. RothbardVsHayek: Hayek: Hayek’s criticism that then the possibility of growing artificial fruit, etc., would make all land “capital” again misconceives the problem, which is one of the physical need and possibility of reproducing the agent. Since the basic land - not its fruit - needs no reproduction, it is excluded from the capital-good category. >Capital goods/Rothbard. |
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 |
| Information | Hayek | Boudreaux II 66 Information/price/economic cycle/Hayek/Boudreaux: Economic cycles: adjustments in production activities (…) are not instantaneous. They take time. >Relative prices, >Price, >Economic cycle, >Recession, >Depression. Unemployment: Unemployment rises during the time it takes for these adjustments to be made. Workers in industries with unsold inventories are laid off, and time is required for them to find employment elsewhere. Even industries that expand in response to more accurate prices typically require some time to rearrange their production plans and facilities in order to make profitable the hiring of new workers. The time it takes for the firms to adjust away from the production plans they made when prices were inaccurate is time during which unusually large numbers of workers are unemployed. Unemployment: Such unemployment is not caused by too little aggregate demand. Therefore, such unemployment cannot be cured by more government spending or other efforts to raise aggregate demand. Instead, such unemployment is caused by the widespread failure of individual prices to convey accurate information to entrepreneurs and investors about what specific products they should produce and about how best to produce these products. The only way to cure this malinvestment is to allow prices to adjust so that they better reflect consumer desires and the realities of resource availabilities. This cure, again, requires time - time for prices to adjust and for workers to find and move to jobs that are more economically sustainable. >Monetary policy/Hayek. Sunstein I 14 Information/prices/markets/Hayek/Sunstein: a pricing system, as suggested by Friedrich August von Hayek, can help in solving the problem of how (implicit) pressure is exerted in group discussions to withhold potentially crucial information. This has a pronounced effect on the gathering of information. Markets/Hayek: Markets create prices for goods in a way that processes scattered information distributed among very different people. In markets, participants have an extreme incentive to be right. Some information may remain "hidden", but when it comes to making a profit, this information will not be hidden for customers and investors for long. For this reason, market prices reflect a high degree of information.(1) Sunstein: You could say that markets create something like a "Daily Us" see Filter bubbles/Sunstein. SunsteinVsHayek: However, his argumentation had a blind spot. Markets can also process false information. Styles can lead to inflationary prices. This can also affect land and real estate prices. >Markets/Sunstein, Markets/Hayek. I 132 Prediction markets/forecast markets/Sunstein: Examples where information markets are efficient: For example, to recognize tendencies of air pollution, to observe deficits in public budgets (2). For example, tracking outbreaks of diseases and predicting their spread or monitoring the solvency of institutions.(3) I 137 Manipulation: Candidate Pat Buchanan's supporters bought large quantities of shares in the IEM (Iowa Electronic Market, a prediction market for elections) in 2000 to manipulate the prediction. However, better informed investors subsequently took advantage of this. 1. Friedrich Hayek, Law, Legislation, and Liberty, vol. 1: Rules and Order (Chicago: University of Chicago Press, 1973) p. 13. 2. See Abramowicz, “Prediction Markets, Administrative Decisionmaking, and Predictive Cost-Benefit Analysis,” pp. 990–92. 3. ibid. pp. 987-90. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 Sunstein I Cass R. Sunstein Infotopia: How Many Minds Produce Knowledge Oxford 2008 Sunstein II Cass R. Sunstein #Republic: Divided Democracy in the Age of Social Media Princeton 2017 |
| Justice | Hayek | Mause I 197 Justice/Hayek: HayekVsRawls: Hayek's philosophy of freedom sees redistribution as an inadmissible interference in the autonomy rights of individuals and therefore rejects them because of their negative effects on social justice. (1) >Autonomy. Hayek's thesis: the overriding norm is that of individual autonomy. Terms that limit this autonomy need to be justified. For example, re-distribution: does not stand up to this justification, as the market is unsurpassedly efficient for Hayek. Market/Hayek: For the market to function optimally, all it needs is equal rights for all market participants, maximum contractual freedom and a minimum social security system. >Markets/Hayek. Any further redistribution measures would not only suppress the incentive to secure one's own existence. Nor would it have any legitimation either: possible unequal exchange results of the market are an unintended consequence of individual action and, due to the lack of intentionality, cannot justify any follow-up responsibility. (2) VsHayek: Hayek does not take into account that interest groups can influence pricing or that a large number of services are not provided via the market. (3) Mause I 203 Justice/Theories of Justice/Hayek: Where Hayek relies on the principle of performance justice, Rawls focuses on equal opportunities, while Sens' principle of participation justice comes very close to need justice. (4)(5) RawlsVsHayek, HayekVsRawls, SenVsRawls, RawlsVsSen, SenVsRawls, SenVsHayek, HayekVsSen. >Social Market Economy. 1. F. A. von Hayek, Die Verfassung der Freiheit. Tübingen 1971. 2. W. Kersting, Kersting, Theorien der sozialen Gerechtigkeit. Stuttgart 2000, pp. 60-63. 3.I. Becker, R. Hauser, 2011. Soziale Gerechtigkeit – ein magisches Viereck: Zieldimensionen, Politikanalysen und empirische Befunde. Berlin 2011, pp. 31-34. 3. Sven Jochem, Reformpolitik im Wohlfahrtsstaat: Deutschland im internationalen Vergleich. Berlin 2009, p. 68. 4. Cf. Rieger, Elmar, und Stephan Leibfried, Kultur versus Globalisierung: Sozialpolitische Theologie in Konfuzianismus und Christentum. Frankfurt am Main 2004, p. 44. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
| Markets | Hayek | Gaus I 246 Markets/Hayek/D’Agostino: ‚[T]he cosmos of the market neither is nor could be governed by such a single scale of ends; it serves the multiplicity of separate and incommensurable ends of all its sep- arate members' (1976(1): 108).) D’Agostino: We see it, rather, as a question which is devolved to individuals and mediated by the price mechanism. The answer to the question 'What should be produced and how should it be distributed?' is, then, simply the result, via market mechanisms, of individuals' answers to the question 'What do I want and how willing am I to pay for it?' That (social) option is best, in effect, in which each individual holds as her share of the commodities produced in her society those that she is willing and able to pay for. Other options, in which all individuals, regardless of their own assessments, hold the some 'normal' share of basic commodities or in which individuals' holdings differ but are not 'aligned' to individuals' own payments, are ranked below this particular option by the system which is defined by the principles of liberty of exchange. Cf. >Diversity/Liberalism. (This is the rationale, relative to the ideology of the market, for the principle of 'user pays' which has recently been much applied in commodities, including services, which have traditionally been produced by public sector organizations.) Diversity/D’Agostino: on the account developed here, the market is a (specifically liberal) device for achieving coherence without sacrificing diversity. As Hayek said, 'it is the great advantage of the market that makes agreement on ends unnecessary [representativeness] and a reconciliation of divergent purposes possible [coherence]‘ (1976(1): 112). VsHayek: to be sure, some theorists, across a range of theoretical perspectives, suspect and argue that the sort of 'reconciliation of divergent purposes' which specifically market mechanisms of devolution facilitate in fact works via a covert (and illegitimate) normalization of subjects, and hence does depend, contrary to Hayekian ideology, on a (manipulated) 'agreement on ends'. 1. Hayek, Friedrich (1976) Law, Legislation and Liberty. Vol. 2, The Mirage of Social Justice. Chicago: University of Chicago Press. D’Agostino, Fred 2004. „Pluralism and Liberalism“. In: Gaus, Gerald F. & Kukathas, Chandran 2004. Handbook of Political Theory. SAGE Publications Mause I 71 Market/Hayek: The most important social institutions (such as the market) are not the product of conscious planning, but of unconscious social evolution. And this social evolution must not be hindered, but must be kept open for the development of institutional innovations. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Gaus I Gerald F. Gaus Chandran Kukathas Handbook of Political Theory London 2004 Mause I Karsten Mause Christian Müller Klaus Schubert, Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018 |
| Method | Hayek | Kurz I 77 Method/Hayek/SraffaVsHayek/Kurz: (…) in his 1932 review of Hayek’s Prices and Production (1931)(1) (…) Sraffa highlights the many contradictions, existing within the Hayekian theoretical framework, between the asserted object under investigation and the peculiar point of view chosen by Hayek. We have stressed the word ‘asserted’ because Sraffa claims that Hayek progressively shifted his analytical focus in the course of his book from the accumulation of capital in a monetary economy, the asserted object, to the statement that only a constant money policy does not distort the voluntary decisions of agents. It is true that Sraffa’s review emphasizes Hayek’s logical blunders, though Sraffa was of the opinion that the basic flaws of Hayek’s theory originate with its ‘subjective’ method. >Subjectivism. (A possible explanation of Sraffa’s chosen style of exposition is that Sraffa was aware of the risk of annoying his readers with an explicit methodological discussion: see Signorino 2001a(2) in this regard.) Nonetheless, as already noted by Lawlor and Horn (1992(3): 23–4) Sraffa was well aware that Prices and Production contains both methodological prescription and positive analysis and, accordingly, he put under fire both Hayek’s chosen framework and Hayek’s use of his own framework. Cf. >Method/Sraffa. 1. Hayek, F. A. (1931,1932) Prices and Production and other works. London: Routledge. 2. Signorino, R. (2000a) ‘The Italian debate on Marshallian (and Paretian) economics and the intellectual roots of Piero Sraffa’s “Sulle relazioni fra costo e quantita prodotta”: a note’, History of Economic Ideas 8: 143–57. 3. Lawlor, M. S. and Horn, B. (1992) ‘Notes on the Sraffa–Hayek exchange’, Review of Political Economy 4: 317–40, reprinted in H. D. Kurz and N. Salvadori (eds) The Legacy of Piero Sraffa, 2 Vols, 2003, Cheltenham and Northampton: Edward Elgar. Salvadori, Neri and Signorino, Rodolfo. 2015. „Piero Sraffa: economic reality, the economist and economic theory. An interpretation.“ In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
| Method | Sraffa | Kurz I 70 Method/Sraffa/Kurz: (…) Sraffa’s implicit methodology: the threefold relationship between ‘economic reality’, ‘the economist’ and ‘economic theory’. By ‘economic reality’ we mean the collection of human agents and material objects which constitute the human process of production and reproduction of commodities. By ‘the economist’ we mean the human agent who observes, classifies and analyses economic reality. By ‘economic theory’ we mean the main intellectual product emerging from the economist’s effort to analyse the economic reality under investigation. Our main results may be summarized as follows. In his published works of the 1920s and early 1930s Sraffa appears to consider economic reality as Kurz I 71 if it existed independently of the activity of observation and classification carried out by economists. >As if. Furthermore, he makes several empirical claims about economic reality as if they were self-evident or, at least, easily verifiable. Whereas Sraffa acknowledges that an element of human arbitrariness is unavoidable within economic theorizing, he also stresses that different quaesita may require different ‘points of view’ in the sense that, given a specific theoretical problem, one specific ‘point of view’ may prove to be best suited to analyse and solve the problem at hand. This implies the necessity of the choice of the ‘point of view’ by an economist. What matters to Sraffa is to detect what different economists/observers can consistently say about a given object or to build the analytic tools required to discover a given property of the object. Ontology/Sraffa/Kurz: While Sraffa’s ontology concerns his vision about ‘reality’ as an object which does or does not exist independently of its ‘observer’, Sraffa’s methodology concerns the rules the economist must abide by in the process of elaboration of economic theory. In particular, many Marshallian economists would have shared basically the same assumption about an independent reality (Signorino 2000a(1), 2000b(2), 2001b(3)). We claim that a characteristic of Sraffa’s methodology, not shared by the majority of his contemporaries, is how Sraffa makes use of these elements in his critical writings and in the elaboration of his own theory. Kurz I 75 Arbitrariness/Kurz: Sraffa’s acknowledgement of the problem of the arbitrariness of the economist raises (at least) two orders of questions: (i) What exactly is the source of the ‘arbitrariness’ of the economist? (ii) How does one cope with the problem of the arbitrariness of the economist, that is, what are, if any, its admissible boundaries? The problem of the arbitrariness of the economist lies at the very heart of Sraffa’s 1925-6 critique of the Marshallian theory of value and its inability to classify real world industries into the three ‘boxes’ of constant, increasing and diminishing returns. >Alfred Marshall. Method/SraffaVsMarshall, Alfred: In the opening section of the Italian paper, Sraffa asks (rhetorically) „whether the failing cannot be found in the very nature of the criterion according to which the classification should be conducted. In particular, it remains to be seen whether the fundamentum divisionis is formed by objective circumstances inherent in the various industries, or, instead, is dependent on the point of view of the person acting as observer;(…)“ (Sraffa 1998[1925]: 324)(4). Kurz I 76 Kurz: The aim of the 1925 paper is to show the tension, existing within the Marshallian theoretical framework, between an object, economic reality and its structural properties, and the point of view chosen by a subject, the economist/observer. Such a tension obliges Marshallian economists to introduce some further assumptions, such as external-internal scale economies, within their theoretical framework. As a consequence, the theoretical domain of Marshallian theory is drastically reduced: „The fact that the ‘external economies’ peculiar to an industry, which make possible the desired conciliation between scientific abstraction and reality, are themselves a purely hypothetical and unreal construction, is something that is often ignored.“ (Sraffa 1998 [1925]: 347)(4) For SraffaVsHayek see >Method/Hayek. Kurz I 77 Ontology/Method/Sraffa/Kurz: The ‘various forces at work’ and the ‘equilibrium resulting from their opposition’ constitute the economic reality investigated by the economist. The arbitrariness of the economist lies in the choice of the scheme of classification, that is to say, the way the economic forces may be grouped. Since different schemes may be selected, the criterion to follow for Sraffa, at least in the 1920s, is that of simplicity, ‘the most homogeneous manner’, which obliges the economist to choose the scheme best suited to highlight the influence of each force on the equilibrium position. Kurz I 78 Method/SraffaVsMarshall, Alfred/Kurz: The theoretical domain of Marshallian theory, once reconstructed in a logically consistent way, turns out to be too narrow: „Reduced within such restricted limits, the supply schedule with variable costs cannot claim to be a general conception applicable to normal industries; it can prove a useful instrument only in regard to such exceptional industries as can reasonably satisfy its conditions.“ (Sraffa 1926: 540)(5) Kurz: According to Sraffa, the Marshallian theory may gain logical consistency only by making recourse to unrealistic assumptions. 1. Signorino, R. (2000a) ‘The Italian debate on Marshallian (and Paretian) economics and the intellectual roots of Piero Sraffa’s “Sulle relazioni fra costo e quantita prodotta”: a note’, History of Economic Ideas 8: 143-57. 2. Signorino, R. (2000b) ‘Method and analysis in Piero Sraffa’s 1925 critique of Marshallian economics’, European Journal of the History of Economic Thought 7: 569-94, reprinted in H. D. Kurz and N. Salvadori (eds) The Legacy of Piero Sraffa, 2 Vols, 2003, Cheltenham and Northampton: Edward Elgar. 3. Signorino, R. (2001a) ‘Piero Sraffa on utility and the subjective method in the 1920s: a tentative appraisal of Sraffa’s unpublished manuscripts’, Cambridge Journal of Sraffa, P. (1960) Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory, Cambridge: Cambridge University Press, Italian edition: Produzione di Merci a Mezzo di Merci. Premesse a una Critica della Teoria Economica, Torino: Einaudi. 4. Sraffa, P. (1998) ‘On the relations between cost and quantity produced’, in L. L. Pasinetti (ed.) Italian Economic Papers, Vol. III, Bologna: il Mulino and Oxford: Oxford University Press, pp. 323-63, reprinted in H. D. Kurz and N. Salvadori (eds) The Legacy of Piero Sraffa, 2 Vols, 2003, Cheltenham and Northampton: Edward Elgar, English translation of Sraffa (1925). 5. Sraffa, P. (1926) ‘The laws of returns under competitive conditions’, Economic Journal 36: 535–50, reprinted in H. D. Kurz and N. Salvadori (eds) The Legacy of Piero Sraffa, 2 Vols, 2003, Cheltenham and Northampton: Edward Elgar. Salvadori, Neri and Signorino, Rodolfo. 2015. „Piero Sraffa: economic reality, the economist and economic theory. An interpretation.“ In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge. |
Sraffa I Piero Sraffa Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). Cambridge 1960 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
| Morals | Hayek | Sunstein I 123 Moral/Hayek/Sunstein: Hayek's thesis: Morality is itself a product of many minds that make many decisions over time, creating a set of principles that are unlikely to be embraced by any individual mind or theory. Hayek's thesis: "Our morality equips us with possibilities that are greater than those that reason could give us.(1) Sunstein I 124 Sunstein: Hayek's conclusion is that many ghosts are responsible for ((s) the emergence of) morality over time. SunsteinVsHayek: he does not take into account the effects of group pressure on information retention. >Information Cascades). Precisely this can contribute to the fact that traditional moral concepts last longer than necessary. >Politics/Sunstein, Communication/Sunstein. 1. Friedrich Hayek, “The Origins and Effects of Our Morals: A Problem for Science,” in The Essence of Hayek, 318, 330. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 Sunstein I Cass R. Sunstein Infotopia: How Many Minds Produce Knowledge Oxford 2008 Sunstein II Cass R. Sunstein #Republic: Divided Democracy in the Age of Social Media Princeton 2017 |
| Regression Theorem | Mises | Rothbard IV 59 Regression Theorem/Money/Austrian School/Menger/Mises/Rothbard: Mises built on Menger's logical-historical account of the origin of money out of barter, and demonstrated logically that money can only originate in that way. In doing so, he solved the problem of the circular explanation of the utility of money. Specifically, the problem of the circle is that, at any given time, say DayN, the value (purchasing power) of money on that Day is determined by two entities: the Supply of MoneyN and the demand for Money - which itself depends on a pre-existing Purchasing Power on DayN-1. Solution: Mises broke out of this circle precisely by understanding and grasping the time dimension of the problem. For the circle on any given day is broken by the fact that the Demand for Money on that day is dependent on a previous day's purchasing power, and hence on a previous day's demand for money. But haven't we broken out of the circle only to land ourselves in an infinite regress backward in time, with each day's Rothbard IV 60 purchasing power resting on today's demand for money, in turn dependent on the previous day's purchasing power, in turn determined by the previous day's demand, etc.? It is no help to escape circular reasoning only to land in a regress of causes that can never be closed. Rothbard: But the brilliance of Mises's solution is that the logical regress backward in time is not infinite: it closes precisely at the point in time when money is a useful non-monetary commodity in a system of barter. In short, say that Day 1 is the first moment that a commodity is used as a medium of indirect exchange (to simplify: as a "money"), while the previous Day 0 is the last day that commodity, say gold, was used only as a direct good in a system ofbarter. In that case, the causal chain of any day's value of money, say Dayw, goes back logically in time, to Dayl, and then goes back to Dayo. In short, the demand for gold on Day 1 depends on the purchasing power of gold on Day 0. But then the regress backward stops, since the demand for gold on Day 0 consists only of its direct value in consumption, and hence does not include a historical component, i.e., the existence of prices for gold on the previous day, Day 1. Cf. >Regress/Philosophical theories. In addition to closing the determinants of the value or purchasing power of money and thereby solving the Austrian Circle, Mises's demonstration showed that, unlike other goods, the determinants of the value of money include an important historical dimension. The Regression Theorem also shows that money, in any society, can only become established by a market process emerging from barter. Money/Mises/Rothbard: money cannot be established by a social contract, by government imposition, or by artificial schemes proposed by economists. Money can only emerge, "organically" so to speak, out of the market.(1) RothbardVsHayek: comprehension of Mises's Regression Theorem would spare us numerous impossible schemes, some proffered by Austrians or quasi-Austrians, to create new moneys or currency units out of thin air: such as F.A. Hayek's proposed "ducat," or plans to separate units of account from media of exchange. 1. The presentation of the Regression Theorem is in Ludwig von Mises, The Theory of Money and credit, 3rd ed. (New Haven, Conn.: Yale University Press, 1953), pp. 108-23. Mises later answered critics of the theorem in his Human Action (New Haven, Conn.: Yale University Press, 1949), pp. 405—13. For a reply to more recent critics, Gilbert and Patinkin, see Rothbard, Toward a Reconstruction, p. 13, and Rothbard, Man, Economy and State (Princeton, N.J.: D. Van Nostrand, 1962), I, pp. 231-3 7, and esp. p. 448. Also see Rothbard, "The Austrian Theory of Money" in Edwin Dolan, ed., The Foundations of Modern Austrian Economics (Kansas City: Sheed and Ward, 1976), p. 170. For the most recent discussion of the Regression Theorem, including a reply to Moss's critique of Mises, see James Rolph Edwards, The Economist of the Country: Ludwig von Mises in the History of Monetary Thought (New York: Carlton Press, 1985), pp. 49-67. |
EconMises I Ludwig von Mises Die Gemeinwirtschaft Jena 1922 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 |
| Reproducibility | Rothbard | Rothbard III 497 Reproducibility/Rothbard: We are attempting to classify physical goods here, not to discuss their possible values, which will fluctuate continually. The point is that the resources subject to depletion cannot be replaced, much as the owner would like to do so. They therefore earn a net rent.(1) >Land/Rothbard, >Rent/Rothbard. Land/Hayek: Hayek also raises the question whether a stream is “land” if a new stream can be created by collecting rain water. RothbardVsHayek: Here again, Hayek misconceives the issue as one of maintaining a “constant income stream” instead of classifying a physical concrete good. The stream is land because it does not need to be physically replaced. It is obvious that Hayek’s criticism is valid against Kaldor’s definition. Capital/Kaldor/Rothbard: Kaldor defined capital as a reproducible resource which it is economically profitable to produce. In that case, obsolete machines would no longer be capital goods. (Would they be “land”?) RothbardVsKaldor: The definition should be: physically reproducible resources. RothbardVsHayek: Hayek’s criticism that then the possibility of growing artificial fruit, etc., would make all land “capital” again misconceives the problem, which is one of the physical need and possibility of reproducing the agent. Since the basic land - not its fruit - needs no reproduction, it is excluded from the capital-good category. >Capital goods/Rothbard. 1. Net rents equal gross rents earned minus gross rents paid to owners of factors. |
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 |
| Ricardo Effect | Hayek | Rothbard III 718 Ricardo Effect/efficiency/Hayek/Rothbard: One common prounion argument is that unions benefit the economy through forcing higher wages on the employers. At these higher wages the workers will become more effcient, and their marginal productivity will rise as a result. >Efficiency, >Productivity. RothbardVsRicardo effect: If this were true, however, no unions would be needed. Employers, ever eager for greater profits, would see this and pay higher wages now to reap the benefits of the allegedly higher productivity in the future. As a matter of fact, employers often train workers, paying higher wages than their present marginal product justifies, in order to reap the benefits of their increased productivity in later years. >Unions/Rothbard. Ricardo effect/Hayek: A more sophisticated variant of this thesis was advanced by Ricardo and has been revived by Hayek. This doctrine holds that union-induced higher wage rates encourage employers to substitute machinery for labor. This added machinery increases the capital per worker and raises the marginal productivity of labor, thereby paying for the higher wage rates. RothbardVsRicardo/RothbardVsHayek/RothbardVsUnions: The fallacy here is that only increased saving can make more capital available. >Saving/Rothbard. Capital investment is limited by saving. Union wage increases do not increase the total supply of capital available. Therefore, there can be no general rise in labor productivity. Instead, the potential supply of capital is shifted (not increased) from other industries to those industries with higher wage rates. And it is shifted to industries where it would have been less profitable under nonunion conditions. The fact that an induced higher wage rate shifts capital to the industry does not indicate economic progress, but rather an attempt, never fully successful, to offset an economic retrogression - a higher cost in the manufacture of the product. Hence, the shift is "uneconomic." >Wages/Rothbard, >Production/Rothbard. Rothbard III 719 Innovation/technology/efficiency: A related thesis is that higher wage rates will spur employers to invent new technological methods to make labor more effcient. Here again, however, the supply of capital goods is limited by the savings available, and there is almost always a sheaf of technological opportunities awaiting more capital anyway. Furthermore, the spur of competition and the desire of the producer to keep and increase his custom is enough of an incentive to increase productivity in his firm, without the added burden of unionism.(1) 1. On the Ricardo effect, see Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 767–70. Also see the detailed critique by Ford, Economics of Collective Bargaining, pp. 56–66, who also points to the union record of hindering mechanization by imposing restrictive work rules and by moving quickly to absorb any possible gain from the new equipment. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 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 |
| Ricardo Effect | Rothbard | Rothbard III 718 Ricardo Effect/efficiency/Hayek/Rothbard: One common prounion argument is that unions benefit the economy through forcing higher wages on the employers. At these higher wages the workers will become more effcient, and their marginal productivity will rise as a result. >Efficiency, >Productivity. RothbardVs: If this were true, however, no unions would be needed. Employers, ever eager for greater profits, would see this and pay higher wages now to reap the benefits of the allegedly higher productivity in the future. As a matter of fact, employers often train workers, paying higher wages than their present marginal product justifies, in order to reap the benefits of their increased productivity in later years. >Unions/Rothbard. Ricardo effect/Hayek: A more sophisticated variant of this thesis was advanced by Ricardo and has been revived by Hayek. This doctrine holds that union-induced higher wage rates encourage employers to substitute machinery for labor. This added machinery increases the capital per worker and raises the marginal productivity of labor, thereby paying for the higher wage rates. RothbardVsRicardo/RothbardVsHayek/RothbardVsUnions: The fallacy here is that only increased saving can make more capital available. >Saving/Rothbard. Capital investment is limited by saving. Union wage increases do not increase the total supply of capital available. Therefore, there can be no general rise in labor productivity. Instead, the potential supply of capital is shifted (not increased) from other industries to those industries with higher wage rates. And it is shifted to industries where it would have been less profitable under nonunion conditions. The fact that an induced higher wage rate shifts capital to the industry does not indicate economic progress, but rather an attempt, never fully successful, to offset an economic retrogression - a higher cost in the manufacture of the product. Hence, the shift is "uneconomic." >Wages/Rothbard, >Production/Rothbard. Rothbard III 719 Innovation/technology/efficiency: A related thesis is that higher wage rates will spur employers to invent new technological methods to make labor more effcient. Here again, however, the supply of capital goods is limited by the savings available, and there is almost always a sheaf of technological opportunities awaiting more capital anyway. Furthermore, the spur of competition and the desire of the producer to keep and increase his custom is enough of an incentive to increase productivity in his firm, without the added burden of unionism.(1) 1. On the Ricardo effect, see Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 767–70. Also see the detailed critique by Ford, Economics of Collective Bargaining, pp. 56–66, who also points to the union record of hindering mechanization by imposing restrictive work rules and by moving quickly to absorb any possible gain from the new equipment. |
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 |
| Trade Unions | Rothbard | Rothbard III 565 Labour/unions/Rothbard: (…) there is no difference in kind between “workers” and “management.” The vice president of a company, if hired by its owners, has exactly the same amount of justification, or lack of justification, for joining a union as does a hired mechanic. Unions/Rothbard: For some reason, even the most ardent union advocate thinks absurd the idea of unionizing the vice presidents. Yet if there is no real dichotomy and all employees are labor, then our views on unions must be altered accordingly. Rothbard III 703 Labour Unions/Rothbard: It might be asserted that labor unions, in exacting higher wage rates on the free market, are achieving identifiable monopoly prices. >Monopoly price/Economic theories. For here two identifiable contrasting situations exist: (a) where individuals sell their labor themselves; and (b) where they are members oflabor unions which bargain on their labor for them. Furthermore, it is clear that while cartels, to be successful, must be economically more effcient in serving the consumer, no such justification can be found for unions. >Cartels/Rothbard. Productivity: Since it is always the individual laborer who works, and since effciency in organization comes from management hired for the task, forming unions never improves the productivity of an individual's work. >Productivity/Rothbard. Monopoly price: It is true that a union provides an identifiable situation. >Observation/Rothbard. However, it is not true that a union wage rate could ever be called a monopoly. For the characteristic of the monopolist is precisely that he monopolizes a factor or commodity. To obtain a monopoly price, he sells only part of his supply and withholds selling the other part, because selling a Iower quantity raises the price on an inelastic demand curve. >Elasticity/Rothbard. It is the unique characteristic of labor in a free society, however, that it cannot be monopolized. >Labour. Each individual is a self-owner and cannot be owned by another individual or group. Therefore, in the labor field, no one man or group can own the total supply and withhold part of it from the market. Each man owns himself. Cf. >Person/Philosophy, >Monopoly price/Rothbard. Rothbard III 705 Def Restrictionist price/wages/Rothbaard: If a union, in one way or another, achieves a higher price [wage] than its members could command by individual sales, its action is not checked by the loss of revenue suffered by the "withheld" laborers. If a union achieves a higher wage, some laborers are earning a higher price, while others are excluded from the market and lose the revenue they would have obtained. Such a higher price (wage) is called a restrictionist price. A restrictionist price, by any sensible criterion, is "worse" than a "monopoly price." Since the restrictionist union does not have to worry about the laborers who are excluded and suffers no revenue loss from such exclusion, restrictionist action is not curbed by the elasticity of the demand curve for labor. For unions need only maximize the net income of the working members, or, indeed, of the union bureaucracy itself.(1) Rothbard IIII 707 Laobur market/RothbardVsUnisions: Consequently, at best, a union can achieve a higher, restrictionist wage rate for its members only at the expense oflowering the wage rates of all other workers in the economy. Production efforts in the economy are also distorted. But, in addition, the wider the scope of union activity and restrictionism in the economy, the more diffcult it will be for workers to shift their locations and occupations to find nonunionized havens in which to work. And more and more the tendency will be for the displaced workers to remain permanently or quasi-permanently unemployed, eager to work but unable to find nonrestricted opportunities for employment. The greater the scope of unionism, the more a permanent mass of unemployment will tend to develop. >Unemployment. Degree of organisation: Unions try as hard as they can to plug all the "loop-holes" of nonunionism, to close all the escape hatches where the dispossessed workmen can find jobs. This is termed "ending the unfair competition of nonunion, Iow-wage labor." Rothbard: A universal union control and restrictionism would mean permanent mass unemployment, growing ever greater in proportion to the degree that the union exacted its restrictions (see below). Rothbard III 708 Membership: It is a common myth that only the old-style "craft" unions, which deliberately restrict their occupational group to highly skilled trades with relatively few numbers, can restrict the supply of labor. They often maintain stringent standards of membership and numerous devices to cut down the supply of labor entering the trade. This direct restriction of supply doubtless makes it easier to obtain higher wage rates for the remaining workers. Labour supply/Industrial unions: But it is highly misleading to believe that the newer-style "industrial" unions do not restrict supply. The fact that they welcome as many members in an industry as possible cloaks their restrictionist policy. Minimum wage: The crucial point is that the unions insist on a minimum wage rate higher than what would be achieved for the given labor factor without the union. By doing so, (…) they necessarily cut the number of men whom the employer can hire.(2,3) >Labour market. Ergo, the consequence of their policy is to restrict the supply of labor, while at the same time they can piously maintain that they are inclusive and democratic, in contrast to the snobbish "aristocrats" of craft unionism. Industrial unionism/Mises/Rothbard: In fact, the consequences of industrial unionism are more devastating than those of craft unionism. For the craft unions, being small in scope, displace and Iower the wages of only a few workers. The industrial unions, larger and more inclusive, depress wages and displace workers on a large scale and, what is even more important, can cause permanent mass unemployment.(4) >Strike action/Rothbard, >Economic ethics/Rothbard, >Free Market/Rothbard. Rothbard III 713 Costs/production costs/restrictionist wage: (…) a restrictionist wage raises costs of production for the firms in the industry. This means that the marginal firms in the industry - the ones whose entrepreneurs earn only a bare rent - will be driven out of business, for their costs have risen above their most profitable price on the market - the price that had already been attained. Productivity: Their ejection from the market and the general rise of average costs in the industry signify a general fall in productivity and output, and hence a loss to the consumers.(5) Unions/Rothbard: Unions are not producing organizations; they do not work for capitalists to improve production.(6) Rather they attempt to persuade workers that they can better their lot at the expense of the employer. Consequently, they invariably attempt as much as possible to establish work rules that hinder management's directives. These work rules amount to preventing management from arranging workers and equipment as it sees fit. In other words, instead of agreeing to submit to the work orders of management in exchange for his pay, the worker now sets up not only minimum wages, but also work rules without which he refuses to work. The effect of these rules is to Iower the marginal productivity of all union workers. The Iowering of marginal value-product schedules has a twofold result: (1) it itself establishes a restrictionist wage scale with its various consequences, for the marginal value product has fallen while the union insists that the wage rate remain the same; (2) consumers lose by a general Iowering of productivity and living standards. Restrictive work rules therefore also Iower output. All this is perfectly consistent with a society of individual sovereignty, however, provided always that no force is employed by the union. Rothbard III 715 Wages: Whereas wage rates on the nonunion labor market will always tend toward equilibrium in a smooth and harmonious manner, its replacement by collective bargaining leaves the negotiators with little or no rudder, with little guidance on what the proper wage rates would be. Even with both Sides trying tofind the market rate, neither of the parties to the bargain could be sure that a given wage agreement is too high, too Iow, or approximately correct. Wages/unions: Almost invariably, (…) the union is not trying to discover the market rate, but to impose various arbitrary "principles" of wage determination, such as "keeping up with the cost of living," a "living wage," the "going rate" for comparable labor in other firms or industries, an annual average "productivity" increase, "fair differentials," etc.(7) Rothbard III 715 Trade Unions/Economic theories/Rothbard: Arguments in favour of unions(8): Indeterminacy of wage rates: „(…) Wage rates are determined by marginal productivity in a zone rather than at a point; and within that zone unions have an opportunity to bargain collectively for increased wages without the admittedly unpleasant effects of unemployment or displacement of workers to poorer jobs." RothbardVs: It is curious that many writers move smoothly through rigorous price analysis until they come to wage rates, when suddenly they lay heavy stress on indeterminacy, the huge zones within which the price makes no difference, etc. (RothbardVsTrade unions). 1) (…), the scope of indeterminacy is very small in the modern world. We have seen above that, in a two-person barter situation, there is likely to be a large zone of indeterminacy between the buyer's maximum demand price and the seller's minimum supply price for a quantity of a good. >Barter/Rothbard, >Exchange/Rothbard, >Market/Rothbard. Within this zone, we can only leave the determination of the price to bargaining. However, it is precisely the characteristic of an advanced monetary economy that these zones are ever and ever narrowed and lose their importance. >Price/Rothbard, >Economy/Rothbard. The zone is only between the "marginal pairs" of buyers and sellers, and this zone is constantly dwindling as the number of people and alternatives in the market increase. Growing civilization, therefore, is always narrowing the importance of indeterminacies. 2) (…) there is no reason whatever why a zone of indeterminacy should be more important for the labor market than for the market for the price of any other good. Rothbard III 716 3) (…) suppose that there is a zone of indeterminacy for a labor market, and let us assume that no union is present. This means that there is a certain zone, the length of which can be said to equal a zone of the discounted marginal value product of the factor. This (…) is far less likely than the existence of a zone for a consumers' good, since in the former case there is a specific amount, a DMVP (discounted marginal value product) , to be estimated. But the maximum of the supposed zone is the highest point at which the wage equals the DMVP. Now, competition among employers will tend to raise factor prices to precisely that height at which profits will be wiped out. In other words, wages will tend to be raised to the maximum of any zone of the DMVP. Wages: Rather than wages being habitually at the bottom of a zone, presenting unions with a golden opportunity to raise wages to the top, the truth is quite the reverse. Assuming the highly unlikely case that any zone exists at all, wages will tend to be at the top, so that the only remaining indeterminacy is downward. Unions would have no room for increasing wages within that zone. Rothbard III 717 Monopsony and oligopsony: It is often alleged that the buyers of labor—the employers—have some sort of monopoly and earn a monopoly gain, and that therefore there is room for unions to raise wage rates without injuring other laborers. However, such a "monopsony" for the purchase of labor would have to encompass all the entrepreneurs in the society. If it did not, then labor, a nonspecific factor, could move into other firms and other industries. And we have seen that one big cartel cannot exist on the market. Therefore, a "monopsony" cannot exist. >Cartels/Rothbard, >Monopolies/Rothbard, >Monopoly price/Rothbard. Oligopsony: the "problem" of "oligopsony" - a "few" buyers of labor - is a pseudo problem. As long as there is no monopsony, competing employers will tend to drive up wage rates until they equal their DMVPs. The number of competitors is irrelevant; this depends on the concrete data of the market. Rothbard III 718 Competition/elasticity: Briefly, the case of "oligopsony" rests on a distinction between the case of "pure" or "perfect" competition, in which there is an allegedly horizontal - infinitely elastic - supply curve oflabor, and the supposedly less elastic supply curve of the "imperfect" oligopsony. >Competition/Rothbard, >Elasticity/Rothbard. Actually, since people do not move en masse and all at once, the supply curve is never infinitely elastic, and the distinction has no relevance. There is only free competition, and no other dichotomies, such as between pure competition and oligopsony, can be established. The shape of the supply curve, furthermore, makes no difference to the truth that labor or any other factor tends to get its DMVP (discounted marginal value product) on the market. >Supply/Rothbard. Efficiency/unions/Rothbard: One common prounion argument is that unions benefit the economy through forcing higher wages on the employers. At these higher wages the workers will become more effcient, and their marginal productivity will rise as a result. RothbardVs: If this were true, however, no unions would be needed. Employers, ever eager for greater profits, would see this and pay higher wages now to reap the benefits of the allegedly higher productivity in the future. As a matter of fact, employers often train workers, paying higher wages than their present marginal product justifies, in order to reap the benefits of their increased productivity in later years. >Ricardo effect/Rothbard. Ricardo effect: This doctrine holds that union-induced higher wage rates encourage employers to substitute machinery for labor. This added machinery increases the capital per worker and raises the marginal productivity of labor, thereby paying for the higher wage rates. RothbardVsRicardo/RothbardVsHayek/RothbardVsUnions: The fallacy here is that only increased saving can make more capital available. >Saving/Rothbard. Capital investment is limited by saving. Union wage increases do not increase the total supply of capital available. Rothbard III 719 Innovation/technology/efficiency: A related thesis is that higher wage rates will spur employers to invent new technological methods to make labor more effcient. Here again, however, the supply of capital goods is limited by the savings available, and there is almost always a sheaf of technological opportunities awaiting more capital anyway. Furthermore, the spur of competition and the desire of the producer to keep and increase his custom is enough of an incentive to increase productivity in his firm, without the added burden of unionism.(9) 1. A restrictionist, rather than a monopoly, price can be achieved because the number of laborers is so important in relation to the possible variation in hours of work by an individual laborer that the latter can be ignored here. If, however, the total labor supply is limited originally to a few people, then an imposed higher wage rate will cut down the number of hours purchased from the workers who remain working, perhaps so much as to render a restrictionist price unprofitable to them. In such a case it would be more appropriate to speak of a monopoly price. 2. Cf. Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. p. 764. 3. See Charles E. Lindblom, Unions and Capitalism (New Haven: Yale University Press, 1949), pp. 78 ff., 92–97, 108, 121, 131–32, 150–52, 155. Also see Henry C. Simons, “Some Reflections on Syndicalism” in Economic Policy for a Free Society (Chicago: University of Chicago Press, 1948), pp. 131 f., 139 ff.; Martin Bronfenbrenner, “The Incidence of Collective Bargaining,” American Economic Review, Papers and Proceedings, May, 1954, pp. 301–02; Fritz Machlup, “Monopolistic Wage Determination as a Part of the General Problem of Monopoly” in Wage Determination and the Economics of Liberalism (Washington, D.C.: Chamber of Commerce of the United States, 1947), pp. 64–65. 4. Cf. Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprintd by the Ludwig von Mises Institute, 1998. p. 764. 5. See James Birks, Trade Unionism in Relation to Wages (London, 1897), p. 30. 6. See James Birks, Trades’ Unionism: A Criticism and a Warning (London, 1894), p. 22. 7. On the nature and consequences of these various criteria of wage determination, see Ford, Economics of Collective Bargaining, pp. 85–110. 8. See Ford, Economics of Collective Bargaining, See the excellent critique by Hutt, in: Theory of Collective Bargaining, passim. 9. On the Ricardo effect, see Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 767–70. Also see the detailed critique by Ford, Economics of Collective Bargaining, pp. 56–66, who also points to the union record of hindering mechanization by imposing restrictive work rules and by moving quickly to absorb any possible gain from the new equipment. |
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 | Hayek | Rothbard III 586 Unemployment/Hayek/Rothbard: One alleged example of a possible case of involuntary unemployment on the free market has been suggested by Professor Hayek.(1) Hayek maintains that when there is a shift from investment to consumption, and therefore a shortening of the production structure on the market, there will be a necessary temporary unemployment of workmen thrown out of work in the higher stages, lasting until they can be reabsorbed in the shorter processes of the later stages. Rothbard: It is true that there is a loss in income, as well as a loss in capital, from a shift to shorter processes. It is also true that the shortening of the structure means that there is a transition period when, at final wage rates, there will be unemployment of the men displaced from the longer processes. RothbardVsHayek: However, during this transition period there is no reason Why these workers cannot bid down wage rates until they are Iow enough to enable the employment of all the workers during the transition. This transition wage rate will be Iower than the new equilibrium wage rate. But at no time is there a necessity for unemployment. 1. Hayek, Prices and Production, 2nd ed. London: Routledge and Kegan Paul, 1935. Reprinted by Augustus M. Kelley, 1967. pp. 91-93. Boudreaux II 60 Unemployment/Hayek/Boudreaux: „In fact ... the very measures which the dominant "macro-economic" theory has recommended as a remedy for unemployment, namely, the increase of aggregate demand, have become a cause of a very extensive misallocation of resources which is likely to make later large-scale unemployment inevitable. The continuous injection of additional amounts of money at points of the economic system where it creates a temporary demand which must cease when the increase of the quantity of money stops or slows down, together With the expectation of a continuing rise of prices, draws labour and other resources into employments which can last only so long as the increase of the quantity of money continues at the same rate - or perhaps even only so long as it continues to accelerate at agiven rate.“(1) (HayekVsKeynes, HayekVsKeynesianism, HayekVsFriedman.) >Money supply, >Interventions/Hayek, >Economic cycles/Hayek, >Demand/Hayek. 1. Friedrich Hayek (1974). The Pretense of Knowledge. Lecture given in acceptance of the Nobel Prize for Economics.ln Bruce Caldwell (ed.), Markets and Other Orders, XV (Liberty Fund Library, 2014): 367. |
Hayek I Friedrich A. Hayek The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007 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 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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