The salutary nature of an economic bust is how it sifts out the misallocations of capital made during the preceding boom. It thereby leaves a stronger mix of businesses better fitted to meet the needs and wants of consumers. The misallocations induced by a credit-inspired boom are built on the sandy foundations of expansive monetary policy and
Modern mainstream economics has particular strengths and weaknesses. Mainstream concepts like opportunity cost, comparative advantage, and marginal cost pricing have great merit. Yet mainstream economics places undue emphasis on equilibrium. The shortcomings of mainstream economics are subtle, but can be understood with clear examples. Such
“We have progressively abandoned the freedom in economic affairs without which personal and political freedom has never existed in the past.” (F.A. Hayek, The Road to Serfdom ). Economic thinking today is divided into many schools of thought, such as the following : the Keynesians, the Post- Keynesians, the Rational Expectations School, the
Fuzzy Math . By Paul Krugman. (W.W. Norton and Company, May 2001, 112 pages) $17.00. You are probably familiar with the recently passed Bush tax bill. You may also be familiar with Paul Krugman of Princeton University (formerly of M.I.T.), whose “New Keynesian” musings appear regularly on The New York Times editorial page. Recently, Krugman
Modern central banks pronounce economic and monetary stability as their target. But what they are after is not the real thing but a statistical chimera. Ludwig von Mises put it this way: “The money equivalents as used in acting and in economic calculation are money prices, i.e. exchange ratios between money and other goods and services. The
1. The Character of Monetary Entries Economic calculation can comprehend everything that is exchanged against money. The prices of goods and services are either historical data describing past events or anticipations of probable future events. Information about a past price conveys the knowledge that one or several acts of interpersonal exchange
Environmentalism is the product of the collapse of socialism in a world that is ignorant of the contributions of Ludwig von Mises—a world that does not know what he has said that would logically explain the collapse of socialism and, even more importantly, the success of capitalism. Because of ignorance of the contributions of von Mises, the great
For more than a century, one of the most popular economic doctrines in the world has been the exploitation theory. According to this theory, capitalism is a system of virtual slavery, serving the narrow interests of a comparative handful of businessmen and capitalists, who, driven by insatiable greed and power lust, exist as parasites upon the
Thomas Sowell’s latest book is a well-written application of economic thinking to several popular topics in contemporary political discourse. Although the book is best suited for the newcomer to free market ideas, even mature Austrian economists would benefit from its insights and excellent anecdotes. Sowell’s overall message is that “thinking
Barron’s October 19, 1998 Oh, Those Assumptions! An engineer, a chemist and an economist are marooned on an island ... . Maybe you’ve heard that classic joke, maybe you haven’t. But either way, it’s worth reviewing, since it bears direct relevance to the work of the 64-year-old Indian economist Amartya Sen, formerly of Harvard, currently at
What is the Mises Institute?
The Mises Institute is a non-profit organization that exists to promote teaching and research in the Austrian School of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.
Non-political, non-partisan, and non-PC, we advocate a radical shift in the intellectual climate, away from statism and toward a private property order. We believe that our foundational ideas are of permanent value, and oppose all efforts at compromise, sellout, and amalgamation of these ideas with fashionable political, cultural, and social doctrines inimical to their spirit.