Nowadays, Austrian economists are most famous for their theory of the business cycle , as developed by Ludwig von Mises and Friedrich Hayek. However, they also made many contributions to the pure theory of capital and interest, most notably in the seminal work of Eugen von Böhm-Bawerk and later in that of Hayek . In the present article we’ll see
In a recent post “ Triumph of the Austrian Economists ,” David Frum laments the displacement of the respectable Chicago School as the economists of choice among the political Right. Frum fails to see that conservative Republicans are justified in switching their allegiance to the Austrian economists, because supply-side monetarists have a glaring
I recently debated Karl Smith, a New Keynesian professor at UNC , on the possible merits of government spending (video here ). Smith brought up what I consider to be the strongest argument against the Austrian position, namely that during a recession there appear to be “idle resources.” According to the Keynesian view, if government spending could
This year in the online Mises Academy I have been leading students through Murray Rothbard’s classic treatise, Man, Economy, and State . (For details on the current class, covering the final third of the book, see here .) In the previous class we covered Rothbard’s analysis of the pricing of land. This is an illuminating topic because it involves
Reviewing intellectual ideas is often hard work, involving slogging through numerous references and deep contemplation of the author’s contentions. That is why it is a true joy to occasionally come across work so egregiously chowder-headed that we can gleefully have at it without too much work at all. Just such work was brought to our attention
Largely confined to the outer fringe of “scientific” economics, Austrians have to jump with glee at any mention—positive or negative—that their theories receive in mainstream journals. It is with this attitude that I examine Paul Samuelson’s article in The Quarterly Journal of Economics entitled “A Summing Up.” Historical Background This article
THE INTEREST PROBLEM Eugen von Böhm-Bawerk’s three-volume work, Capital and Interest , is a classic, both because of its brilliant analysis and its witty exposition. The first volume provides a history and critique of all preceding explanations of the “interest problem.” For Böhm-Bawerk, the task of the interest theorist was to explain why a
In a previous article , I explained Eugen von Böhm-Bawerk’s conception of the “interest problem.” Specifically, why could a capitalist earn an effortless flow of real wealth, year after year, from his fund of capital? To state the problem in an equivalent form, why is it that a capitalist can spend, say, $1,000 on labor and raw materials, in
If you read up on the history of economic thought in the twentieth century, you are likely to encounter the work of Piero Sraffa, in particular his curious volume, Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press, 1960). Although this book was instrumental in the
Recent developments in the global economy—specifically, higher skilled foreign workers, lower costs of capital movement, and improved communications—have apparently undermined “the” case for free trade, one of the most bedrock conclusions of orthodox economics. In previous articles ( 1 and 2 ) I have restated the case in light of the specific
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.