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
In response to my last article on government deficits , Stefan Karlsson alerted me to an openly Keynesian analysis at National Review Online. Although Tom Nugent’s surprising piece ran back in 2004, its errors are timeless and hence worth exploding even today. CONFUSING CORRELATION WITH CAUSATION Nugent commits the standard Keynesian fallacy of
As I have read countless analysts, including professional economists, offer “solutions” to the financial crisis, I have become more convinced of the importance of capital theory. You see this with the dichotomy people keep drawing between the financial markets and the “real economy,” a distinction that is useful for some purposes but which in this
There’s an old joke where the first guy says, “What’s the difference between drapes and toilet paper?” The second guy says, “I don’t know, what?” Then the first guy responds, “You are not allowed in my house!” After watching the “expert” economists debate our financial crisis during the past year, I realize that we can modify the joke. Today I
In a recent debate, prominent Keynesian professor and blogger Brad DeLong claimed that the Austrian explanation of the business cycle “does not work as an intellectual enterprise.” DeLong quotes Paul Krugman who, back in December, apparently dealt the Austrian diagnosis a crushing defeat on both theoretical and empirical grounds. In the present
“It is no coincidence that Mankiw’s worldview leads him to literally propose destroying the currency in order to fix the economy.” In his April 18 New York Times op-ed , Harvard professor (and Bush adviser) Greg Mankiw calls on the Federal Reserve to promise future inflation, in order to fix the economy. Mankiw’s article beautifully illustrates
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.