Now available from the Mises Institute and Transaction Periodicals Consortium:
The Quarterly Journal of Austrian Economics
Volume 1, Number 3
Fall 1998
ARTICLES
Hayek’s Money Economy: The Dynamics of Competitive Equilibrium and Socio-Economic Order
by G. R. Steele (Lancaster University, UK)
Are Markets Like Language?
by Leland B. Yeager (Auburn University)
The Role of Fractional-Reserve Banking and Financial Intermediation in the Money Supply Process: Keynes and the Austrians
by John P. Cochran and Steven T. Call (Metropolitan State College of Denver)
Management vs. The Market: An Exaggerated Distinction
by Don Mathews (Coastal Georgia Community College)
COMMENTS
Reisman on Capitalism
by George Reisman (Pepperdine University) Response to Reisman on Capitalism
by Alexander Tabarrok (Ball State University)
Free Banking and Fractional Reserves: A Comment
Pascal Salin (University of Paris, Dauphine)
Free Banking and Fractional Reserves: Response to Pascal Salin
Jörg Guido Hülsmann (State University of New York, Buffalo)
BOOK REVIEWS
Risk and Business Cycles: New and Old Austrian Perspectives by Tyler Cowen
Reviewed by Lawrence J. Sechrest (Sul Ross University)
Neoclassical Microeconomic Theory: The Founding Austrian Version by A.M. Endres
Reviewed by Gregory M. Dempster (Hampden-Sydney College)
Against Politics: On Government, Anarchy, and Order by Anthony de Jasay
Reviewed by N. Stephan Kinsella (South Texas College of Law)
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Vol 1, No 3
ARTICLES
1. Hayek’s Money Economy: The Dynamics of Competitive Equilibrium and Socio-Economic Order
by G. R. Steele (Lancaster University, UK)
“Hayek’s economics is focused upon adaptation: the continuously changing social order requires no conscious direction. That evolutionary thesis applies even to itself: no one can remain intellectually active throughout a long life without the adaptation of concepts or conclusions. If complete reversals are rare, reconsideration and refinement of notions previously held are normal. And while intellectual thought is consciously disciplined by the precepts of science and rationality, serendipity has the dominant role in the process of discovery.
“Among the many aspects of the chronology of Hayek’s work (see Hutchinson 1981, pp. 203-32; Caldwell 1988; Lawson 1994; Fleetwood 1995; Foss 1995; Witt 1997; Lewin 1997), one is afforded particular attention. Did Hayek continuously refine his notion of equilibrium, or was there an abrupt change? While this is likely to remain a moot issue, a case is presented for coherence and continuity in the important themes: the conceptualization of equilibrium within the money economy; the relevance of money’s non-neutrality to business cycles; and coordination within the extended social order which is only possible within a money economy.”
2. Are Markets Like Language?
By Leland B. Yeager (Auburn University)
“...[I] do not claim that markets, money, and prices are just like language but they do share some functions. All are instruments of what Mises called social cooperation. All help coordinate activities which are dispersed over space and time; all help mobilize knowledge and use it effectively, as in economic calculation. Language, markets, and money are prime examples of the largely spontaneous and only partly planned evolution of useful but often improvable institutions. Some analogies, particularly between money and language, are illuminating. They concern, for example, how dominance tends to reinforce itself through network effects, and how money facilitates multilateral clearing of exchanges through serving in effect as a monitoring and record-keeping device. More broadly, economics and linguistics have as much in common as probably the best-developed.”
3. The Role of Fractional-Reserve Banking and Financial Intermediation in the Money Supply Process: Keynes and the Austrians
by John P. Cochran and Steven T. Call (Metropolitan State College of Denver)
“Timothy Fuerst (1994) has argued for the need for more banking theory in monetary theory. A review of the history of economic thought indicates that, until the 1930s, banking theory and the role of banks in the process of financial intermediation and credit creation were emphasized in the writings of monetary economists beginning at least in the early 1800s. In such theories, the role and impact of monetary policy on the economy follow as corollaries from a well-developed theory of money, credit, and banking.
“This article presents two alternative interpretations of the role of banks in the monetary transmission process. The interpretation based on the work of Mises, Hayek, and Rothbard leads to the conclusion that central banking and monetary policy are the `generators of the “business cycle”’ (Hayek 1979). The other interpretation presents a Keynesian theory minus the liquidity preference theory of the rate of interest.”
4. Management vs. The Market: An Exaggerated Distinction
by Don Mathews (Coastal Georgia Community College)
“Firms with great entrepreneurial ability will perceive opportunities where other firms do not, and will be able to exploit those opportunities where other firms cannot. It may well be the case, as Coase and Chandler argue, that firms vertically integrate to reduce costs. But it might also be the case-and I believe it is more likely the case-that firms vertically integrate because they have lower costs as a result of their superior entrepreneurial ability. Even if Coase and Chandler are correct, entrepreneurship is the force behind vertical integration because entrepreneurship is what it takes to discover that vertical integration reduces costs. Thus, the size of firms and the number and types of products they produce will vary with the entrepreneurial ability of forms. That proposition is not novel, except here it is grounded in Austrian theory.”
COMMENTS
Reisman on Capitalism
by George Reisman (Pepperdine University)
“The Review of Austrian Economics (RAE) recently published a review of my book Capitalism: A Treatise on Economics that, while praising my book to some extent, seriously misrepresents or altogether ignores major portions of it. Since a full analysis of the review would require twice as much space as the review itself, I will confine myself here to just a few instances of comparing the review’s statements concerning my book with my book’s actual content.”
Response to Reisman on Capitalism by Alexander Tabarrok (Ball State University)
“Reisman’s Capitalism is longer than either Mises’s Human Action or Rothbard’s Man, Economy, and State. It thus seems unreasonable to object to my review because it ignores major portions of his work. Reisman’s other objections are similarly weak.”
Free Banking and Fractional Reserves: A Comment
Pascal Salin (University of Paris, Dauphine)
“The article by Jörg Guido Hülsmann (1996), `Free Banking and the Free Bankers,’ is an important contribution to a proper understanding of free-banking systems. He is perfectly correct in blaming some advocates of free banking who support arguments which are irrelevant or wrong, such as the argument according to which free banking makes possible a higher rate of investment, due to increased credits, the argument according to which a 100-percent-reserve system would imply higher costs, would impede financial intermediation, or would lead to money shortages, etc. Thus although I basically agree with Hülsmann when he blames both opponents of free banking and some free bankers who do not develop the right arguments, I cannot agree with his plea in favor of a 100-percent-reserve system.”
Free Banking and Fractional Reserves: Response to Pascal Salin
Jörg Guido Hülsmann (State University of New York, Buffalo)
“Pascal Salin’s critique of my article `Free Banking and the Free Bankers’ (1996) raises several important issues about the theory of banking. However, I think that a closer look at them strengthens rather than weakens the case for a 100-percent-reserve system.”
BOOK REVIEWS
Risk and Business Cycles: New and Old Austrian Perspectives by Tyler Cowen
Reviewed by Lawrence J. Sechrest (Sul Ross University)
“This very ambitious book starts with the high promise of a radically new and superior theory of business cycles, but when it ends the reader cannot resist the conclusion that the promise has gone unfulfilled.”
Neoclassical Microeconomic Theory: The Founding Austrian Version by A.M. Endres
Reviewed by Gregory M. Dempster (Hampden-Sydney College)
“Despite a few instances where his writing becomes somewhat labored, Endres has managed to bring together many strands of research and organized them into a fairly coherent whole. This is certainly a book that will be of interest to serious students of early Austrian thought.”
Against Politics: On Government, Anarchy, and Order by Anthony de Jasay
Reviewed by N. Stephan Kinsella (South Texas College of Law)
“This is a wonderful collection of previously published articles by Anthony de Jasay who, it turns out, is an undiscovered Austrian, or at least a close cousin.”
