Austrian economists have debated issues of monetary theory and inflation extensively, but there is still no agreement on the definition of inflation. Mises (1953, 240) defined inflation as an increase in the supply of money not offset by an increase in the demand for money, leading to a fall in the purchasing power of money (PPM). Rothbard (2009, 990) defined it as an increase of fiduciary media, explicitly excluding increases in the stock of specie. This article will argue that Rothbard’s definition is the most suitable for economic discourse and analysis and can be generalized to any market-selected money. By consistently applying the method of counterfactual reasoning (Hülsmann 2003), it is shown that the processes of money creation lead to very different outcomes depending on the conditions of money production. The term “inflation” is therefore best reserved for money production in the form of bank credit expansion or fiat money creation. These phenomena are external to the market, and the process of redistribution they bring about runs counter to the structure of income and wealth that would have emerged in their absence.
{"title":"What Is Inflation? Clarifying and Justifying Rothbard's Definition","authors":"Kristoffer Mousten Hansen, Jonathan Newman","doi":"10.35297/qjae.010141","DOIUrl":"https://doi.org/10.35297/qjae.010141","url":null,"abstract":"Austrian economists have debated issues of monetary theory and inflation extensively, but there is still no agreement on the definition of inflation. Mises (1953, 240) defined inflation as an increase in the supply of money not offset by an increase in the demand for money, leading to a fall in the purchasing power of money (PPM). Rothbard (2009, 990) defined it as an increase of fiduciary media, explicitly excluding increases in the stock of specie. This article will argue that Rothbard’s definition is the most suitable for economic discourse and analysis and can be generalized to any market-selected money. By consistently applying the method of counterfactual reasoning (Hülsmann 2003), it is shown that the processes of money creation lead to very different outcomes depending on the conditions of money production. The term “inflation” is therefore best reserved for money production in the form of bank credit expansion or fiat money creation. These phenomena are external to the market, and the process of redistribution they bring about runs counter to the structure of income and wealth that would have emerged in their absence.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"100 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82285460","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article reconsiders the Austrian school’s historical position regarding the role of mathematics in economics in light of complexity economics’ approach to this issue. It first shows the three typical objections to the traditional use of mathematics raised by Austrian economics. Secondly, it presents complexity economics’ critique of algebraic mathematics, which is employed in mainstream economics, and its proposal for using algorithmic mathematics and computation. Then, it analyzes the similarities between the Austrian and complexity economics positions and considers whether the alternative algorithmic method that complexity economics advocates is compatible with and valuable for Austrian economics. The article concludes that Austrian economics can use algorithmic mathematics to elaborate economic theory without contradicting its own methodology and that algorithmic models and simulations can in fact enlarge Austrian theories on the working and emergence of the market process.
{"title":"The Austrian School and Mathematics: Reconsidering Methods in Light of Complexity Economics","authors":"Vicente Moreno-Casas","doi":"10.35297/qjae.010142","DOIUrl":"https://doi.org/10.35297/qjae.010142","url":null,"abstract":"This article reconsiders the Austrian school’s historical position regarding the role of mathematics in economics in light of complexity economics’ approach to this issue. It first shows the three typical objections to the traditional use of mathematics raised by Austrian economics. Secondly, it presents complexity economics’ critique of algebraic mathematics, which is employed in mainstream economics, and its proposal for using algorithmic mathematics and computation. Then, it analyzes the similarities between the Austrian and complexity economics positions and considers whether the alternative algorithmic method that complexity economics advocates is compatible with and valuable for Austrian economics. The article concludes that Austrian economics can use algorithmic mathematics to elaborate economic theory without contradicting its own methodology and that algorithmic models and simulations can in fact enlarge Austrian theories on the working and emergence of the market process.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"46 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74205962","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Well-intended and richly argued as Salin’s proposal for reconciliation between the Austrian School and Chicago School is, it eschews a discussion of one aspect of the two schools that is also relevant to their respective monetary views; namely, their analytical method. This short comment aims to clarify why the specific praxeological approach of the Austrian school makes its monetary theory unique. By implication, as long as methodological differences between the Austrian and the Chicago traditions persist, no reconciliation will be within reach. This comment concludes that this is the decisive, though unintended, contribution of Salin’s article.
{"title":"Comment on Salin’s “The Monetary Economics of the Austrian School and the Chicago School”","authors":"N. Gertchev","doi":"10.35297/qjae.010147","DOIUrl":"https://doi.org/10.35297/qjae.010147","url":null,"abstract":"Well-intended and richly argued as Salin’s proposal for reconciliation between the Austrian School and Chicago School is, it eschews a discussion of one aspect of the two schools that is also relevant to their respective monetary views; namely, their analytical method. This short comment aims to clarify why the specific praxeological approach of the Austrian school makes its monetary theory unique. By implication, as long as methodological differences between the Austrian and the Chicago traditions persist, no reconciliation will be within reach. This comment concludes that this is the decisive, though unintended, contribution of Salin’s article.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88992712","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mateusz Machaj’s book Capitalism, Socialism and Property Rights is a straightforward and useful contribution to our understanding of the problems of socialism. Translated from the original Polish by Kacper Potocki, the book flowed smoothly. In it, Machaj makes three important points. The first centers on the discussion on how the socialist economists, who thought that a market could be mimicked or limited to only consumer goods, were wrong. The second is that the neoclassical economists, who used the model of perfect competition and thought solving the right set of equations could produce equilibrium, were also wrong. And the third, and most important, point is Machaj’s claim that Mises’s approach was too narrowly focused on economics and not broad enough for the legal and ethical implications of property rights. By broadening the perspective beyond the economic and into the legal and moral realms, one sets the foundations for policies of nations transitioning away from socialism in any of its forms.
{"title":"Book Review: Capitalism, Socialism and Property Rights: Why Market Socialism Cannot Substitute the Market","authors":"Paul Cwik","doi":"10.35297/qjae.010150","DOIUrl":"https://doi.org/10.35297/qjae.010150","url":null,"abstract":"Mateusz Machaj’s book Capitalism, Socialism and Property Rights is a straightforward and useful contribution to our understanding of the problems of socialism. Translated from the original Polish by Kacper Potocki, the book flowed smoothly. In it, Machaj makes three important points. The first centers on the discussion on how the socialist economists, who thought that a market could be mimicked or limited to only consumer goods, were wrong. The second is that the neoclassical economists, who used the model of perfect competition and thought solving the right set of equations could produce equilibrium, were also wrong. And the third, and most important, point is Machaj’s claim that Mises’s approach was too narrowly focused on economics and not broad enough for the legal and ethical implications of property rights. By broadening the perspective beyond the economic and into the legal and moral realms, one sets the foundations for policies of nations transitioning away from socialism in any of its forms.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"58 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90644222","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The second edition of _Economic Episodes in American History_ by Mark Schug, William Wood, Tawni Hunt Ferrarini, and M. Scott Niederjohn is a welcome response to the changes in how the beleaguered subject has been taught in high schools over the past eleven years (the first edition came out in 2011). For Schug et al.’s work provides the cure for the current pedagogical dispensation: learning American history is important because it is a way students can understand what economists call the economic way of thinking, capitalism and industrial development were (and still are) responsible for an unprecedented rise in living standards, and capitalism especially improved the well-being of women and minorities.
{"title":"Book Review: Economic Episodes in American History, 2nd ed.","authors":"Patrick Newman","doi":"10.35297/qjae.010148","DOIUrl":"https://doi.org/10.35297/qjae.010148","url":null,"abstract":"The second edition of _Economic Episodes in American History_ by Mark Schug, William Wood, Tawni Hunt Ferrarini, and M. Scott Niederjohn is a welcome response to the changes in how the beleaguered subject has been taught in high schools over the past eleven years (the first edition came out in 2011). For Schug et al.’s work provides the cure for the current pedagogical dispensation: learning American history is important because it is a way students can understand what economists call the economic way of thinking, capitalism and industrial development were (and still are) responsible for an unprecedented rise in living standards, and capitalism especially improved the well-being of women and minorities.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"82 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79015722","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
To what extent is there complementarity or agreement between Austrian economics and the Chicago school on monetary issues? Both Austrians and Chicagoans would agree that monetary expansion has real effects in the short run, though they emphasize different variables. In the long run, Austrians argue that there is a lasting real effect of monetary expansion—money is not neutral—but Chicagoans too argue that economic activity is less efficient even if people correctly forecast the rate of inflation. Regarding the balance of payments, both the Austrian and Chicago school lead to the conclusion that there can be no balance-of-payments problem. Both are modern versions of the classical price specie flow theory. Perhaps the Austrian approach to monetary economics and the Chicago school approach are more compatible than is commonly thought.
{"title":"The Monetary Economics of the Austrian School and the Chicago School","authors":"Pascal Salin","doi":"10.35297/qjae.010143","DOIUrl":"https://doi.org/10.35297/qjae.010143","url":null,"abstract":"To what extent is there complementarity or agreement between Austrian economics and the Chicago school on monetary issues? Both Austrians and Chicagoans would agree that monetary expansion has real effects in the short run, though they emphasize different variables. In the long run, Austrians argue that there is a lasting real effect of monetary expansion—money is not neutral—but Chicagoans too argue that economic activity is less efficient even if people correctly forecast the rate of inflation. Regarding the balance of payments, both the Austrian and Chicago school lead to the conclusion that there can be no balance-of-payments problem. Both are modern versions of the classical price specie flow theory. Perhaps the Austrian approach to monetary economics and the Chicago school approach are more compatible than is commonly thought.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"520 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136175548","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although Pascal Salin’s desire to build bridges between the Austrian School and the Chigago School, as well as his efforts to smooth out the differences between schools of monetary thought, is admirable, it is difficult to see the need or the urgency to integrate the Austrian approach with other approaches. Salin has not yet made a convincing case that the Austrian approach to monetary issues is lacking, and indeed, there are several reasons why such reconciliation between the two traditions is impossible.
{"title":"A Note on Money Neutrality","authors":"C. Dorobat","doi":"10.35297/qjae.010146","DOIUrl":"https://doi.org/10.35297/qjae.010146","url":null,"abstract":"Although Pascal Salin’s desire to build bridges between the Austrian School and the Chigago School, as well as his efforts to smooth out the differences between schools of monetary thought, is admirable, it is difficult to see the need or the urgency to integrate the Austrian approach with other approaches. Salin has not yet made a convincing case that the Austrian approach to monetary issues is lacking, and indeed, there are several reasons why such reconciliation between the two traditions is impossible.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"36 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90083387","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The essays presented in Wennberg and Sandström's Questioning the Entrepreneurial State tackle the idea of the state not merely supporting innovation and entrepreneurship through creating a favorable environment, but instead making decisions about what entrepreneurial ventures to pursue. It provides a much-needed holistic critique of the entrepreneurial state that is likely to appeal to a big-tent audience within the Austrian community, and it provides a primer on a wealth of academic foundations upon which to build for researchers interested in studying the idea of the entrepreneurial state.
温伯格和Sandström的《质疑创业型国家》(Questioning The Entrepreneurial State)中发表的文章探讨了这样一种观点，即国家不仅通过创造有利的环境来支持创新和创业精神，而且还决定创业企业应该追求什么。它提供了一个急需的对企业家国家的全面批判，这可能会吸引奥地利社会中的大量观众，它为有兴趣研究企业家国家概念的研究人员提供了丰富的学术基础的入门读物。
{"title":"Book Review: Questioning the Entrepreneurial State: Status Quo, Pitfalls, and the Need for Credible Innovation Policy","authors":"W. G. Miller","doi":"10.35297/qjae.010149","DOIUrl":"https://doi.org/10.35297/qjae.010149","url":null,"abstract":"The essays presented in Wennberg and Sandström's Questioning the Entrepreneurial State tackle the idea of the state not merely supporting innovation and entrepreneurship through creating a favorable environment, but instead making decisions about what entrepreneurial ventures to pursue. It provides a much-needed holistic critique of the entrepreneurial state that is likely to appeal to a big-tent audience within the Austrian community, and it provides a primer on a wealth of academic foundations upon which to build for researchers interested in studying the idea of the entrepreneurial state.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80043826","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper in this issue by Professor Salin comparing the Austrian and Chicago schools in the field of monetary theory is very stimulating. One would expect nothing less from a leading monetary theorist sympathetic to both schools. Austrians can learn a lot from engaging with non-Austrian approaches to monetary theory and economics generally. After all, one can learn from the refutation of false doctrines as well as from true theories expounded outside one’s own school of thought. In the case of the Chicago school, there is the opportunity to do both: although there are many similarities between Chicago and Austrian monetary theory, the differences are crucial and, as is argued in this reply, generally suggest the superiority of the Austrian position.
{"title":"Austrian Monetary Theory: Comment on Pascal Salin’s Paper","authors":"Kristoffer Hansen","doi":"10.35297/qjae.010144","DOIUrl":"https://doi.org/10.35297/qjae.010144","url":null,"abstract":"The paper in this issue by Professor Salin comparing the Austrian and Chicago schools in the field of monetary theory is very stimulating. One would expect nothing less from a leading monetary theorist sympathetic to both schools. Austrians can learn a lot from engaging with non-Austrian approaches to monetary theory and economics generally. After all, one can learn from the refutation of false doctrines as well as from true theories expounded outside one’s own school of thought. In the case of the Chicago school, there is the opportunity to do both: although there are many similarities between Chicago and Austrian monetary theory, the differences are crucial and, as is argued in this reply, generally suggest the superiority of the Austrian position.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"59 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72728096","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article presents the traditional limitations of happiness economics and the uncertainty about the econometric relationship between public spending and happiness. It also argues that the happiness metric is a new form of social engineering, and that as such, happiness economics is biased toward a particular political utopia and scientific ideal. The political utopia is liberticidal, antidemocratic. It transforms democracy into “pollo-cracy”—i.e., the government (kratos) to the pollsters. The scientific ideal is positivist and favors government by numbers. This scientific norm underestimates the limits of statistical work. The social engineering of happiness is a new fatal presumption of policy makers. It is a new way to critique the free market economy and to substitute profit with a social criterion of quality of life and happiness.
{"title":"Happiness and Public Spending","authors":"F. Facchini","doi":"10.35297/qjae.010132","DOIUrl":"https://doi.org/10.35297/qjae.010132","url":null,"abstract":"This article presents the traditional limitations of happiness economics and the uncertainty about the econometric relationship between public spending and happiness. It also argues that the happiness metric is a new form of social engineering, and that as such, happiness economics is biased toward a particular political utopia and scientific ideal. The political utopia is liberticidal, antidemocratic. It transforms democracy into “pollo-cracy”—i.e., the government (kratos) to the pollsters. The scientific ideal is positivist and favors government by numbers. This scientific norm underestimates the limits of statistical work. The social engineering of happiness is a new fatal presumption of policy makers. It is a new way to critique the free market economy and to substitute profit with a social criterion of quality of life and happiness.","PeriodicalId":39988,"journal":{"name":"Quarterly Journal of Austrian Economics","volume":"113 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86791478","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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