The Indispensability of Freedom 8Th International Conference the Austrian School of Economics in the 21St Century
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The Indispensability of Freedom TITLE 8th International Conference The Austrian School in the 21st Century Federico N. Fernández Barbara Kolm Victoria Schmid (Eds.) Friedrich A.v.Hayek Institut The Indispensability of Freedom 8th International Conference The Austrian School of Economics in the 21st Century Federico N. Fernández Barbara Kolm Victoria Schmid (Eds.) Papers presented on November 13th and 14th, 2019 Published by the Austrian Economics Center and Fundación International Bases www.austriancenter.com www.fundacionbases.org Copyright ©2020 by Friedrich A. v. Hayek Institut, Vienna Federico N. Fernández, Barbara Kolm, and Victoria Schmid (Eds.) All rights reserved. No texts from this book may be reprinted or posted in any form without prior written permission from the copyright holders. Design and composition by Victoria Schmid Cover photo by Anton Aleksenko | Dreamstime.com ISBN: 978-3-902466-17-4 First Edition 2 3 4 Content Austrian Economics Conference 2019 Preface Robert Holzmann 13 The History of the Austrian Economics Conference The Editors 15 Juan Carlos Cachanosky Memorial Lecture I. The Continuing Importance of Misesian Economics Robert Murphy 17 II. Keynote: Geopolitics, Economic Freedom, and Economic Performance Erich Weede 31 1. The Role of Non-Democratic Institutions in a Democracy, according to Montesquieu, Tocqueville, Acton, Popper, and Hayek, Applied to the EU Jitte Akkermans 45 2. Mind with a purpose: a humanistic conversation between Psychology and some postulates of the Austrian School of Economics Silvia Aleman Menduinna 59 3. What Is Wrong With Sustainable Development Goals? Horacio Miguel Arana 71 5 Content 4. A Unique Methodology using the Principles of the Austrian School of Economics – Applied To Investing and Trading Richard Bonugli 83 5. The Intellectual Partnership of Hayek and Popper Rafe Champion 91 6. Economic Society in Kraków as Polish Prewar Pro-Liberty Think Tank Marcin Chmielowski 103 7. Freedom in and from the West Georgiana Constantin-Parke 115 8. The Austrian School of Economics versus Mainstream Economic Historians: The “Methodenstreit” (1871-1886) Facundo Gustavo Corvalán 125 9. Israel Kirzner on Dynamic Efficiency and Economic Development Victor I. Espinosa 137 10. Communication, Propaganda, and Freedom Leonardo Facco 155 11. Healthcare and the Failure of Market Failure Marc Fouradoulas 163 6 #ITSCOMINGHOME2019 Content 12. Law and Praxeology Alessandro Fusillo 173 13. Free Private Cities – There is an Alternative Titus Gebel 185 14. The Mengerian Roots of Hayek’s Conservative Liberalism Hannes H. Gissurarson 193 15. The Principle of the Universal Destination of Goods and the Right to Private Property Jacek Gniadek 205 16. Roger Myerson’s Mechanism Design and His Views on Hayek: a Reinterpretation of Moral Hazard and Adverse Selection Christoph Klein 221 17. Entrepreneurship under Socialism: The Case of Former Soviet Economies Anca Elena Lungu, Gabriel Claudiu Mursa 247 18. Economic Liberalism and Praxis Dario Monasterio 259 19. The Mississippi Bubble (1719-1720). An ”Austrian” Explanation Gabriel Mursa, Mihaela Ifrim 269 #ITSCOMINGHOME2019 7 Content 20. Even Virtue has a Need of Limits - Classical Liberalism in the 21st Century Scott B. Nelson 285 21. An Alternative View on Saving and Investment From an Austrian Economics Perspective Youliy Ninov 297 22. Paving the Road to Serfdom: The Epistemology of Elitist Utopianism in Contemporary Social Science Marc Orlitzky 311 23. A Contemporary Analysis on Ludwig von Mises and his Contribution to the Development of Modern Liberal Theory Artenis Peka 331 24. Calculation of Private Product According to Rothbard’s Approach Olga Peniaz 341 25. From Boehm-Bawerk’s “Positive Theory” to Schumpeterian Dynamics J. Hanns Pichler 355 26. An Assault on the Individual: A Preliminary Comparative Study Between the Psychology of a Socialist State and Narcissistic Abuse Agnieszka Płonka 373 8 #ITSCOMINGHOME2019 Content 27. The Problem of Information War in the Framework of Natural Law – the Paradox of Tolerance Revisited in the Light of Soviet Propaganda Agnieszka Płonka 389 28. Fractional Reserve Banking Unmasked Luis Enrique Ponce Goyochea 401 29. The Hayek MV-Rule Pavel Potuzak 409 30. The Austrian School of Economics in Spain: From Dictatorship to Democracy. The Roots for the 21st Century Carlos Puente 423 31. Dynamic Monetary Theory and the Phillips Curve with a Positive Slope Adrián O. Ravier 433 32. Carl Menger and His Theoretical Foundations to Austrian Economics Stanislaw Rzepka 455 33. Baumol-Tobin: An Austrian Perspective Carlos Alberto Salguero, María Bernarda Salguero 467 34. UBI – Utopian Dream or Dystopian Nightmare? Antony Sammeroff 487 #ITSCOMINGHOME2019 9 Content 35. The Future of the European Union Seen from the Perspective of the Austrian School of Economics Karl Socher 495 36. The Natural Market, of the Natural Order, in Contraposition to the “Free” Market Alejandro A. Tagliavini 507 37. Mengerian Foundations and the Austrian Business Cycle Theory: Linkages and Controversies András Tóth 515 38. Intellectual Dark Web – A Series of Footnotes to Hayek Žiga Turk, Federico Reho 545 39. Resolving the St. Petersburg Paradox: A Triumph for Austrian Economics Robert W. Vivian 561 40. Austrian Economics as a Paradigm of Golden Mean Thinking Jakub Bożydar Wiśniewski 575 41. Free Banking and the Capital Structure of Production Karol Zdybel 585 42. The Logic of the Reform Contained in the “Dual Track System” Zhu Haijiu 599 10 #ITSCOMINGHOME2019 11 12 Preface Robert Holzmann Excellencies, Madame President, Dear guests and participants of the conference “The Austrian School of Economics in the 21st century. Welcome to Austria, welcome to Vienna, welcome to the Austrian National Bank. This is a great “Coming home” – like stated in the invitation to this conference. The internationally renowned Austrian School of Economics finally is getting public recognition in Austria as well. This event coincides with the current discussion about the introduction of digital money in which the thinking of the School of Austrian Economics experiences a comeback on the international stage. The recent book by Thomas Mayer on “Austrian Economics, Money and Finance” is a prestigious example. Besides digital money, cash always will remain a necessary and valuable method of payment in the near future – however, as Friedrich von Hayek once said: “The advice I would give is: If you have the courage to do so, don’t feel patriotic in monetary matters. Choose the money which helps you best.” Personally, I think this also fits to the form of money not only to the currency itself. In academic circles is often jokingly claimed two economists mean five opinions. However, this ironically-meant phrase has a true kernel: it is precisely the diversity of opinions that makes events such as this high-calibre conference so valuable. To quote Friedrich von Hayek again, “The fact that the market economy is much more knowledgeable about facts than any individual or even any organization is the crucial reason why the market economy does know more than any other economy.” The “knowledge of facts” and the conclusions that result will be at the forefront of this conference. Many thanks to the Friedrich A. von Hayek Institut for making this event possible. I wish you exciting and informative discussions as well as an interesting time in the beautiful city of Vienna. Robert Holzmann Governor, Oesterreichische Nationalbank 13 The History of the Austrian Economics Conference It is with great pleasure that we write these lines to introduce this volume, which edits most of the papers presented at the 8th International Conference “The Austrian School of Economics in the 21st Century.” The event was held at the Oesterreichische Nationalbank (OeNB) on November 13th and 14th, 2019. It was co-organized by Fundación Internacional Bases, the Austrian Economics Center (AEC), and the Hayek Institut. This Austrian conference was originally born in Rosario, Argentina of all places. Even though this country is not particularly famous for the adoption of sound economic policies, it has had a strong Austrian tradition for many decades now. In fact, Ludwig von Mises himself gave a series of six lectures in Argentina in 1959. Incidentally, these lectures were later edited as a book under the title Economic policy: Thoughts for Today and Tomorrow. According to the Mises Institute1, it is probably Mises’s best selling book. Thanks to the efforts of Alberto Benegas Lynch (Sr), who invited Mises to Argentina, the Austrian School took root in the country. The other two most influential Austrians are Alberto Benegas Lynch (Jr) and Juan Carlos Cachanosky. Standing on the shoulders of these three giants, the Austrian school grew, disseminated scholars in several universities, and created higher learning institutions of its own like ESEADE. Juan Carlos Cachanosky is a key figure for the growth of the conference and its current form. Sadly, Juan Carlos passed away much too early on the last day of 2015. As a way to honor his memory and work we established in Vienna in 2019 the Juan Carlos Cachanosky Memorial Lecture, which we plan to continue throughout all future editions of the conference. The Austrian conference started in 2006. Originally, with a biannual frequency, in its previous seven editions it has brought together figures such as Richard Ebeling, Jörg Guido Hülsmann, Benjamin Powell, Fernando Nogales, Alexander Salter, Mark Notturno, Arturo Damm Arnal, Christopher Lingle, Lawrence White, and Stephen Hicks,