The Next Generation of Austrian Economics.Indb

T« Nøã GÄÙã®ÊÄ Ê¥ AçÝãÙ®Ä EÊÄÊÃ®Ý Joseph Th omas Salerno T« Nøã GÄÙã®ÊÄ Ê¥ AçÝãÙ®Ä EÊÄÊÃ®Ý EÝÝùÝ ®Ä HÊÄÊÙ Ê¥ JÊÝÖ« T. S½ÙÄÊ E®ã ù PÙ Bù½çÄ Ä Dò® HÊóÄ M ISESI NSTITUTE Published 2015 by the Mises Institute. Th is work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 4.0 International License. http://creativecommons.org/licenses/by-nc-nd/4.0/ Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832 mises.org ISBN: 978-1-61016-593-8 eISBN: 978-1-61016-636-2 CÊÄãÄãÝ Foreword. .7 Llewellyn H. Rockwell, Jr. Introduction . .9 Per Bylund and David Howden I. Money . .17 1. Th e Quality of Monetary Regimes . .19 Philipp Bagus 2. Subjectivism in International Economics: Why Absolute Purchasing Power Parity Does Not Hold . .35 Simon Bilo 3. Money. .43 David Howden 4. High-Frequency Trading: A Note on Spot vs. Future Trades, Property Rights, and Settlement Risk . .59 Guillaume Vuillemey II. Mundane Economics. .73 5. Unsuspected Origins of Modern Austrian Economics: Th e Historical School of Economics on Capital and Economic Calculation . .75 Eduard Braun 6. Th e Realm of Entrepreneurship in the Market: Capital Th eory, Production, and Change . .89 Per Bylund 5 6 Th e Next Generation of Austrian Economics 7. “Mises and Hayek Mathematized”: Toward Mathematical Austrian Economics . .105 Marek Hudík 8. A Note on the Limits to Monopoly Pricing . .123 Xavier Méra III. Policy . .137 9. Hayek on the Regulation of the Banking System and Central Bank Policy . .139 Mateusz Benedyk 10. Fiat Money and Government Defi cits . .153 Amadeus Gabriel 11. Knowing and Entrepreneurship . .167 Mateusz Machaj 12. Economic Policy and Entrepreneurship: Alertness or Judgment? . .183 Matthew McCaff rey 13. Prospects for Interdisciplinary Engagement with International Relations . .201 J. Patrick Rhamey Afterword . .219 Peter G. Klein Index . .229 Contributors. .239 FÊÙóÊÙ L½ó½½ùÄ H. RÊ»ó½½, JÙ.* ft er Joey Rothbard’s death, I fl ew to New York to organize the dis- posal of Murray and Joey’s goods according to their wills. Books and papers went to the Mises Institute, of course, where they are the center of our library and archives. But my strongest memory, Aaside from ineff able sadness, was the printed document on the small table next to Murray’s reading chair in the living room. It was Joe Salerno’s doctoral dissertation. To me, that has always symbolized Murray’s relationship with Joe, whom he praised as a wonderful economist, and — perhaps almost as important in our times — as a brave fi ghter against error and sellout. Joe has been a strong intellectual infl uence on the Mises Institute since our founding. How appropriate that he is also Murray’s successor as our academic vice president. Joe infl uences so much. Th e Mises University, the Austrian Economics Research Conference, and the Summer Fellows Program are all under his aegis, and much the better for it. Not only is Joe an important scholar, he is a teacher of the sort we would all have loved to have had. No one could be more patient, rigorous, detailed, and loving. Forget Mr. Chips. We’ve got Joe Salerno. *Llewellyn H. Rockwell, Jr. is chairman and CEO of the Mises Institute, Auburn, Alabama. 7 IÄãÙÊçã®ÊÄ PÙ Bù½çÄ Ä Dò® HÊóÄ en years ago Joe Salerno inherited the Mises Institute’s summer fellowship program from his predecessor, Jörg Guido Hülsmann. Generously funded by Peg Rowley, summer fellows are given time to study Austrian economics fi rsthand with some of the current Tmasters. Not only is a sense of camaraderie inculcated amongst the partici- pants, but they are also given access to the world’s best Austrian economics library and other resources. Frequent visits by friends of the Institute give these young scholars the ability to ask questions about the theory and history of the movement, and give them an ability to become a part of its ongoing evolution. Central to this fellowship is the mentorship of Professor Salerno him- self. Under his stewardship the program has brought 138 students to the Institute’s facility in Auburn, Alabama, from 2005 to 2013. Th ese students have produced magnifi cent works central to Austrian economics during their summers in Auburn, and have gone on to take active roles in both the academic community and with private industry. Perhaps more important than the careers that these young scholars have gone on to live is the enlightenment that they have shared with others through their daily lives. Using their argumentation skills fomented during their stays at the Mises Institute, these scholars have had their reach extended to others in subsequent encounters. We are all the better off for it. Th e contributors to the present volume come from the ranks of PhD students, post-doctoral researchers and university professors. Th ey have 9 10 Th e Next Generation of Austrian Economics reached out to others in a bid to have the truth of their studies heard by the widest audience possible. Professor Salerno’s work in fostering debate and encouraging students during their summer in Auburn has no doubt been infl uential in spurring on this activism. Th e present book is divided into three sections: money, policy and what we can refer to as mundane economics, the study of the basic, yet vital top- ics of the science. Each section represents an important area of Professor Salerno’s own research and his imprint on each chapter should be apparent to the reader. Suffi ce to say, a brief overview of his contributions will assist the reader in seeing his impact on the development of these young Aus- trian scholars in particular, and on Austrian economics in general. IÄ¥½çÄ ÊÄ MçÄÄ EÊÄÊÃ®Ý Professor Salerno is one of the leading contemporary theorists in the Austrian tradition. A former colleague of Murray Rothbard’s, Professor Salerno has made his unfading mark on the theoretical Austrian literature through several infl uential as well as highly provocative articles. He has also changed the landscape for Austrian theorizing and the self-perception of Austrians. His perhaps most debated contribution is “Mises and Hayek Dehomog- enized” (1993), an article that essentially rewrote the history and sociology of the Austrian school. Professor Salerno here argues that “the Mengerian tradition was developed in very diff erent directions by his brilliant followers, Eugen von Böhm-Bawerk and Friedrich von Wieser, and by their own students and followers” (1993, p. 114). In fact, Professor Salerno argues, these directions constitute “very diff erent paradigms.” eTh former focuses on monetary calculation and resource allocation using actual market prices and comprises the social rationalism of Mises (Salerno 1990) and the judg- mental entrepreneur (Salerno 2008b); one may also add the distinctly Aus- trian method of praxeology (see e.g., Rothbard 1951a; 1951b). Th e latter, in contrast, is a “general equilibrium tradition” (Salerno 2002) focused on the problem of coordination due to dispersed and tacit knowledge (see Hayek 1937; 1945) and much more inclined to quantitative analyses. While only one of many infl uential contributions, the “dehomoge- nized” article represents Professor Salerno’s contributions to Austrian theory well. His contributions to “mundane” theory are primarily in the form of integrating existing theories and prospective theoretical perspectives by off ering reinterpreting and contextualizing commentary, comparisons, and theoretical extensions. While perhaps not as glamorous as producing Introduction 11 thousand-page treatises, this important integrative work is what produces a consistent body of theory that defi nes and furthers a tradition or school of thought. Salerno’s work has strengthened the Austrian theoretical tradition and helped identify precursors and “proto-Austrians.” His work stretches beyond publishing in specifi cally Austrian journals and discussing exclu- sively Austrian theorists. Much thanks to Professor Salerno’s work, we are able to trace the philosophical origins of Austrian thought centuries if not millennia back in time and can identify kinship with other traditions. To exemplify, Professor Salerno has pursued illuminating commentary on the legacies of Carl Menger (Salerno 2004; 2010a), Eugen von Böhm-Bawerk (Salerno 2008), Ludwig von Mises (Salerno 1995a; 1999; 2012), Murray N. Rothbard (Salerno 2006), as well as of the French Liberal school’s Jean- Baptiste Say and Frédéric Bastiat (Salerno 1978; 1985; 1988; 1998; 2001), and has addressed the theoretical origins and shortcomings of opponents and competing traditions (Salerno 1992). Professor Salerno has also addressed traditions in monetary theory (Salerno 1991), but this work has come to be overshadowed by his important theoretical advances related to macroeconomics and money, especially monetary policy, business cycle theory (Salerno 1989; 2012b), and the calculation problem (Salerno 1990b; 1994b; 1996a). MÊÄù Ä PÊ½®ù Besides his work on the more mundane aspects of economics, Professor Salerno has pushed forward the development of the one topic, besides method, that most separates neoclassical from Austrian economists: business cycle theory. Th is focus stems from the fact that the Austrian theory [of the business cycle] embodies all the dis- tinctive Austrian traits: the theory of heterogeneous capital, the structure of production, the passage of time, sequential analysis of monetary interventionism, the market origins and function of the interest rate, and more. (Salerno 1996b) While this focus on business cycle theory has most recently been sum- marized

Load more