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Cambridge University Press 978-1-107-01242-4 - The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years Lawrence H. White Index More information

Index

Acemoglu, Daron, 273 Bailey, Martin J., 396 Acheson, Dean, 277 Balaam, David N., 11 Ackley, Gardner, 321 Bank of England, 87, 281, 283 Adenauer, Konrad, 235 Bank Charter Act of 88, 402–03 Akerman, Johan Banking School, 89–90 warning of impending 1929 bust, 76 and real bills doctrine, 89 Allais, Maurice, 268, 269 Barro, Robert J., 397, 400–01 American Economic Association, 19, 22, on size of the spending “multiplier”, 404 110, 307 Bastiat, Frederic, 243, 368–69 opposition to laissez-faire, 115 Candlemaker’s petition, 368–69 anarcho-capitalism, 17, 25, 205, 239 Bauer, Otto, 35 Association for Private Enterprise Bauer, Peter, 246, 252, 262, 272 Education, 215 biography, 270 Attlee, Clement, 173, 174 on India’s Second Five-Year Plan, 255 opposition to free market economy, 175 Bellamy, Edward, 117 Austrian business cycle theory. See business Bentham, Jeremy, 20, 191–93, 339 cycles, Austrian theory of on economic policy and the role of Austrian economics, 3, 12, 36, 72 government, 195 C. Menger’s theory of price formation, 226 Bergson, Abram, 63 capital theory evaluation of socialist calculation debate, 65 C. Menger’s contribution to, 78 Berle, Adolf A., Jr., 110 criticism of, 91 Bernanke, Ben, 299 E. von Böhm-Bawerk’s contribution to, Beveridge, William, 164, 184 78, 80, 85–86 Bhagwati, Jagdish, 250, 264 Hayekian triangle, 78–80 on influence of Western economists on emergence of money, 226–29 Indian economists, 250 interest support for liberalization of Indian E. von Böhm-Bawerk’s contribution to economy, 264–65 theory of, 85–86 bimetallism, 288–93 equilibrium rate as intertemporal price and inflation, 291–93 coordinating saving and investment, international, 289 85–86 Boettke, Peter, 33 Wicksell’s contribution to theory of, 86 Böhm, Franz, 235, 239, 244 opposition to Real Bills Doctrine, 97 Böhm-Bawerk, Eugen von, 35, 44, 78, 317 and spontaneous order theory, 224–25 contribution to capital theory and Austrian Ayres, Clarence, 109 economics, 85

413

© in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-01242-4 - The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years Lawrence H. White Index More information

414 Index

Boldrini, Marcello, 268, 269 and free banking, 74–75 Bolshevism, 28 Keynesian theory of, 72 influence in central Europe, 34 L. v. Mises’ policy prescription for, 74–75 Revolution of 1917, 3 Monetarist theory of, 323 Bordo, Michael D., 299 pre-Keynesian theories of, 71–72, 88–90 Boudreaux, Donald, 362 Banking School, 89–90 Brain Trust, FDR’s, 102, 110 comparison between schools, 88–90 Bretton Woods, 4, 237, 309, 361 Currency School, 88–89 conference and agreement, 275–78 difference between Mises and Hayek’s foreign exchange under, 300–02 position on, 89 international monetary system after,277 Free Banking School, 89 and J. M. Keynes, 275, 276–78 policy prescriptions of, 72 and Keynesian economic policies, 277 underconsumption theory of, 103–06 objectives of, 300 F. Engels on, 104 system’s end, 300–02 J. A. Hobson on, 105 Bright, John J. M. Keynes’ criticism of, 105 and Anti-Corn-Law League, 371–72 R. Tugwell on, 103–04 Bronfenbrenner, Martin, 257 Wicksell’s cumulative process, 87 Brunner, Karl, 320 Brutzkus, Boris, 33 Caldwell, Bruce, 169 Bryan, William Jennings, 189 Cambridge, Univ. of, 12, 13, 247, 372, 376 and bimetallism, 292 Cannan, Edwin, 212, 219 Buchanan, James M., 7, 230, 335, 356, capitalism, See also free-market economy 357–59, 398 use of term, 10–11 critique of Keynesian economics. See Caplan, Bryan, 357 public finance, J. M. Buchanan Castle, Barbara, 175 and R. Wagner on Cato Institute, 270 and Public Choice, 355 central banking, 27 budget deficits. See public finance and gold standard, 283, 298–300 Burkhead, Jesse, 388 and inflation, 302–05 Burns, Arthur, 306, 309, 310 L. v. Mises on potential for overexpansion of business cycles money and credit under, 87 T. Joplin-F. A. Hayek scenario of concerted central planning, 33 overexpansion of credit, 87 and development economics. See Austrian theory of, 14–15, 72, 73–82 development economics, characterization as ‘hangover’ theory of and central planning recession, 82 and freedom of choice, 166 evidence in support of, 76 in India. See India, and central planning F. A. Hayek contra J. M. Keynes and M. and individual liberty, 15, 17, 100, 164–68 Friedman, 82 movement in liberal nations towards, F. A. Hayek’s contribution to, 71, 75–76 161–64 J. M. Keynes’ objection to, 77 tendency toward totalitarianism under, L. v. Mises’ contribution to, 71, 73–74 164–68 malinvestment, 73 unintended consequences of, 168 summary of F. A. Hayek’s version of, Cesarano, Fillipo, 302 81–82 Chang, Ha-Joon view of bust and recession, 76–77 on infant industry argument, 372 Austrian vs. Monetarist theories of, 328–29 Cheung, Steven, 345 and central banking, 72, 73–74 Chicago, Univ. of, 6, 16, 203, 272, 310, 320, F. A. Hayek on price stablization policy and, 330, 332 82–85 Chidambaram, P., 261 F. A. Hayek’s policy prescription for, 82–84 Choudhri, Ehsan U., 299

Index 415

Churchill, Winston, 173, 174 consumer sovereignty, 160 Clark, John Bates, 188 coordination problem, 224–25 Clark, John Maurice, 72, 109 Corn Law, Great Britain, 366 classical economics Anti-Corn-Law League, 371–72 J. M. Keynes’ use of label, 71 popular opposition to, 370–72 labor theory of value, 43–44 corporativism. See fascism monetary theory, 278–87 crony capitalism. See state capitalism and public finance, 386 Currency School, 88–89, See also business classical liberalism, 15, 16, 26, 155, 165, 168, cycles, pre-Keynesian monetary 169, 194, 195, 196, 201, 205, 241 theories of 71, 87 as alternative ‘road’, 168 support for monetary rule, 89 and conservatism, 230 influence on A. Smith, 216 Davanzati, Bernardo, 318 intellectual climate of opinion towards, 202 Davis, Arthur K., 117 and F. A. Hayek, 4, 15, 168, 203, 208, 230 De Soto, Hernando, 274 and M. Friedman, 310 deficit spending. See public finance and Mont Pelerin Society, 205 DeLong, J. Bradford, 322 and Ordoliberalism. See Ordoliberalism on socialist calculation debate, 66 political economy of, 208 development economics, 267–70, 271–74 and Public Choice, 359 and central planning, 267–70 and spontaneous order theory, 229–30 and econometrics, 268–69 tradition of, 208–09 endogenous growth theory, 272 Clay, Gen. Lucius, 231 Harrod-Domar model, 256, 268, 271 Coase, Ronald, 332–33, 346 and role of institutions, 272–74 on A. Smith and invisible hand, 347 Solow model, 271 biography 346–47 ‘underdevelopment trap’, 267–68 Coase Theorem. See Coase Theorem diamond-water paradox, 44, 45 and externalities, 347–49 Director, Aaron, 203, 332 on German Historical School, 115 division of labor, 42, 211–13 on role of property rights, 348 Dobb, Maurice, 48, 190 Coase Theorem, 332–33, 347–49 Dobbs, Lou, 362 limits of, 349–52 Domar, Evsey, 256 and transactions costs, 349–52 Durbin, Evan, 177 Cobden, Richard and Anti-Corn-Law League, 371–72 Easterly, William, 271 Cockett, Richard, 206 Eckstein, Otto, 391 Cole, G. D. H., 179, 185 on public finance, 391 colonialism, 364 econometrics, 268 Columbia Univ., 10, 99, 110, 250, 271, 309, 322 economic policy Commons, John R., 19, 22, 109 experiments in, 1 Communism major issues and debates, 1, 3–4 Russian, 17 role of government, 8–11 Communist Manifesto, 29 economics comparative advantage, 224, 366–68 policy relevance, 2 A. Smith on, 366 positive versus normative, 9–10 and case for free trade, 366–68 economists D. Ricardo on, 368 and collapse of Soviet socialism, 63–67 J. S. Mill on, 372–73 ideology of, 18–25 versus absolute advantage, 367, 368 policy disagreements, 2 Conquest, Robert, 182 political influence, 2, 5–7, 19–20 constitutional political economy. See Public support for interventionism, 18–25, 252 Choice Edie, Lionel D., 297

416 Index

Eichengreen, Barry, 97, 298–99 policy, post-WWII, 307–08 Ely, Richard T., 19, 22, 109 Quantitative Easing, 409 ideology of, 117 role in Great Depression, 310–13 Engels, Friedrich, 28, 30 Feldstein, Martin, 402 Entrepreneurship, 42 Ferguson, Adam, 222 Erhard, Ludwig, 231, 232 influence on A. Smith, 222 biography, 233–35 Finer, Herman, 170 and decontrol of German economy, 231 fiscal policy. See public finance Eucken, Walter, 158, 202, 204, 234, 235, 237, Fisher, Antony, 205 239, 245 Fisher, Irving, 22, 24, 72, 322, 329, 339 biography, 241–42 biography, 316–18 eugenics. See Progressivism, and eugenics on economic policy and the role of European Central Bank, 383, 406 government, 25 European Union, 383 on economists and laissez-faire, 24, 25 externalities, 23, 25, 332 on externalities, 25 and Coase Theorem. See Coase Theorem on gold standard, 68 government regulation of, 50, 51, 345 and loss of personal fortune in 1929 stock internalization of. See Coase Theorem market crash, 68 Pigou on, 344–45 optimism before 1929 crash, 150 Pigovian taxes on, 344 Quantity Theory of Money, 314 positive, 343 Fitzpatrick, Sheila, 38 and property rights, 348 Flynn, John T. public goods as positive, 343–44 on New Deal and fascism, 101 R. Coase on, 347–49 Foldvary, Fred E., 341 Foundation for Economic Education, Fabian socialism, 162, 187 203, 204 economics and ideology of, 187 free banking, 25, 27, 74–75, 281–82 economics of, 189–91 A. Smith on, 217–18 influence of Georgism on, 187, 189 business cycles. See business cycles, and free influence of J. S. Mill on, 201 banking influence on Indian economic policy, F. A. Hayek on, 83 247–50 L. v. Mises on, 74–75 Fabian Society, 4, 178, 179, 183, 201, 203, M. Friedman on, 328 204, 208 Free Banking School, 89, 281–82, overview of, 178–79 See also business cycles, political influence of, 179 pre-Keynesian monetary fascism, 100–01 theories of 87 ambiguous economic principles of, free-market economy, 10 155–57 free trade. See trade policy, free trade as economic policy system, 100 Freiburg School. See Ordoliberalism Federal Reserve, 306 Friedman, David D., 17 Act of 1913, 27 Friedman, Milton, 4, 7, 128, 151, 152, 154, 202, banking system, 19, 27 203, 306, 332, 360 effect of Real Bills Doctrine on monetary biography, 309–10 policy of, 95, 98 criticism of central planning in India, and financial crisis of 2007–08,327 263–64 and gold standard, 297 criticism of F. A. Hayek’s business cycle “Monetarist Experiment”, 309 policy prescriptions, 93 Monetarist proposals to constrain, 326–28 criticism of Federal Reserve policy, 306–07 policy during 1920’s economic boom and critique of Keynesian economics, 313–14 bust, 69–70 on economic policy 1929 bust, 82

Index 417

on free trade, 360 globalization methodology, 330 first age of, 26 on Mont Pelerin Society, 204 recent trend toward greater, 361 policy prescriptions. See Monetarist Goerdeler, Carl, 234 economics, policy proposals gold standard, 4 and Public Choice, 335 A. Marshall and I. Fisher on, 293–94 on socialism and academia, 163 bimetallism. See bimetallism on trade wars, 379 and Bretton Woods. See Bretton Woods, Frisch, Ragnar, 252, 268 conference and agreement Fullarton, John, 89 and central banking, 283 and classical economics, 278–87 Galbraith, James F. A. Hayek on, 84, 276, 297 on J. K. Galbraith and mainstream influence and Federal Reserve, 297 of Institutionalist economics, 109 in Great Britain, 276, 295 Galbraith, John Kenneth, 8, 113, 124, 150, 249, and Great Depression, 298–300 252, 253 and inflation, 287–88 on economic policy and the role of as international monetary system, 275 government, 124–25, 334 J. M. Keynes on, 14, 276 as mainstream economist, 109 M. Friedman on, 325 on Mont Pelerin Society, 205 monetary policy under, 277, 298–300 on post-WWII economic policy in price-specie-flow mechanism, 279–80 Germany, 232 rise and fall in popularity of, 282 support for central planning in India, in United States, 276, 287, 293, 295, 302 253–54 and WWI, 295–98 Gandhi, Indira, 259 end of, 309 Gandhi, Mohandas, 247 Goldschmidt, Nils, 240 economic philosophy of, 247 Göring, Herman, 157 Garrison, Roger, 93 government General Agreement on Tariffs and Trade,361 failure, 352. See also Public Choice general equilibrium theory, 49, 61, 330 versus market failure, 338, 352 George, David Lloyd, 27 public goods and, 336–38 George, Henry, 187–89 Great Britain, 4, 20, 180, 181, 276 criticism of infant industry argument, 376 nationalization of industry in, 177–78 support for free market economy, 190 postwar policies in, 175, 176–78 Georgism, 187–89 Great Depression, 3, 27, 70, 81, 92, 94, 99 criticism by economists of, 188 contrasting views of M. Friedman, F. A. German Historical School, 112, 113–16, 160, Hayek, and J. M. Keynes on, 312 236, 375 criticism and effect of F. A. Hayek and L. dismissal of economic theory, 115 Robbin’s policy prescriptions for, influence on Institutionalist economics, 93–95 113–16 explanations for slow recovery, 128–29 German National Socialism. See Nazism extent of, 127 Germany and gold standard, 298–300 postwar decontrol of economy, 231, J. M. Keynes’ explanation for cause of, 129 232–33, 236 M. Friedman and A. Schwartz’ monetary postwar economic conditions of, 231–32 explanation for cause of, 128, 310–13 under Nazism. See Nazi Germany money supply during, 146 Geršl, Adam, 237 policy response to, 131 Gilbart, James William, 89 and Real Bills Doctrine, 98, 311 global warming. See market failure, Hoover administration, 94 pollution Roosevelt administration. See New Deal

418 Index

Greece, 382 influence of L. v. Mises on, 14 public finance issues in.See public finance, on the influence on Ordoliberalism, 237 sovereign debt crisis on Institutionalist economics, 116 Greenspan, Alan, 304 introduction to economics, 12 Gresham’s Law, 290–91 on knowledge problem, 42, 53–58 D. Ricardo on, 290 and entrepreneurship, 54 Grossmann-Doerth, Hans, 235 nature of problem, 54–55 Gwartney, James D., 403 on L. v. Mises, 35 monetary policy prescriptions, 97 Haberler, Gottfried, 72 and Mont Pelerin Society, 207 Hamilton, Alexander, 336, 373 on need for liberal Utopia, 208 on free trade and protectionism, 373–75 Prices and Production, 72 Hansen, Alvin, 77, 151, 386, 387, 391, 395 Pure Theory of Capital, The, 92 on Austrian business cycle theory, 81 response to criticism on inevitability of central planning, 163 of business cycle theory, 92 Harding, Warren G., 27 Road to Serfdom,The, 4, 7, 15, 17, 164–68, Harper, F. A., 203 169, 177, 184, See also central Harrod, Roy, 256 planning, and individual liberty Hawtrey, Ralph, 72 on similarities between fascism and Hayek, Friedrich A., 3, 12, 36, 39, 54, 262, socialism, 100, 156, 164–65 317, 328 and socialist calculation debate, 53–61 biography, 14–16 on policy response to Great Depression, on British inter-war mixed economy, 161 131 business cycle theory of. See business cycles, on prices and production, 91 Austrian theory of on short-run policy focus, 148 and classical liberalism. See classical spontaneous order theory of. liberalism, and F. A. Hayek See spontaneous order, theory, of on competition as discovery process, 61–62 Hayek contra J. M. Keynes, 17–18, 77, 91 the influence of ideas and intellectuals,5 on Prices and Production, 91 on the term ‘capitalism’, 11 on policy response to Great on threat to liberty from central planning, Depression, 131 164–68 on short-run policy focus, 148 on unintended consequences of central Criticism planning, 167 of Federal Reserve policy during on ‘why the worst get on top’, 166 1920’s, 98 wider intellectual influence of,61–63 of Real Bills Doctrine, 98 Hazlitt, Henry, 169, 203 criticism received Heidegger, Martin, 241 for alleged ‘do-nothing policy’ Heilbroner, Robert prescriptions, 93–94 on socialist calculation debate, 66 for business cycle theory, 90–92 Henderson, Leon, 113 N. Kaldor on, 90–91 Hicks, John, 151, 339, 395 for capital theory, 92 Hirshleifer, Jack, 33 for monetary policy, 92 Hitler, Adolf, 100, 155, 157 for Prices and Production, 90, 91 economic policy of, 155 E. v. Böhm-Bawerk’s influence on,85 Hobbes, Thomas, 336 on economic coordination, 56–57 Hobson, J. A., 345 on economic policy and the role of on economic policy and the role of government, 17 government, 105 on gold standard. See gold standard, F. A. on imperialism, 105 Hayek on influence on R. Tugwell,104 Hayekian triangle, 78–80 on underconsumption, 105

Index 419

Hodgskin, Thomas,197 political and professional influence of, Hoover, Herbert 108–10 response to Great Depression, 94 support for New Deal, 109 Hoover Institution, 310 institutions, 272 Horwitz, Steven, 224, 229 and economic development, 273–4 Hume, David, 221 interest rate on gold standard. See gold standard, and market versus natural rate, 86 classical economics International Monetary Fund, 276, 301, 383 influence on A. Smith, 222 interventionism, 9 theory of price-specie-flow mechanism economics as science of, 19 Hutcheson, Francis, 219 and fascism, 157 hyperinflation, 74, 88, 237 financial and monetary, 27 paternalist, 112 ideas, economic invisible hand, 16, 214–16, 229, 238, 250, 268, clash of, 1 347 origin and spread of, 7–8 and market failure, 341 political influence, 5–7 R. Tugwell on, 9, 111, See also spontaneous income redistribution, 23, 50 order as a public good, 353–55 Ireland. See public finance, sovereign debt India, 246 crisis and central planning, 248, 253–58 Irwin, Douglas A., 363, 367–8, 372, 375–7 M. Friedman criticism of, 263–64 corruption and interventionism in, Japan. See public finance, sovereign debt crisis 259–61 Jasay, Anthony de, 193 economic interventionism in, 259–61 Jefferson, Thomas, 194, 336 economic liberalization of, 264–66 Jevons, William Stanley, 78, 287 economic policy following independence and marginalist revolution, 45 of, 247–48 Johns Hopkins Univ., 19 influence of Fabian socialism in,247–50 Johnson, Lyndon B., 302, 391 ‘Permit Raj’, 259 Johnson, Simon, 273 black markets under, 261 Joplin, Thomas, 87 Second Five-Year Plan, 246, 258 slow economic growth in, 261 Kaldor, Nicholas, 90, 250, 252 inflation, Kalt, Joseph, 352 and bimetallism, 291–93 Kennedy, John F., 391 and central banking, 302–05 Keynes, John Maynard, 3, 12, 21, 71, 72, and gold standard, 287–88 126, 162, 167, 247, 269, 270, and government revenue. See seigniorage 386, 387 “Great Inflation”, 303, 308 biography, 13–14 input-output analysis, 258 and Bretton Woods, 13–14 in United States, 307–08, 309 contra F. A. Hayek, 17–18, 77, 91 Keynesian theories of, 308, 322 attack on Hayek and Prices and Monetarist theory of, 306. See Quantity Production, 91 Theory of Money on policy response to Great Depression, under commodity and fiat standards, 131 302–05 rejection of argument in The Road to wage and price controls as policy response Serfdom, 171 to, 306, 307 death, 278 Institute of Economic Affairs, 205 on economic policy and the role of Institutionalist economics, 3, 18–20, 109 government, 16–18 German Historical School’s influence on, economic theory of, 14. See also Keynesian 113–16 economics

420 Index

Keynes, John Maynard (cont.) Phillips Curve and inflation, 152–53, 322 on economists and laissez-faire, 21 Post Keynesian school, 153 on economists focusing on practical propensity to consume, 133 problems, 126 public finance, 387–91 on first age of globalization, 26 critiques of, 392–407 General Theory of Employment, Interest, revolution in economics, 127 and Money, The, 3, 7, 14, 17 sticky wages, 148 on gold standard. See gold standard, main points as summarized by P. J. M. Keynes on Krugman’s , 131 on Great Depression, 14 summary of depression theory of, 148 on the influence of ideas and intellectuals,5 view of savings influence on policy. See also Keynesian widespread acceptance and influence of,7 economics, widespread acceptance explanations for, 150–51 and influence of, on economic on economic policy, 127, 391 policy127 Kirzner, Israel M., 62 laissez-faire, 16 Klein, Daniel B., 21, 341 on monetary policy before 1929, 82 Knight, Frank, 203, 310 prediction of General Theory’s success of, Koopmans, Tjalling, 251, 252, 268 126 Krugman, Paul, 8, 405 on Russian Communism, 17 on advocates of protectionism, 362 on self-defeating output restriction criticism of M. Friedman, 312 policies, 107 on economists and laissez-faire, 21 on Soviet Russia, 162 on fiscal policy, 390 use of label ‘classical economics’, 71 on J. M. Keynes and depression, 131 Keynes, John Neville, 13 on J. M. Keynes and orthodoxy, 149 Keynesian economics, 4, 14, 17, 18, 137, 244, on pre-Keynesian economics, 71 252, 303, 404 summary of The General Theory’s main as depression theory, 149 points, 131 circular flow, 133 support for punitive tariffs against Chinese contra Monetarism, 321–24 imports, 378 contrast to F. A. Hayek’s macroeconomics, and theory of protectionism, 378 137–39 Kydland, Finn, 331 critique of Say’s Law, 147–48 fiscal policy, 131, 387–91 labor theory of value, 30, 43–46 formalization of, 151–52 Labour Party (UK), 4, 163, 170, 173, 174, 177, General Theory of Employment, Interest, 179, 180, 183, 184, 248 and Money, The, 126 election victory of, 174 income-expenditure model, 133, 395, Fabian influence on, 186 405, 406 post-WWII economic policy of, 176–78 inflation, 308, 322 Laffer Curve, 401–410 IS-LM model, 151–52, 395 Laffer, Arthur, 402.See also Supply-Side Keynesian-type policy before the formal economics development of, 6 laissez-faire, 16, 18, 195 liquidity-preference interest theory, economists’ opposition to, 18–25 136–37, 147 origin of phrase, 223 M. Friedman’s critique of, 313–14 R. Tugwell on, 111 monetary policy, 130 Lange, Oskar, 37, 46, 252, 257, 339 multiplier effect, 404–07 biography, 48 neoclassical synthesis, 153 on economic policy and the role of New Keynesian school. See New Keynesian government, 58–61 economics on Marxian economics, 47–48 paradox of thrift, 135–36 and socialist calculation debate, 46–54, 58–61

Index 421

Laski, Harold J., 174, 183–84 criticism of theory of, 341, 352 defense of Soviet terror, 183 free-rider problem, 342–43 on economic policy and the role of market failure, 250, 337, See also government, 183–84 externalities Laughlin, J. Laurence, 292 pollution, 349–52 Leijonhufvud, Axel, 152 “tragedy of the commons”, 348 Lenel, Hans Otto, 245 versus government failure, 338, 352 Lenin, Vladimir, 8, 28 government regulation of, 350, 351 and problems implementing communism, market process 32–33 benefits from rivalrousl competition, 53 on Marxism, 31 entrepreneurial discovery, 61–62 Taylorism’s influence on, 118 entrepreneurship in the, 42 Leonard, Thomas C., 19 Marshall Plan, 233 Leontief, Wassily, 257, 258 Marshall, Alfred, 12, 14, 22, 51, 71, 188, 191, Lerner, Abba, 339, 386, 387 195, 315, 343, 344, 376 Leslie, T. E. Cliffe, 188 on economic policy and the role of Levy, David, 38, 65 government, 22, 23 liberalism on gold standard. See gold standard, A. transformation of meaning, 201 Marshall and I. Fisher on libertarianism, 169, 201, 205. See classical on laissez-faire, 22 liberalism; anarcho-capitalism Quantity Theory of Money, 319–20 Lippmann, Walter, 157, 164 Marx, Karl, 11, 28, 30, 207 List, Friedrich, 373 biography, 30 on infant industry argument, 375–76 Communist Manifesto, The, 30 Locke, John, 194, 273, 318, 336 economic theory of. See Marxian economics London School of Economics, 15, 90, 151, 164, on private property, 29 174, 179, 203, 262, 270, 347 Marxian economics, 30 Loyd, Samuel Jones, 88 exploitation theory of profit, 30 Lucas, Robert E., Jr., 272, 329, 330 labor theory of value, 43–44 Lutz, Friedrich, 237 surplus value, 30, 104 Marxism, 11 Machlup, Fritz, 72, 90, 203 historical prophecies, 29, 30 on Austrian business cycle theory, 80 influence in Europe post-WWI, 34–35 Macmillan, Harold, 161 theory of communism economy, 28, 30, 33 macroeconomics McCulloch, John R., 88 business cycle theory versus depression Meade, James, 177, 345 theory, 149 Means, Gardiner C., 108 J. M. Keynes as inventor of, 132–33 Meltzer, Allan H., 152, 299, 304, 320 New Classical school. See New Classical Menger, Carl, 12, 14, 36, 78, 224, 225 economics biography, 225–26 real business cycle theory, 331 and marginalist revolution, 45 Mahalanobis, P. C., 246, 253 and Methodenstreit with German Historical five-year plan for India,258 School, 114 Malinvaud, Edmund, 268, 269 spontaneous order theory of. See Malthus, Thomas Robert,141 spontaneous order, theory, Mandeville, Bernard, 220 of C. Menger influence on A. Smith, 220–21 theory of emergence of money, 226–29 Mankiw, Gregory, 154, 344 theory of price formation of, 226 marginalist theory of value, 12, 46 Mercantilism. 363–65, See also trade policy, marginal productivity theory of factor protectionism prices, 43 A. Smith critique of, 363–65 marginalist revolution, 12, 45 Miksch, Leonhard, 236

422 Index

Mill, James, 20, 196, 284, 318 policy proposals, 323–28 Mill, John Stuart, 21, 22, 43, 44, 71, 143, 169, constraints on Federal Reserve, 326–28 191, 196–201, 376 monetary rule, 325 defense of classical liberalism, 196 rules over discretion, 324 on economic policy and the role of research program, 320–21 government, 196–201 monetary calculation, 39–43 on infant industry argument, 372 monetary policy influence on Fabian socialism, 201 and gold standard, 298–300 Miller, Adolph, 97 interest rate distortion from expansionary, Miller, Preston, 409 82–85 on public finance policy reform, 412 in United States. See Federal Reserve; gold Mirowski, Philip, 206 standard, in United States Mises, Ludwig von, 14, 15, 35, 39, 62, 85, 165, money. See also Monetarisim 203, 240, 242, 328 commodity. See bimetallism; gold standard biography, 35–36 definition,226 business cycle theory of. See business cycles, emergence of, 226–29 Austrian theory of neutrality, 315 critique of labor theory of value, 43 Quantity Theory of. See Quantity Theory of on Currency School, 87 Money Currency School’s influence on,87 monopoly definition of socialism, 37 and antitrust policy, 243–44 on economic policy and the role of regulation of, 50, 51 government, 36, 243, 244 Mont Pelerin Society, 4, 15, 208, 229, 242, 244, on entrepreneurship, 42 269, 270, 325 on free banking. See free banking, L. v. activity of, 204 Mises on inaugural meetingof, 203–04 on German Historical School, 114 influence on M. Friedman, 310 Human Action, 36, 52 intellectual influence of, 206 influence on F. A. Hayek,14 , 35 origin of, 203 K. Wicksell’s influence on,88 purpose of, 205, 207 On monetary calculation. See monetary Müller-Armack, Alfred, 236 calculation; socialist calculation Muravchik, Joshua, 28 debate, monetary calculation Musgrave, Richard, 342 problem Mussolini, Benito, 99, 100, 155 private seminar, 36 Myrdal, Gunnar, 252 and socialist calculation debate, 36–43, on ‘underdevelopment trap’, 267 46–53 and business cycles. See business cycles, Nash, George H., 169 L. v. Mises’ policy prescription for National Bureau of Economic Research, 311 Theory of Money and Credit, 73 National Recovery Administration, 101, Mitchell, Wesley Clair, 72, 105, 109, 309 See also New Deal Moley, Raymond, 110 national socialism. See fascism; Nazism Molinari, Gustave di, 25 Nazi Germany, 100 Monetarisim, 4, 154, 308–09, 311, 385 economic policy of, 157–60 business cycle theory. See business cycles, Nazism, 100 Monetarist theory of Nazi Party, 100 contra Keynesian economics, 321–24 repression of dissidents and intellectuals explanation of Great Depression, 310–13 under, 155, 241, 242 influence of R. Lucas and New Classicals on, Nehru, Jawaharlal, 246, 247 330–31 on economic policy, 247–50 interest theory, 322 neo-liberalism, 201 “Old Monetarists”, 318, 323 network effect, 228

Index 423

Neurath, Otto, 35 and German Historical School, New Classical economics, 154, 323, 330–31 236, 240 New Deal, 3, 99, 101, 201 and laissez-faire liberalism, 239–41 Agricultural Adjustment Act, 101 and monetary systems, 237–38 as basis for current US farm policy, 108 and rent-seeking, 244 economic problems of, 107 Orwell, George, 171 economic problems of NRA and AAA, Owen, Robert, 23, 28 106–08 economists’ support for precursors of, 24 Panic of 27, 1907 and growth of government, 22 Pareto efficiency. See welfare economics, influence of R. Tugwell on,102–03 normative criteria Institutionalist economists’ support for, 109 Pareto, Vilfredo, 5, 6, 192 legal problems of NIRA and AAA, 108 biography, 338–39 National Industrial Recovery Act, 101 on the role of economic ideas, 5 declared unconstitutional by Supreme Parnell, Henry Stuart, 89 Court, 108 Patten, Simon, 109 National Recovery Administration biography, 111–12 influence of fascist economic policy on economic policy, 112 model on, 101 Peart, Sandra J., 65 negative effect on recovery of, 106–08, 128 Peel, Robert, 88, 371 precursors to, 27 Phelps, Edmund, 322 New Economic Policy of Lenin, 34 Physiocrats, 222 New Institutional economics, 244 Pigou, Arthur C., 22, 71, 72, 147, 172, 176, 191, New Keynesian economics, 153–54, 323, 195, 199, 346, 347, 349 331, 406 and externalities, 51, 343, 344–45 New York Univ., 271 on laissez-faire, 23 Newcomb, Simon, 314 objection to manner of J. M. Keynes’ Nicholas II, 28 criticism of F. A. Hayek, 91 NIRA. See New Deal, National Industrial Plant, Arnold, 347 Recovery Act; National Recovery Polanyi, Michael, 204 Administration Popper, Karl, 204 Nirvana fallacy, 338 Portugal. See public finance, sovereign debt Nixon, Richard, 302, 391 crisis Nobel Prize, 16, 310, 331, 358 Prescott, Edward C., 331 Nordhaus, William, 65 price system, 15, 347 North, Douglass, 272 abolition of, 33 Nozick, Robert, 17, 336 economic calculation under socialism NRA. See New Deal, National Recovery without. See socialist calculation Administration debate; monetary calculation economic coordination, 56–57 Obama, Barack, 405 Price, Bonamy, 281 objective theory of value. See labor theory of private property, 29, 273 value abolition of, 29 O’Driscoll, Gerald P., Jr., 399 and economic development. Oppenheimer, Franz, 234 See development economics, and Ordoliberalism, 235–41 role of institutions and antitrust policy, 243–44 and externalities. See externalities, and and constitutionalism, 238 property rights current status of, 245 profit and loss calculation, 37, on economic policy and the role of See also monetary calculation; government, 235–41 price system and F.A. Hayek, 237 progressive taxation, 25

424 Index

Progressivism, 18–20, 27 public goods, 217, 335 and eugenics, 24, 112 defining characteristics of, 340 and Institutionalist economics, 109 free-rider problem, 342–43 and paternalist interventionism, 112 income redistribution policies as, 353–55 and prohibition, 24, 112 positive externalities of, 343–44 and rule by experts, 24 private provision of, 341, 346 Technocracy, 113 and role of government, 336–38 views regarding fascist economic policy, 99 theory, 335, 339–44. See also welfare prohibition. See Progressivism, and prohibition economics protectionism. See trade policy, protectionism; policy proposals of, 342 Mercantilism; Public Choice, types of goods, 341 rent-seeking Prychitko, David, 43 Quantity Theory of Money, 308, 314–16 Public Choice, 4, 244, 335 and A. Marshall, 319–20 Calculus of Consent, The, 357 and I. Fisher, 314 concentrated benefits and dispersed costs,356 precursors to, 318–19 constitutional political economy, 355, 357–59 Quesnay, François, 222 as Coasean approach to politics, 359 J. M. Buchanan and G. Tullock on, Rae, John, 317 357–59 Raico, Ralph, 124 unanimity rule, 358 Ramesh, Jairam, 252, 259 influence of K. Wicksell on,358 Rappard, William, 208 overview of, 355 Rawls, John, 336 rent-seeking, 244, 355–57 Read, Leonard, 203 theory of government failure, 357 Reagan, Ronald, 206 debate over, 357 Real Bills Doctrine versus public goods theory, 356 definition of ‘real bills’, 95 public finance differences between F. A. Hayek’s monetary A. Smith on, 389 policy norm and, 97–98 budget deficits explanation of, 95–96 and Keynesian economics, 387–91 as guideline for monetary policy, 95 liability for, 391–93 major problems with, 96–97 and classical economics, 386 Reed, Harold L., 70 debate over, 385–86 Reinhart, Carmen, 385 debt trap, 382 rent-seeking. See Public Choice, rent-seeking fiscal policy, 385, 395 Ricardian equivalence. See public finance, P. Krugman on, 390 Ricardian equivalence issues in US, 383–85 Ricardo, David, 43, 71, 142, 224, 284, 389 J. M. Buchanan and R. Wagner on, Richter, Rudolf, 244 392–95, 399 Roaring Twenties, 68 and Keynesian economics, 387–91, 392 and economic boom and bust in US, 69–70 monetary expansion as a source of Federal Reserve policy during, 69–70 government revenue. See seigniorage Robbins, Lionel, 15, 50, 72, 94, 192, 203, 204, policy reform 207, 339 debate over, 412 on inflationary boom as cause of T. Sargent, N. Wallace, and P. Miller on, Depression, 81 412 Robertson, Dennis H., 72 Ricardian equivalence, 395–401, 404 Robinson, James A., 273 sovereign debt crisis, 382–85 Robinson, Joan, 250, 252, 270, 360 “unpleasant Monetarist arithmetic”, 412 Rockoff, Hugh, 23 critiques of, 392–407 Rodrik, Dani, 267

Index 425

Roemer, John, 66 and Fabian Society, 183 Rogoff, Kenneth, 385 Shenoy, B. R., 246, 254, 258 Romer, Christina, 405 biography, 262–63 Romer, Paul, 272 Shenoy, Sudha, 263 Roosevelt, Franklin, 27, 99, 107, 335 Sidgwick, Henry, 20, 21, 22, 191, 343, 372 on inflationary boom as cause of development of infant industry argument, Depression, 81 377 and ‘Brain Trust’. See Brain Trust Simons, Henry, 310 Röpke, Wilhelm, 155, 161, 204, 234, 236, 237 Singh, Manmohan, 262 biography, 242–43 Sismondi, Jean-Charles-Léonard on fascist economics, 155, 161 Simon de de, 141 Rothbard, Murray N., 17 Skidelsky, Robert rule by experts. See Progressivism, and rule by criticism of F. A. Hayek’s policy experts prescriptions, 93 Russia, 28 Smith, Adam, 1, 9, 11, 16, 43, 45, 71, 120, 191, Russian Revolution of 1917, 28 194, 198, 209, 221, 226, 227, 238, Rüstow, Alexander, 234 247, 250, 272, 273, 274, 284, 336, Rutgers Univ., 309 347, 360, 377 argument for free trade, 365–67 Sachs, Jeffrey, 10, 271 biography, 209 Sally, Razeen, 243 and classical liberalism, 208–09, 230 Samuelson, Paul, 8, 127, 135, 153, 339, 342, critique of colonialism, 364–65 346, 397 critique of infant industry argument, 373 evaluation of socialism, 65 critique of Mercantilism, 363–65 public goods theory, 335, 339. on economic policy and the role of See also public goods, theory government, 216–19, 336 on ‘underdevelopment trap’, 267 free banking, 210, 217–18 Sargent, Thomas, 405, 409 on gold standard. See gold standard, and on Keynesian multiplier estimates, 406 classical economics on public finance policy reform, 412 influence of B. Mandeville on,220–21 Say, Jean-Baptiste, 143, 386, See also Say’s Law influence of D. Hume on,222 of Markets influence of F. Hutcheson on,220 influence on Supply-Side economics, 401 as intellectual touchstone and icon, 209–10 Say’s Law of Markets, 144–45 on public finance, 389 J. M. Keynes’ critique of, 147–48 on public goods, 337 scarcity, 29 on seigniorage, 407 Schelling, Thomas C., 349 on self-interest, 211 Schmidtz, David, 338 spontaneous order theory of. Schmoller, Gustav, 114, 236, 240 See spontaneous order, theory, of Schumpeter, Joseph, 57, 172 A. Smith on German Historical School, 114 on system of natural liberty’, 215 Schwartz, Anna J., 128, 299, 310 Wealth of Nations, The, 210–11 seigniorage, 407–09 Smithies, Arthur Selgin, George, 27 on F. A. Hayek’s Pure Theory of Capital, 93 Seligman, Edwin R. A., 109 social cost. See externalities on ‘scientific’ methodology of German Social Gospel, 117 Historical School, 114 socialism Sen, Amartya, 250 arguments for, 50–52 Senior, Nassau, 279, 283–87 collapse of Soviet, 63–67 Shaw, George Bernard, 2, 126, 179, 182, 186, and current lack of a model of, 66 188, 190, 247 definition, 10

426 Index

socialism (cont.) subjective theory of value, 12, 46 market, 46–48, 49–50 subjective-marginal utility theory, 45 as transition between capitalism and Supply-Side economics, 401–04 communism, 33 Laffer Curve, 401–02 utopian, 28, 117 policy influence of, 402–03 K. Marx and F. Engels’ criticism of, Supreme Economic Council, 33 28–29 surplus value. See Marxian economics:surplus socialist calculation debate, 3, 36–66, 165, 224 value centralization vs. decentralization, 55–57 Switzerland, 202 contribution of F. A. Hayek to, 53–61 contribution of L. V. Mises to, 36–43, 46–53 tariffs. See trade policy, protectionism contribution of O. Lange to, 46–54, 58–61 Tavlas, George S., 382 economists’ views of, 63–66 Taylor, Fred M., 22 entrepreneurial problem, 52–53 Taylor, Frederick Winslow, 118 incentive problem, 38–39, 46 Taylorism, 118–20. See also Progressivism, knowledge problem, 53–58 Technocracy, rule by experts; F. A. Hayek on nature of, 54–55 Tugwell, Rexford G., and Taylorism monetary calculation problem, 39–43 Tea Party, 358, 385 Solow, Robert, 153 Technocracy. See Progressivism, Technocracy; Sombart, Werner, 160–61, 236, 240 rule by experts sovereign debt crisis. See public finance, technological progress sovereign debt crisis under capitalism and socialism, 52 Soviet Union, 32 Temin, Peter, 298 and collapse of socialism, 63–67 Thatcher, Margaret, 206, 321 economic problems of, 33–34, 38–39 Thomas, Robert, 272 J. Stalin’s terror of, 182 Thornton, Henry, 96, 280 shortages and famine in, 34, 38–39 Thurow, Lester, 353–55 transition to socialism, 32–34 Timberlake, Richard H., 299 Sowell, Thomas, 8, 62, 219 Tinbergen, Jan, 251, 252 Spain. See public finance, sovereign debt crisis Tobin, James, 387, 391, 396 special interests. See Public Choice Tocqueville, Alexis de, 165 specialization. See division of labor Tooke, Thomas, 89 Spencer, Herbert, 25, 197 Torrens, Robert, 88, 368 spontaneous order, 9, 15, 214–16 Toye, Richard, 180 theory trade policy emergence of money, 226–29 economists on, 361 of A. Ferguson, 222 F. Bastiat on free trade versus protectionism of A. Smith, 214–16, 224 and “Candlemakers’ Petition”, of C. Menger, 224 368–69 of F. A. Hayek, 215 floating exchange rate, 380 policy implications of, 229–30 free trade Sraffa, Piero, 90 A. Hamilton opposition to, 374 Stalin, Josef, 182 A. Smith on, 365–67 Stanislaw, Joseph, 13 M. Friedman on, 360 state capitalism, 9, 10, 17, 100, 117 theory of comparative advantage and case state socialism for, 366–68 Bismarck’s economic policy as, 117 unilateral, 360 Stigler, George, 2, 6, 190, 203, 204, 332, 333 liberalization, post-WWII, 361 Stiglitz, Joseph, 267 P. Krugman on free trade versus stock market crash, 1929, 68 protectionism, 378 Stringham, Edward P., 17 protectionism, 362, 365–66

Index 427

advocates of, 362–63 Utilitarianism, 20, 192, 193, 194, 196, P. Krugman on, 362 198, 201 Corn Law. See Corn Law, Great Britain and economics, 20, 21, 192, 194–96, 339 “infant industry” argument for, influence on Fabian socialism, 195 372–73 J. Bentham’s contribution to, 191–93 A. Hamilton on, 375 concept of ‘utility’ in, 192 A. Smith critique of, 373 and Pareto efficiency, 339 F. List on, 375–76 H. Chang on, 373 Van Zandt, David E., 346 H. Sidgwick development of, 377 Vanberg, Viktor, 238 J. S. Mill on, 373 Veblen, Thorstein, 52, 109 J. Bhagwati on, 363 biography, 112–13 as tool for trade liberalization, 378–79 ‘conspicuous consumption’, 112 vested interests in, 365–66 ideology of, 117 trade deficit, 379–81 influence on J. A. Hobson, 104 Trotsky, Leon, 33 on neoclassical economics, 112 Tugwell, Rexford G., 3, 99 Veseth, Michael, 11 biography, 110–11 Vienna, Univ. of, 12, 14, 35, 225, 226 influence over New Deal policies, Viner, Jacob, 72, 310 102–03, 110 Volcker, Paul, 309 interest in fascism as economic policy Voltaire, 212 model, 99 J. A. Hobson’s influence on,104 Wagner, Richard E., 7 on cause of Great Depression, 103–04 critique of Keynesian economics. See public and Taylorism, 118–24 finance, J. M. Buchanan and R. and Taylorism, 119 Wagner on on economic policy and the role of Walker, Francis A., 289 government, 102–03, 118–24 Wallace, Neil, 409 on invisible hand and laissez-faire, 111 on public finance policy reform, 412 on profit motive, 123 Walras, Léon, 338 on theory of underconsumption, 103 and marginalist revolution, 45 policy prescription for Great Depression, Webb, Sidney and Beatrice, 162, 179–82 102–03, 104 on economic policy and the role of position in Roosevelt administration, 110 government, 180–81 S. Patten’s influence on,111 influence in Labour Party, 180–81 unawareness of socialist calculation problem support of Soviet Russia, 182 and debate, 122 Weber, Max, 160 Tullock, Gordon, 335, 356, 357–59 welfare economics, 339. See also externalities; Turgot, Anne Robert Jacques, 223 government failure; market failure and A. Pigou, 344 underconsumption theory normative criteria D. Ricardo’s critique of T. Malthus on, Kaldor-Hicks efficiency, 352 142–43 Pareto efficiency, 337, 339 J. A. Hobson on, 105 limits of, 352 Say’s Law of Markets, 144–45 policy proposals of, 342, 344, 345 T. Malthus and J. Sismondi on, 141–42 White, Harry Dexter, 275, 277 unemployment, natural rate of, 326 White, Lawrence H., 27 United States Wicksell, Knut, 14, 15, 71, 73, 77, 85, 87, 133, growth of government, 334–35 135, 317, 328 national debt and public finance issues in, influence on F. A. Hayek and 383–85 J. M. Keynes, 15

428 Index

influence on J. M. Buchanan and Public and growth of government, 22, 27, 100 Choice, 357 international economic system prior to, 275 influence on L. v. Mises, 88 interventionist economic policies during, 100 Wieser, Friedrich von, 14, 36 as precursor to New Deal, 100 Wilson, Woodrow, 27 Treaty of Versailles, 13 interventionist economic policies during World War, Second, 4, 15, 92, 161, 202, 231 WWI, 100 and growth of government, 163, 334 Winch, Donald, 206 interventionism during, 163–64 Wittman, Donald, 357 Wootton, Barbara, 170 Yale Univ., 24, 316 World Trade Organization, 360, 361 Yeager, Leland, 296, 318 World War, First, 3, 12, 14, 35, 241 Yergin, Daniel, 13