The Austrian Theory of the Trade Cycle and Other Essays by Ludwig von Mises, Murray N. Rothbard, Gottfried Haberler,

By Ludwig von Mises, Murray N. Rothbard, Gottfried Haberler, Friedrich A. Hayek

Booms and busts will not be endemic to the loose marketplace, argues the Austrian conception of the company cycle, yet happen via manipulation of cash and credits through crucial banks. during this monograph, Austrian giants clarify and guard the idea opposed to choices. comprises essays by way of Mises, Rothbard, Haberler, and Hayek. In his later years, Professor Haberler allotted lots of those monographs to pals and colleagues. re-creation with an creation by way of Roger Garrison and an index.

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Marx saw that, before the Industrial Revolution in approximately the late eighteenth century, there were no regularly recurring booms and depressions. There would be a sudden economic crisis whenever some king made war or confiscated the property of his subject; but there was no sign of the peculiarly modern phenomena of general and fairly regular 61 THE AUSTRIAN THEORY OF THE TRADE CYCLE AND OTHER ESSAYS swings in business fortunes, of expansions and contractions. Since these cycles also appeared on the scene at about the same time as modern industry, Marx concluded that business cycles were an inherent feature of the capitalist market economy.

Wages increase in periods of expansion. In periods of contraction they ought to fall, not only in money terms, but in real terms as well. By successfully preventing the lowering of wages during a period of depression, the policy of the trade unions makes unemployment a massive and persistent phenomenon. Moreover, this policy postpones the recovery indefinitely. A normal situation cannot return until prices and wages adapt themselves to the quantity of money in circulation. Public opinion is perfectly right to see the end of the boom and the crisis as a consequence of the policy of the banks.

The natural thing is then to substitute later a gold-exchange standard for the abandoned gold standard, which means, as I have said already, the erection of a credit structure on the existing stock of gold. Therefore, if the annual output of gold had been larger than it actually was, the difference would have been only this: the credit structure too would have become larger, and we would have started in for the last boom from a higher price level. If this is a correct guess of what would have happened-and it seems to me very probable-the economic 53 THE AUSTRIAN THEORY OF THE TRADE CYCLE AND OTHER ESSAYS consequences of the last period of credit expansion, 192729, and the present deflation would have been exactly the same.

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