LS agrees with me. Perhaps he can explain it to you. Even when I’m right nobody here seems to understand me.
EDIT: a good place to start is Rothbard’s book on recession of (somewhere around) 1814. Overproduction and the failing of business is natural to the system. The only argument to be made is whether or not the government prolongs recessions… I really didn’t think there was even an argument about this.
Would you please explain to me what could besides a government intervention promote a systematic misallocation, such that develops into a recession?
Banks wanting to make a profit? Systemic recession is natural to the system. The only argument one can make is that the government prolongs it, or makes it easier to happen with fiat currency.
Systemic recession is natural to the system
I’m confused, which economist (if any) are you channelling?
Do you mean Rothbard’s Panic of 1819? That’s a 300 page book. Could you tell me where in the book he writes what you say? Or quote a little?
I don’t know why anyone cares what Tyler Cowen says.
I’d guess that it’s because he’s a smart guy who writes in a readable, provoking and non confrontational way on a variety of subjects that interest a great deal of people. Of course, that’s kinda besides the point, people do care what Tyler Cowen says as is manifest in the large number of hits MR gets, and most of them don’t go there for Tabarrok.
As fate would have it, I found a little footnote in todays read of Human Action, page 203:
Neglect of the problems of indirect exchange was certainly influenced by
political prepossessions. People did not want to give up the thesis according to
which economic depressions are an evil inherent in the capitalist mode of
production and are in no way caused by attempts to lower the rate of interest by
credit expansion. Fashionable teachers of economics deemed it “unscientific”
to explain depressions as a phenomenon originating “only” out of events in the
sphere of money and credit. There were even surveys of the history of business
cycle theory which omitted any discussion of the monetary thesis. Cf., e.g.,
Eugen von Bergmann, Geschichte der nationalokonomischen Krisentheorien
(Stuttgart, 1895).
Speaking to us from the very grave, Mises tells us ole Laotsu has got it all wrong.
Now Lao, you may diagree, but express not surprise that yours is not the unanimous opinion here.
There are different degrees of overproduction.
And oddly enough, this recession is mainly accompanied by underproduction. As seen on TV, nothing in a typical house in the US is made here except for the house itself.
People also burned [sic] witches, stoned adulterers and performed female circumcision. It’s not a good idea to use your fellow primates as proof of anything. For every “hit” his blog gets, Perez Hilton gets more.
I’m confused, which economist (if any) are you channelling?
Every post capitalist economist ever.
Speaking to us from the very grave, Mises tells us ole Laotsu has got it all wrong.
“You keep saying that. But I don’t think that word means what you think it means.” Mises is saying recession arises out of money and credit, not the capitalist mode of production, per se. What he is not saying, which you want it to imply, is that only government can fudge up the monetary system.
And oddly enough, this recession is mainly accompanied by underproduction. As seen on TV, nothing in a typical house in the US is made here except for the house itself.
That’s still overproduction. Too much, or more specifcally, the wrong things, were/was produced for the consumer base to buy.
Do you mean Rothbard’s Panic of 1819? That’s a 300 page book. Could you tell me where in the book he writes what you say? Or quote a little?
The whole book is about how the banks themselves expanded the money supply beyond its’ reasonable capacity.
https://forum.freecapitalists.org/t/problems-in-human-nature/5907/8
This was one of my first posts. It’s not the one I’m looking for, which is my actual first thread I created. But it alludes to my point, and has just the quote you’re looking for. I will try to find my first thread, perhaps a mod can provide a link if possible. But if not, read the book.
EDIT: actually this is hte post I was looking for. But the first one is still soemwhat relevant.
https://forum.freecapitalists.org/t/the-ideallic-businessman/5186
‘bad ones’ would have sufficed.
So, Liberty Student, do you agree with Lao’s statement that
“Overproduction is natural to capitalism”
As he claimed you did and if so what is your reasoning behind this?
“Were there any Asutrians at all agree with Paul Krugman and Brad Delong in 2005???”
About the existence of a housing bubble and and oncoming recession our about the Asian banking situation?
“”
Overproduction is not necessarily inherent to capitalism (private property). Overproduction is due to error. Error is inherent to uncertainty. Uncertainty is inherent to humanity. Since we are talking only of humans living within a capitalistic system, then overproduction is inherent to capitalism, i.e. as it exists in the real, human world. But then it is inherent to any human system. The question is - which system results in the least overproduction? Please consult Say’s law.
I think Epicurus/Lao cites Rothbard extremely out of context. Rothbard would never claim that the “capitalist system” (whatever that may be) is “prone to overproduction”. In fact, that’s a very ambiguous statement. Rothbard would, however, say that business failure is a natural part of an economy, and I think that most economists would agree. However, saying that business failure is natural to an economy is completely different from saying that mass bussiness failure is inherent in capitalism — Rothbard makes this clear distinction in America’s Great Depression. Intertemporal discoordination theory (Austrian business cycle theory; I’ve just started calling it the former) doesn’t purport to explain business failure, rather it explains why a cluster of businesses failed at around the same time (or why there are industrial fluctuations).
Regarding overproduction, which I referred to at first but never made my point, Rothbard never would have endorsed the notion that general overproduction is possible. This is why Ludwig von Mises, Friedrich Hayek, and Rothbard went to such ends to distinguish between the concept of “overproduction” and malinvestment. Overproduction in one good is only possible at the expense of the production of another good. In this sense, of course relative overproduction is always present in a market, because we know the market is never at equilibrium and we know that market dynamics are always changing, and so production is never “optimal”.
I have never read Rothbard’s book on the crisis of 1819 (Panic of 1819), so maybe a quote would help put things into context. I don’t have time to scour the book myself right now, but I searched for the word “overproduction” and there’s only one find. It’s actually an opposing argument, which Rothbard critisizes (that of an agricultural overproduction).
" What he is not saying, which you want it to imply, is that only government can fudge up the monetary system."
Mises made it exceedingly clear in the section on indirect exchange that a free market banking system (especially sections 12 and 17 as I skim through) would have automatic restraints against credit expansion
“Intertemporal discoordination theory”
Good one. This should draw the more ‘scientific’ economists.
What I got from your posts is that
Everyone wants cheap credit and thus the govt [which is but the distilled will of the people, according to Mises] is only giving people what they want. If there was no govt, said everyone would find another way to make cheap credit exist, using the banks in 1819.
The only possible defense against our problems, in theory, is relying on the good will of businesmen, whose sole interest is to please everyone. Although that is what we think, it is, sadly, a broken reed.
Since cheap credit is not the right thing in all situations, but will always rear its ugly head because of the will of the people, and since cheap credit causes recessions [ABCT], therefor it is inherent not just in Capitalism, but a result of human nature itself, that there will always be recessions.
Have I summarized you accurately, Lao?
Note to Jonathan: Why make up clumsy new names for things?
It is not logically necessary that only government can cause the credit expansion leading to a boom and bust. In the real world, however, this is likely the case.
I wouldn’t sweat too much over Lao’s notion…