Hi, I’m working the following idea up to be an intro to an article on inflationists throughout history. Could you guys let me know if you can find any holes in the argument?
Much of what is today called “macroeconomics” is not actually economics. It would be better described as a sub-discipline of Crank Studies. Economics is the study of consumption, production, and exchange under conditions of scarcity. By definition, money, qua money, is a medium of exchange. Also by definition, society becomes more prosperous only via consumption goods. As Ludwig von Mises explained in chapter 5 of The Theory of Money and Credit, money is not a consumption good; nor is it a production good which can contribute toward creating a consumption good. Therefore, a new unit of money cannot increase the prosperity of society. If it could, there would be no scarcity on earth, since new units of money, qua money, can be generated without limit and at negligible cost. Someone who believes new units of money can increase general prosperity does not fully accept scarcity, and therefore, to the extent that he accepts that fallacy, is not an economist. Most “macroeconomists” today do accept that fallacy to a greater or lesser extent, and are therefore, to a greater or lesser extent, not economists .
well for some easy points (though I’m not sure what they’re for even having read the thread on that) I’ll say that the macroecon. do accept scarcity by your admission because you do write “at negligible cost” which shows there is a room for another choice hence scarcity.
I think you may be in danger of using a strawman argument here. No one believes that an increased money supply will lead to an increase in prosperity in the long run, and therefore denying scarcity. Unless you want to say it’s because stabilizing the economy prevents what would otherwise be lost output, but I don’t think that’s what you’re talking about. Since you cannot deny that it has short run effects, then you’re just talking about different business cycle theories.
Also, I would avoid following Mises and using phrases like "money, qua money," it only makes your argument less clear. But that’s just my opinion.
Strictly speaking, that’s true. But the ridiculous notion of (1) a world with such little scarcity as would be implied by the enormously lopsided cost-benefit ratio involved if new money units could create additional prosperity is so close to (2) a world with no scarcity, that I don’t think I need to clutter my argument with that degree of hair-splitting.
I admit to not being familiar with the details of the General Theory, where does he say this? Even if true, surely this couldn’t be central to his theory, or else why the focus on fiscal policy? And if so, if you’re addressing unusual wacko theories, then that’s another story. That is certainly not standard macro.
“Thus the remedy for the boom is not a higher rate of interest but a lower rate of interest! For that may enable the so-called boom to last. The right remedy for the trade cycle is not to be found in abolishing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us permanently in a quasi-boom.”
Later, he defends the practice of bringing about a lower rate of interest via monetary expansion.
“Or, again, the evil is supposed to creep in if the increased investment has been promoted by a fall in the rate of interest engineered by an increase in the quantity of money. Yet there is no special virtue in the pre-existing rate of interest, and the new money is not “forced” on anyone; — it is created in order to satisfy the increased liquidity-preference which corresponds to the lower rate of interest or the increased volume of transactions, and it is held by those individuals who prefer to hold money rather than to lend it at the lower rate of interest.”
The statement hinges on the argument that follows. If the argument is sound, I do not need to go into particulars. If the argument is not sound, please tell me why. If you read the OP with the least bit of care, you’d have seen that it was not structured as a dogmatic assertion, but as an invitation to inform me of holes in the argument. Dismissive grunts like…
…do not qualify as informing me of anything but your reaction to my argument on the most shallow level.
If anybody would like to actually engage me regarding my argument above (as fakename and Rooster most graciously did), I would be very grateful.
To dismiss most of economicsm, even just macroeconomics, as “Crank Studies” requires a lot of effort on your part to shread to pieces every single work apart of that “Crank Studies” Either you do the work, or its just an arrogant statement; if you pan to, or have done a line by line debunking of all major macroeconomic works, then you have a full right to dismiss them, but if you have not (do you even have a PhD in economics?) then this is just an arrogant statement. Arrogant statements are holes in your rhetoric; they are combative, and will repel many from ever reading beyond that statement. Quite honestly, if I were to see a statement like that, I would look at the author’s credentials, if he dismisses macroeconomics as such, and does not at least have a PhD, then I won’t read any futher. But of course, I do assume here that you want to create a work of scholarship that could possibilty attract the attention of so-called crank macroeconomists, and turn them from the dark side.
Ending your opening paragraph with a statement that is a rhetorical cudgel, as combative as possible, is a terrible thing to do if you actually want non-Austrians to read this article. Otherwise, it is just preaching to the choir. What truly is the pupose of the over-the-top rhetorical combat in this article?
I don’t want to be in the position of defending Keynes (!), I’m sure this whole passage is flawed, but I think again this comes down more to differences in business cycle theories and the ability to stabilize the economy, rather than denying scarcity and claiming that more money can provide permanent prosperity.
(Actually you may in fact catch Keynes denying scarcity in some form, from what I understand he had some strange ideas that are not as widely known, but I don’t think that represents modern macro, even among the modern Keynesians)
It’s not far from the truth, if one fails to incorporate proper capital theory into their economics and recognise the effect credit expansion has on the real economy…
Mr. Woods has a PhD in history, and most of his works have been through a historical perspective. Mr. Rockwell barely ever goes into pure economics, and remains in the sphere of politics, where he has his experience.
If you desire to actually confront Keynesian macroeconomics, and expect to win on a front larger than mises.org, and lewrockwell.com it is very much recommended that you go to the front equipped with a PhD in economics.
In addition, may I note that the most important thing highlighted by having a PhD in economics is that it gives you some credentials, and experience in the field. With both Mr. Rockwell, and Mr. Woods, they have both education, and experiance in their fields, and therefore you can overlook the fact that they don’t have PhDs in economics. However, when you see an article on the internet, or in a newspaper that dismisses Keynesian economics as crankish, with the author neither holding a position in either a thinktank, or a university, nor do they hold a PhD in the subject that they hold, then why shoud you even read their argument? Economics is a complex science, and just like other sciences, it is best to listen to those who have some experiance in the field rather than a internet ghost with no credentials hiding behind a pseudonym.
In fairness, all he said was that he wanted to write an article, not become a prominent public intellectual. Although I agree you should have more knowledge before attempting such extreme claims.