Mises made a mistake

[bill50]

I found a mistake in The Theory of Money and Credit. I couldn’t find any explanation of where it came from by searching here. The mistake occurs in the H.E. Batson 1934 translation. Specifically at the bottom of page 256 of the Liberty Fund 1981 edition. It also occurs in the middle of page 225 of this online version http://mises.org/books/tmc.pdf

I’ve vigorously made sure there were no logical or mathematical errors in the book as I’ve been reading it and this seems like quite an elementary mistake.

Mises supposes that every year the value of money decreases by 10% of what it was at the start. He correctly identifies that the value of money over time forms a geometric series with a ratio of .99. He then goes on to state that the value in year n is 100*.99^(n-1). That is actually the value of the money at the beginning of year n. The value of the money at the end of year end is 100*.99^n

Is this mises mistake, or is this a mistake in the translation or editing? His method of logical deduction is brilliant, and he seems to have a solid grasp on mathematics so its hard to beleive he could make such a simple mistake.

[fezwhatley]

His theory of money in that book was circular, not to the point of devastating inaccuracy, but still more coherent than any theory up to that point. The erros in that book were held against him, and he has since never been fully exonerated. Fortunately in Human Action he provided a revised and flawless theory of money.

[Conza]

Well he was also wrong with Anarchy. Did Rothbard and others clear it all up, with money & theory etc. later on?

Although I myself don’t really consider him as such, [;)] - you have to remember, he is still human. [:D]

[bill50]

I know he didn’t go as fr as anarchy, but I kinda figured here was a reason for that. Out of curiousity, what were the other mistakes?

[Jon_Irenicus]

His monopoly theory was incomplete, and expanded upon by Rothbard. In addition, Hulsmann provided a more formal backing for the ABCT, which Mises did not.

[Juan]

His support for conscription in HA is a huge mistake.

[kefka888]

Actually this is not a mistake. As you said Mises is defining that the value of money decreases by 10% from what it was at the BEGINNING of the year. And that is exactly what the formula finds. The value of the money at the beginning of the year or more specifically the value at the end of the year before.

For example:

Lets find the value of money at the end of 1899 using your equation 100*.99^n

so 100*.99^1899 = 5.14e^-7

Now let’s use Mises equation for the value of money at the beginning of 1900 (100*.99^(n-1):

so 100*.99^(1900-1) = 5.14e^-7

[Thedesolateone]

@Juan

His support for conscription in HA is a huge mistake.

I really need to get round to reading that book - but how can he possibly support conscription?

[Juan]

@LvM

From this point of view one has to deal with the often-raised problem of whether conscription and the levy of taxes mean a restriction of freedom. If the principles of the market economy were acknowledged by all people all over the world, there would not be any reason to wage war and the individual states could live in undisturbed peace[16]. But as conditions are in our age, a free nation is continually threatened by the aggressive schemes of totalitarian autocracies. If it wants to preserve its freedom, it must be prepared to defend its independence. If the government of a free country forces every citizen to cooperate fully in its designs to repel the aggressors and every able-bodied man to join the armed forces, it does not impose upon the individual a duty that would step beyond the tasks the praxeological law dictates. In a world full of unswerving aggressors and enslavers, integral unconditional pacifism is tantamount to unconditional surrender to the most ruthless oppressors. He who wants to remain free, must fight unto death those who are intent upon depriving him of his freedom. As isolated attempts on the part of each individual to resist are doomed to failure, the only workable way is to organize resistance by the government. The essential task of government is defense of the social system not only against domestic gangsters but also against external foes. He who in our age opposes armaments and conscription is, perhaps unbeknown to himself, an abettor of those aiming at the enslavement of all.

[laminustacitus]

@Juan

His support for conscription in HA is a huge mistake.

However, he did only do so in the 3rd Edition of Human Action; nevertheless, it was quite the blunder.

[Juan]

Well, the paragraph following that one is a bit weird as well.

The maintenance of a government apparatus of courts, police officers, prisons, and of armed forces requires considerable expenditure. To levy taxes for these purposes is fully compatible with the freedom the individual enjoys in a free market economy. To assert this does not, of course, amount to a justification of the confiscatory and discriminatory taxation methods practiced today by the self-styled progressive governments/

He seems to take for granted that a minimal government requires ‘considerable expenditure’ ?

[laminustacitus]

@Juan

He seems to take for granted that a minimal government requires ‘considerable expenditure’ ?

I doubt the “considerable expenditure” of Mises’ optimal state, or even his time period, comes close to what contemporaries’ would think of as a “considerable expenditure”, so its not that shocking.

[bill50]

Well kefka888, he never mentioned starting with the year 0 A.D. as his first year. When doing time value calculatins, you begin at time t=0 representing present time. Time t=1 would then be the end of year one/ beginning of year two. I can’ see how time value calculations would have changed since Mises’ time.

He either mean to say the formula for the value at the beginning of year n was 100*.99^(n-1),used some kind of wacky old school time-value calculations that considered year 0 the first year rather than year one the first year, or he made a mistake.

Now I’m dissapointed that I’m going to begin finding a bunch of mistakes as I read.

[Jon_Irenicus]

The man wrote many, many books… are you honestly going to be disappointed for his few errors? I think you’re holding him to too high a standard.

[Conza]

@Jon Irenicus

The man wrote many, many books… are you honestly going to be disappointed for his few errors? I think you’re holding him to too high a standard.

No he must be omniscient!

[hayekianxyz]

@laminustacitus

@Juan

His support for conscription in HA is a huge mistake.

However, he did only do so in the 3rd Edition of Human Action; nevertheless, it was quite the blunder.

Keep in mind that he also wrote against conscription in Nation, State and Economy.

[revolutionist]

@bill50

Well kefka888, he never mentioned starting with the year 0 A.D. as his first year. When doing time value calculatins, you begin at time t=0 representing present time. Time t=1 would then be the end of year one/ beginning of year two. I can’ see how time value calculations would have changed since Mises’ time.

He either mean to say the formula for the value at the beginning of year n was 100*.99^(n-1),used some kind of wacky old school time-value calculations that considered year 0 the first year rather than year one the first year, or he made a mistake.

Now I’m dissapointed that I’m going to begin finding a bunch of mistakes as I read.

There is no 0 AD. It started at 1.

[pairunoyd]

@Thedesolateone

I really need to get round to reading that book - but how can he possibly support conscription?

do you support voluntary state armies?