Even if the price level was perfectly static wages would have some trouble falling quickly. In a world of fallible individuals there will always be a predisposition towards higher money wages instead of real wages. I agree that a deflationary economy would experience less of this tendency.
Yes, this is correct, however remember that wages are currently inflation-adjusted. They cannot be reviewed daily or even monthly but medium-term intervals, like quarterly (well they can actually, especially if utilising contractos), could certainly work. In the opposite scenario, where prices steadily decrease employers will have to formulate deflation-adjusted contracts to ensure they remain profitable operators. There may not even be deflationary adjustments since gold’s purchasing power increasing due to heightened productivity isn’t deflation per se but obviously this depends on wage-earner (since I consider the word “worker” to be nonsense) productivity.
Bear in mind that things like unemployment insurance increase the reluctance of employees to accept lower wages when unemployed. For some people this might be acceptable but at the moment this insurance is both compulsory and provided at highly subsidised costs. This alone should suffice to curtail a tendency to sacrifice earnings even when though nominally lower, they are really identical or higher to what they were before.
Again, I don’t think Mises felt the need to bother with Keynes. It may be disappointing that he didn’t, but he left enough knowledge behind to counter Keynesian postulates.
While the Keynesian system is a tissue of fallacies, it is a mistake to dismiss it brusquely, as many conservative economists have done, as nonsense. It is nonsense, in the last resort; but failure to deal with its fallacies in detail and in depth has left the field of ideas open for Keynesianism to conquer.
To be honest, Keynesianism has been taken apart by numerous people, including Austrians. It still persists. It isn’t for its academic soundness that it survives.
In Mises:The Last Knight of Liberalism, Jorg Guido Hulsmann says Mises was present at Keynes’s speech that became The End of Laissez-Faire.
In his Notes and Recollections, Mises talks about Keynes “reviewing” The Theory of Money and Credit and then later revealing that his German was inadequate.
“To be honest, Keynesianism has been taken apart by numerous people, including Austrians. It still persists. It isn’t for its academic soundness that it survives.”
Bringing this thread back because of something I saw in a review of Human Action at Goodreads.
" Although people often view this book as a refutation of macro-economic theories such as that of John Maynard Keynes, the book in its original version and ultimately what we read today are primarily focused on more traditional kinds of socialism and Marxism. The Majority of Mises economic writings were aimed at bringing down that view of economic thinking. Keynes tried to have a correspondence with Mises when he was still a somewhat respected professor in Austria and he didn’t even bother replying if I remember correctly. Mises didn’t think such economic theories would ever be mainstream or seen as important, so he didn’t bother refuting them."
Has anyone heard anything about Keynes’s supposed attempt to correspond with Mises?
Interesting (if it’s true). I have never heard of it. I only know that Keynes reviewed the Theory of Money and Credit in 1914. He wrote the book was unoriginal.
Interesting (if it’s true). I have never heard of it. I only know that Keynes reviewed the Theory of Money and Credit in 1914. He wrote the book was unoriginal.