Economics Dictionary of ArgumentsHome
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| Inflation: In economics, inflation is defined as the sustained increase in the general price level for goods and services in an economy over a certain period of time, which leads to a decline in the purchasing power of money. It is usually measured by indices such as the consumer price index (CPI) or the producer price index (PPI)._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Jeremy Bentham on Inflation - Dictionary of Arguments
Rothbard II 52 Inflation/Bentham/Rothbard: [In] the unpublished ‘Manual of Political Economy’ (1795)(1), Bentham continued the laissez-faire theme of ‘No more trade than capital’. The government, he emphasized, can only divert investment funds from the private sector; it cannot raise the total level of investment. ‘Whatever is given to any one branch, is so much taken from the rest... Every statesman who thinks by regulation to increase the sum of trade, is the child whose eye is bigger than his belly.’ For Bentham began his rapid slide down the inflationist chute. In a kind of appendix to the work, he states that government paper money could increase capital if resources were not ‘fully employed’. There is no analysis, as of course there never is in the inflationist canon, of why these resources were ‘unemployed’ in the first place, i.e. why their owners withheld them from use. The answer must be: because the resource owner demanded an excessively high price or wage: inflation is therefore a means of fooling resource-owners into lowering their real demands. It did not take long for Jeremy Bentham to slide down the slippery slope from Adam Smith and what would be Say's law back to mercantilism and inflationism. Shortly afterwards, in an unpublished ‘Proposal for the Circulation of a [New] Species of Paper Currency’ (1796)(2), Bentham happily wedded his ‘projecting’ and constructivist spirit to his new-found inflationism. Instead of floating bonds and paying interest on them, the government, he proposed, should simply monopolize all issue of paper notes in the kingdom. Rothbard II 53 It could then issue the notes, preferably non-interest bearing, ad libitum and save itself the interest. Bentham was scarcely at his best answering the question of what limit there might be to this government paper issue. The limit, he answered, would obviously be ‘the amount of paper currency in the country’.(2) 1. Bentham, J. 1795. Manual of Political Economy. 2. Bentham, J. 1796. Proposal for the Circulation of a [New] Species of Paper Currency._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Benth I J. Bentham An Introduction to the Principles of Morals and Legislation Mineola, NY 2007 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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