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The author or concept searched is found in the following 2 entries.
| Disputed term/author/ism | Author |
Entry |
Reference |
|---|---|---|---|
| Money Illusion | Keynes | Rothbard III 783 Money Illusion/Keynes/Keynesianism/Rothbard: Keynes believed that while other elements of the economic system, including prices, were set basically in real terms, workers bargained even ultimately only in terms of money wages - that unions insisted on minimum money wage rates downward, but would passively accept falling real wages in the form of rising prices, money wage rates remaining the same. Unemployment: The Keynesian prescription for eliminating unemployment therefore rests specifically on the "money illusion" - that unions will impose minimum money wage rates, but are too stupid to impose minimum real wage rates per se. Unions, however, have learned about purchasing-power problems and the distinction between money and real rates; indeed, it hardly requires much reasoning ability to grasp this distinction.(1) >Unemployment/Keynesianism, >Unemployment/Rothbard. Inflation/VsMoney illusion: Ironically, Keynes' advocacy of inflation based on the "money illusion" rested on the historical experience (…) that, during an inflation, selling prices rise faster than wage rates. Minimum wage: Yet an economy in which unions impose minimum wage rates is precisely an economy in which unions will be alive to any losses in their real, as well as their money, wages. >Minimum wage/Rothbard. Inflation: Inflation, therefore, cannot be used as a means of duping unions into relieving unemployment.(2) RothbardVsKeynesianism: Keynesianism has been touted as at least a "practical" system. Whatever its theoretical defects, it is alleged to be fit for the modern world of unionism. >Unions/Rothbard. RothbardVsKeynes: Yet it is precisely in the modern world that Keynes' doctrine is least appropriate or practical.(3) KeynesismVsVs:The Keynesians object that to allow rigid money wage rates to become flexible downward would further Iower monetary demand for goods, and therefore monetary income. But this completely confuses wage rates with aggregate payroll, or total income going to wages.(4) That the former falls does not mean that the latter falls. On the contrary, total income is,(…) , determined by total expenditures in the previous period of time. Lower wage rates will cause the hiring of those made unemployed by the old excessively high wage rates. The fact that labor is now cheaper relatively to land factors will cause investors to expend a greater proportion on labor vis-å-vis land than before. And the employment of unemployed labor increases production and therefore aggregate real income. Furthermore, even if payrolls also decline, prices and wage rates can adjust (…) . 1. Cf. Lindahl, "On Keynes' Economic System—Part I," pp. 25, 159 ff. Lindahl's articles provide a good summary as well as a critique of the Keynesian system. 2. Furthermore, inflation is, at best, an ineffcient and distortive substitute for flexible wage rates. For inflation affects the entire economy and its prices, while particular wage rates will fall only to the extent necessary to "clear" the market for the particular labor factor. Thus, freely flexible wage rates will fall only in those fields necessary to eliminate unemployment in those particular areas. Cf. Henry Hazlitt, The Failure of the "New Economics" (Princeton, N.J.: D. Van Nostrand, 19 59), pp. 278 ff. 3. Cf. L. Albert Hahn, The Economics oflllusion (New York: Squier Publishing Co., 1949), pp. 50 ff., 166 ff., and passim. 4. Cf. Hutt, "Significance of Price Flexibility." |
EconKeyn I John Maynard Keynes The Economic Consequences of the Peace New York 1920 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 |
| Money Substitutes | Rothbard | Rothbard III 804 Money-substitutes/Rothbard: Since money-substitutes exchange as money on the market, we must consider them as part of the supply of money. It then becomes necessary to distinguish between money (in the broader sense) - the common medium of exchange - and money proper. Money proper: Money proper is the ultimate medium of exchange or standard money - here the money commodity - while the supply of money (in a broader sense) includes all the standard money plus the money-substitutes that are held in individuals' cash balances. In [earlier times], gold was the money proper or standard money, while the receipts - the demand claims to gold - were the money-substitutes. >Banks/Rothbard. Rothbard III 805 (…) as long as all money-substitutes are full money certificates, an increase or decrease in the money-substitutes outstanding can have no effect on the total supply of money. Only the composition of that supply is affected, and such changes in composition are of no economic importance. Pseudo receipts/VsMoney substitutes: However, when banks are legally permitted to abandon a 100-percent reserve and to issue pseudo receipts, the economic effects are quite different. We may call the money-substitutes that are not genuine money certificates, uncovered money-substitutes, since they do not genuinely represent money. The issue of uncovered money-substitutes adds to individuals' cash balances and hence to the total supply of money. Uncovered money-substitutes are not offset by new money deposits and so constitute net additions to the total supply. Any increase or decrease in the supply of uncovered money-substitutes increases or decreases to the same extent the total supply of money (in the broader sense). Money supply: Thus, the total supply of money is composed of the following elements: supply of money proper outside reserves + supply of money certificates + supply of uncovered money-substitutes. Certificates: The supply of money certificates has no effect on the size of the supply of money; an increase in this factor only decreases the Size of the first factor. The supply of money proper and the factors determining its Size have already been discussed. It depends on annual production compared to annual wear and tear, and thus, on the unhampered market, the supply of money-proper changes only slowly. >Monetization of debt/Rothbard, >Bank Reserve/Rothbard, >Money market/Rothbard. |
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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