What Happened To Hayeks Capital Theory

Three of Hayek' s ideas appear to have proved most fertile in the discussions of recent years 1 The stock of capital does not constitute a measurable quantity. 2 The notion of ' intertemporal' or ' dynamic' equilibrium. 3 The reinterpretation of the 'higher productivity of roundabout methods of production' as the process in the course of which 'as investment proceeds, more and more of those natural forces which before were only potential resources are utilized and gradually drawn into the...

Common Ground

Peering from our centenary watchtower we can clearly make out two areas of broad agreement between Keynesian and Austrian economics, of which one concerns monetary disturbances and the other the foundations of economic science. These are the areas of inflation and methodology. In the light of all we know about their differences, in particular as regards the different perspectives on market forces, we shall hardly expect to find here agreement on matters of detail. But broad agreement on matters...

Subjectivism In Microeconomics

A' change in methods of production in a given state of knowledge' is, strictly speaking, a contradiction in terms. When we ask how much of the subjectivist view of human action, sketched briefly, if inadequately, in the last section, has been absorbed into the main body of modern economic thought, it will be best to distinguish, as regards the latter, between micro- and macro-economics. For the relationship between the subjectivist view and macroeconomics, and in particular the treatment it...

Overinvestment And The Neoclassical Doctrine

Thus far we have seen that the neoclassical theory of crisis involves the dislocation of a part of the economic system, a distortion of relative prices, and that adjustment is essentially the readjustment of that area which has been hit to the rest of the system that has remained intact. The applicability of neoclassical analysis is therefore confined to cases in which the initial depression is a partial one. Now, this does not seem to be too unrealistic a picture of what has actually happened...

Monetary Overinvestment Theory And Adjustment

We have thus far attempted to describe the neoclassical notion of adjustment, and to examine the conditions contingent upon its attainment. We came to the conclusion that this type of analysis fits best the case of partial depressions, where the system as a whole has remained unaffected, but encounters considerable difficulties in the case of overinvestment crises. We now shall have to study the views of an important group of neoclassical economists, the outstanding representative of whom is...

Ludwig Lachmann And The Austrian Alternative

The significance of Lachmann's work, and of the so-called Austrian school of which it is a part, may be seen in terms of this danger. The Austrians were not of course innocent of all of the modernistic tendencies of the last couple of centuries, but they were arguably the one school of thought in the history of economics that resisted more of these tendencies than any other. They may be seen as the school that offers the most promise of rescuing the truths of economics from the sinking ship of...