tag:blogger.com,1999:blog-6245381193993153721.post8330473405613992342..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: The Differences Between Mises and Hayek on ABCTLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-6245381193993153721.post-79845326173696805032014-08-03T22:21:31.028-07:002014-08-03T22:21:31.028-07:00Perhaps you should look at the subtitle of the blo...Perhaps you should look at the subtitle of the blog?Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-7928033290839128652014-08-03T16:36:02.077-07:002014-08-03T16:36:02.077-07:00the main component of the interest rate (risk and ...the main component of the interest rate (risk and such premiums aside) is simply the intersection of supply and demand in the market for loanable funds... the supply and demand for those funds are determined by the varied time-preferences of "producers and consumers" (people) in the market... which would make one think that interest rates are not arbitrary and are actually an example of spontaneous order...<br /><br />btw are you a post-keynesian, new-keynesian, neo-keynesian...?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-19237259182991270592011-06-23T11:48:57.071-07:002011-06-23T11:48:57.071-07:00"There he seems to say that the boom generate...<i>"There he seems to say that the boom generated by the new issue of fiduciary media is unsound when the market is near to its maximum utilization of resources. "</i><br /><br />Yes, he is: but it is in periods of recession/depression that interests rates tend to be lowered by fiduciary media/fiat money. So why aren't <i>real resources</i> available at that time?<br /><br /><i>"Past that, the only way of keeping the boom running is by additional savings. "</i><br /><br />What about international trade? Is this a world where no one trades across borders?<br /><br />Anyway, Keynesian policy already deals with inflationary booms: you cut government spending, balance the budget, possibly run a budget surplus if necessary and raise taxes, and raise interest rates. The boom is moderated, real resources are freed up for a new cycle of real GDP growth. <br /><br />Honestly, what does Mises think happened in the era of classic Keynesianism (1945-1979)?<br /><br />There was utterly unprecedented economic growth, productivity growth, real output growth, and real wage growth in line with productivity in these years: it called the Golden Age of Capitalism, and it was the era of Keynesianism.<br /><br />Keynesianism smoothed out the variability of business cycles, keeping inflation low until the years before the breakup of Bretton Woods. <br /><br />Stagflation was caused by <br />(1) the effects of the US dismantling its commodity buffer stocks in the 1960s, which had previously keep commodity prices stable. That led to supply price shocks in 1969-1972<br /><br />(2) the uncertainty caused by the breakup of Bretton woods, feeding into futher speculation in commodities<br /><br />(3) wage-price spirals, caused by factor input costs rising in industrialized nations<br /><br />(4) the disaster of the first and second oil shocks.<br /><br />The solution for stagflation is given by <br />Nicholas Kaldor in “Inflation and Recession in the World Economy” (Economic Journal 86 (December, 1976): 703–714).<br /> <br />The solution is (1) incomes policy and (2) commodity buffer stocks to break the source of the problem by maintaining stable commodity prices. This is exactly why the 1940s, 1950s, 1960s had stable commodity prices: the US maintained buffer stocks, then dismantled them in the mid-1960s.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-67715730214244401432011-06-23T11:30:53.165-07:002011-06-23T11:30:53.165-07:00True. But I wouldn't say it's wrong, I'...True. But I wouldn't say it's wrong, I'd rather say it's incomplete.<br /><br />On the "full employment" issue, what do you think of the following quotation from Mises?<br /><br />"On the eve of the credit expansion all those production processes were in operation which, under the given state of the market data, were deemed profitable. The system was moving toward a state in which all those eager to earn wages would be employed and all nonconvertible factors of production would be employed to the extent that the demand of the consumers and the available supply of nonspecific material factors and of labor would permit. A further expansion of production is possible only if the amount of capital goods is increased by additional saving, i.e., by surpluses produced and not consumed. The characteristic mark of the credit-expansion boom is that such additional capital goods have not been made available. The capital goods required for the expansion of business activities must be withdrawn from other lines of production."<br /><br />There he seems to say that the boom generated by the new issue of fiduciary media is unsound when the market is near to its maximum utilization of resources. Past that, the only way of keeping the boom running is by additional savings.ivanfoofoohttps://www.blogger.com/profile/07899286403907746852noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-85467065959725835242011-06-23T11:05:24.912-07:002011-06-23T11:05:24.912-07:00And yet his version of ABCT is still wrong.
There ...And yet his version of ABCT is still wrong.<br />There is the explicit use of the invalid Wicksellian natural rate interest concept in the early versions. The same assumption that the economy is at full employment. The same inability to explain what happens when <i>real resources and labour</i> are in fact <i>available</i> when fiduciary media/fiat money expand the money supply. The same neglect of international trade.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-76761776826054294622011-06-23T10:59:59.439-07:002011-06-23T10:59:59.439-07:00One of the reasons why Mises is still a much super...One of the reasons why Mises is still a much superior economist than Hayek.ivanfoofoohttps://www.blogger.com/profile/07899286403907746852noreply@blogger.com