In a remarkable column published in today’s Financial Times, Jeffrey Sachs exhibits a fundamental reversal of his economic thinking. Until now, one of the foremost disciples of John Maynard Keynes, he openly and categorically rejects that doctrine. As one of the foremost skeptics of Austrian economics, he now openly embraces the economic thought of Friedrich von Hayek. I choked on my morning orange juice as I took in the magnitude of this rebirth.
1. Sachs on Keynes
“The rebound of Keynesianism, led in the US by Lawrence Summers…Paul Krugman…and… Ben Bernanke…came with the belief that short-term fiscal and monetary expansion was needed to offset the collapse of the housing market…The US policy choice has been fours years of structural (cyclically adjusted) budget deficits of general government of 7 per cent of gross domestic product or more; interest rates near zero; another call by the White House for stimulus in 2013; and the Fed’s new policy to keep rates near zero until unemployment returns to 6.6 per cent…We can’t know how successful (or otherwise) these policies have been because of the lack of convincing counterfactuals. But we should have serious doubts. The promised jobs recovery has not arrived. Growth has remained sluggish. The US debt-GDP ratio has almost doubled, from about 36 per cent in 2007 to 72 per cent this year. Jeffrey Sachs, ‘We must look beyond Keynes to fix our problems’, Financial Times, December 19, 2012
2. Sachs on Hayek
“the zero interest rate policy has a risk not acknowledged by the Fed: the creation of another bubble. The Fed failed to appreciate that the 2008 bubble was partly caused by its own easy liquidity policies in the preceding six years. Friedrich Hayek was prescient: a surge of excessive liquidity can misdirect investments that lead to boom followed by bust.” Jeffrey Sachs, ‘We must look beyond Keynes to fix our problems’, Financial Times, December 19, 2012
I have no doubt that many readers of this column will also choke on their beverage of choice as they read these born again words of revelation from this former sinner:
Amazing grace, how sweet the sound
That saved a wretch like me.
I once was lost, but now am found.
Was blind, but now, I see.”
After several centuries of experimentation with boom-and-bust monetary and fiscal policies, we need to give the Austrian school a chance.
Written by SUSANNE LOMATCH
Free market capitalism is under assault. Framed as the culprit for the global financial crisis by the popular media, politicians and ideological opportunists alike, who expediently blame the United States for igniting the crisis. The irony is that we haven’t had true free market capitalism in the U.S. for a very long time. Plagued with recurring financial panics, recessions and downright depressions, the real culprit is the federal government management of money and credit that is quite antithetical to free markets.
Article I, Section 8 of the U.S. Constitution clearly gives Congress the enumerated right “To coin money, regulate the value thereof…” But in 1913, Congress decided to outsource monetary management to the Federal Reserve Banking System. And it did so for purely political reasons [1-4]: to charter an ‘independent’ body with the power to print paper money when the needs of government or special interests arose. More to the point: to finance government debt and perpetuate government spending habits; to rescue banks that become illiquid and insolvent due to risk mismanagement and/or instabilities in a fractional reserve banking system; and most insidiously, to inject inflation into the economy when prices fall below a certain point (price controls). None of these actions belong to free market measures in a capitalist society.
The stark reality is that the U.S. abandoned free market principles when it adopted fiat currency manipulation strategies and promoted a fractional reserve banking system that lends out many more dollars than exist in real deposits. A fiat currency (e.g., U.S. Dollar, Euro, Sterling, Yen) by itself is not the problem; it is the abusive government regulation of the value of the fiat currency that is anti-free market. Purposefully driving interest rates to zero instead of allowing for market determination of rates is anti-free market manipulation. Likewise, lending money created from thin air instead of from a rational measure of deposits undermines the supply and demand of resources that are natural to a free market and distorts healthy business cycles, not to mention the high risk of high leverage if loans default. The U.S. did not invent this brand of money and credit misregulation – it was adopted from millennia of central banking history in Britain and Europe [1,5,6]. The U.S. has become perhaps uniquely addicted to the easy money and credit binges promoted by our central bank, the Fed – especially since demand for Treasurys by foreign creditors (i.e., China and Japan) is limited. Runaway government spending, off-balance sheet entitlement liabilities and easy credit promises made to voters have throttled this modus operandi. And the crony capitalism of government welfare (bailouts, “subsides”) to large corporations and financial institutions has only made the addiction worse.
Consider the following basic examples to further illustrate. In a free market, interest rates are set by the supply and demand of the market, not artificially by a central bank. “When the Fed lowers rates artificially, they no longer reflect the true state of consumer demand and economic conditions in general. People have not actually increased their savings or indicated a desire to lower their present consumption. These artificially low interest rates mislead investors. They make investment decisions suddenly appear profitable that under normal conditions would be correctly assessed as unprofitable. From the point of view of the economy as a whole, irrational investment decisions are made and investment activity is distorted” . Artificially low rates are used to “stimulate” the consumer driven economy and interest rate sensitive investments, but the damage is borne in a misallocation of resources and a distortion of healthy free market driven business cycles. Consumers save less and consume more resources, and businesses that choose to invest will not only find resources limited and even more expensive as time progresses, but lending supply limited unless banks relax their reserve requirements. Modern fractional reserve banking answers this problem: banks lend from checkable demand deposits as well as timed deposits (such as CDs). Money that is lent can be multiplied by lending out on a basis of fractional reserves – for every dollar in checkable deposits, a dollar lent is deposited in checking and loaned again, up to the legal reserve limit. In a loose monetary environment, credit expansion means greater risk, as we have seen just recently in the credit boom of the last decade. In the worst case, artificially low rates and the artificial growth in lending supply (credit expansion though the creation of money in fractional banking) end in a business recession or depression: businesses cannot complete all of the invested projects due to the scarcity and/or inflationary expense of specific resources, and consumers cannot continue to spend what they don’t have. Natural supply and demand of the business cycle is disrupted.
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(Reuters) – The gap between the Federal Reserve’s dovish core and its hawkish wing was on display on Thursday as a top Fed official said the economy is in better shape even as Fed Chairman Ben Bernanke focused on a source of weakness.
While growing “slower than we would like,” the U.S. economy is expanding fast enough that it does not need further help from the central bank, Dallas Fed President Richard Fisher told Fox Business Network.
“We will not support further quantitative easing under these circumstances because there’s a lot of money lying on the sidelines, lying fallow,” he said, according to a transcript provided by the network. “We don’t need any more monetary morphine.“
Despite the bright light streaming into my office window, reminding me of the beautiful spring weather here in Athens, I managed to spend most of yesterday afternoon listening to the first installment of Ben Bernanke’s 4-part lecture series on “The Federal Reserve and the Financial Crisis.” The lecture was given at George Washington University yesterday; the other parts will be given on the 22nd, 27th, and 29th of this month.
In this opening lecture Bernanke offers a brief overview of the role of central banks, their general origins, the specific origins of the Federal Reserve System, and the Fed’s early performance.
It would of course be silly to expect any sitting central banker, much less the head of the world’s most important central bank, to deliver an entirely candid lecture on the origins of central banking. But then again, Ben Bernanke is no run-of-the-mill central banker: he is a former academic economist and economic historian, and one with very high standing in the profession. So one might expect him to at least avoid gross distortions of the historical record to which his less academically-minded counterparts might be expected to resort. But no: as the lecture lumbered on (for Chairman Bernanke’s classroom demeanor is all too reminiscent of his demeanor when testifying to Congress), it became increasingly evident that the man lecturing at Duquès Hall was at least 99 and 44/100ths percent pure Federal Reserve spokesman.
So like any central banker, and unlike better academic economists, Bernanke consistently portrays inflation, business cycles, financial crises, and asset price “bubbles” as things that happen because…well, the point is that there is generally no “because.” These things just happen; central banks, on the other hand, exist to prevent them from happening, or to “mitigate” them once they happen, or perhaps (as in the case of “bubbles”) to simply tolerate them, because they can’t do any better than that. That central banks’ own policies might actually cause inflation, or contribute to the business cycle, or trigger crises, or blow-up asset bubbles–these are possibilities to which every economist worth his or her salt attaches some importance, if not overwhelming importance. But they are also possibilities that every true-blue central banker avoids like so many landmines. Are you old enough to remember that publicity shot of Arthur Burns holding a baseball bat and declaring that he was about to “knock inflation out of the economy”? That was Burns talking, not like a monetary economist, but like the Fed propagandist that he was. Bernanke talks the same way throughout much (though not quite all) of his lecture.
The new issue of the Journal of Economics and Financial Education is now available online and it is a special issue devoted to a symposium on teaching Austrian economics.
In his obituary of Bertil Ohlin, Paul Samuelson plays the game of “what if” — in this case, “what if the Nobel Prize was established in 1900, then who would have won the prize between 1901 and 1930?”
This is list of names Samuelson thinks would have won the prize:
“One cannot forbear playing the game of might-have-been. Here is the most likely scenario of awards from 1901 on: Bohm-Bawerk, Marshall, J.B. Clark, Walras, and Wicksell; Carl Menger, Pareto, Wicksteed, Irving Fisher, and Edgeworth; Sombart, Mitchell, Pigou, Adolph Wagner, Allyn Young, and Cannan; Davenport, Taussig, Schumpeter, Veblen, and Bortkiewicz; Cassel, J. M. Keynes, Heckscher, J. R. Commons, and J. M. Clark; Hawtrey, von Mises, Robertson, H. L. Moore, and F. H. Knight.”(p. 358, n1)
What do you think of that list? And, what do you think it says about Mises’s stature as an economic thinker if even Samuelson signaled that he would have been honored with the Nobel Prize for his contributions to economic science?
Andrei Shleifer is one of the most important economic thinkers of our time. Here are some of his thoughts on the economic transition in the Soviet Union that he viewed first hand.
Twenty years ago, communist countries began their shift towards capitalism. What do we know now that we didn’t know then? Harvard’s Andrei Shleifer, the Russian-born, American-trained economist, provides his answers and their relevance for contemporary policymakers.
Recently, I was asked by the organisers of the IIASA conference1 to mark the 20th anniversary of the beginning of economic reforms in Eastern Europe and former Soviet Union to comment on the lessons of transition. The assignment presumably refers to the things that I learned – as an economist – that are different from what I believed initially. Such a recollection free from hindsight bias is challenging, but I tried. This list might be useful to future reformers, although there are not so many communist countries left. Some of the issues are however relevant not just for communist countries; the problems of heavily statist economies are similar. So here is my top-seven list.
First, in all countries in Eastern Europe and the former Soviet Union, economic activity shrunk at the beginning of transition, in some very sharply. In many countries, economic decline started earlier, but still continued. In Russia, the steepness and the length of the decline (almost a decade) was a big surprise. Countries with the biggest trade shocks (such as Poland and Czechoslovakia) experienced the mildest declines. To be sure, the true declines were considerably milder than what was officially recorded – unofficial economies expanded, communist countries exaggerated their GDPs, defence cuts, and so on – but this does not take away from the basic fact that declines occurred and were surprising. These declines contradicted at least the simple economic theory that a move to free prices should immediately improve resource allocation. The main lesson of this experience is for reformers not to count on an immediate return to growth. Economic transformation takes time.
Second, the decline was not permanent. Following these declines, recovery and rapid growth occurred nearly everywhere. Over 20 years, living standards in most transition countries have increased substantially for most people, although the official GDP numbers show much milder improvements and are inconsistent with just about any direct measure of the quality of life (again raising questions about communist GDP calculations). As predicted, capitalism worked and living standards improved enormously. One must say, however, that for a time things looked glum. So lesson learned: have faith – capitalism really does work.
Third, the declines in output nowhere led to populist revolts – as many economists had feared. Surely reform governments were thrown out in some countries, but not by populists. Instead of populism, politics in many countries came to be dominated by new economic elites, the so-called oligarchs, who combined wealth with substantial political influence. From the perspective of 1992, this came as a huge surprise. Ironically, in some countries in Eastern Europe populism appeared 20 years after transition started, after huge improvements in living standards were absolutely obvious. Indeed, people in all transition countries were unhappy with transition: they were unhappy even in countries with rapidly improving quality of life (and this itself is another surprise and major puzzle – something for future reformers to keep in mind). But the lesson is clear: a reformer should fear not populism but capture of politics by the new elites.
Fourth, economists and reformers overstated both their ability to sequence reforms, and the importance of particular tactical choices, eg, in privatisation. In retrospect, many of the theories that animated the discussion of reform – whether institutions should be built first, whether companies should be prepared for privatisation by the government, whether voucher privatisation or mutual fund privatisation is better, whether case by case privatisations might work – look quaint. Reformers nearly everywhere, including in Russia, had a vastly overstated sense of control. Politics and competence frequently intervened and dictated to a large extent most of the tactical choices. Still, most countries, despite different choices, ended up with largely similar outcomes (notable and sad exceptions are Belarus, Uzbekistan, and Turkmenistan). In various forms, all had privatisation and macroeconomic stabilisation as well as legal and institutional reform to support a market economy. Lesson learned: do not over-plan the move to markets, but, more importantly, do not delay in the hope of having a tidier reform later.
Fifth, economists have greatly exaggerated the benefits of incentives by themselves, without changes in people. Economic theory of socialism has put way too much weight on incentives, and way too little on human capital. Winners in the communist system turned out not to be so good in a market economy. Transition to markets is accomplished by new people, not by old people with better incentives. I realised this and wrote about it in the mid-1990s, but the lesson both in firms and in politics in profound: you cannot teach an old dog new tricks, even with incentives.
Sixth, it is important not to overestimate the long-run consequences of macroeconomic crises and even debt defaults. Russia experienced a major crisis in 1997–98, which some extremely knowledgeable observers said would set it back by 20 years, yet it began growing rapidly in 1999–2000. Similar stories apply elsewhere, from East Asia to Argentina. Debt restructurings do not necessarily make permanent scars. This experience bears a profound lesson for reformers, who are always intimidated by the international financial community: do not panic about crises; they blow over fast.
Seventh, it is much easier to forecast economic than political evolution. Although nearly all transition countries have eventually converged to some form of capitalism, there has been a broader range of political experiences, from full democracies, to primitive dictatorships, to just about everything in between. There appears a strong geographic pattern in this, with countries further West, especially those involved with the European Union, becoming clearly democratic, and countries further East remaining generally more authoritarian. For countries in the middle, including Russia and Ukraine, the political paths over the 20 years have wiggled around. Lesson learned: middle-income countries eventually slouch toward democracy, but not nearly in as direct or consistent a way as they move toward capitalism.
One would think Matthew Yglesias had become quite well versed in Austrian Economics by now or at least slightly familiar, but alas that is not the case. Sadly all one can do is shake ones head as I think it is a lost cause and he really is not interested in learning why it was Ron Paul stated that “We are all Austrians now.”
Here is his latest attempt to confuse and befuddle as he leaves one discombobulated and none the wiser. Yglesias crawls along as he confounds fact and fiction and then reaches his crescendo of confusion when he states:
“Many of the original Austrians found their business cycle ideas discredited by the Great Depression, in which the bust was clearly not self-correcting and country after country stimulated real output by abandoning the gold standard and engaging in deficit spending. Then for a long time after World War II, policy elites more or less agreed on a combination of “automatic” fiscal stabilizers (the deficit naturally goes up during recessions as tax revenues fall and social service outlays rise) and interest rate cuts. And it worked, so nobody much cared about Austrian economics outside of crank circles.”
Of course, no prestigious circle cared much about Austrian economics except the one that matters most that gave F.A. Hayek a Noble prize in 1974 for his pioneering work in the theory of money and economic fluctuations and his penetrating analysis of the interdependence of economic, social and institutional phenomena.
If Matthew or anyone else wants to see the error of their ways it is a quick click away and a short read to the real story behind America’s Great Depression.
The Exemplary F.A. Hayek and the Extraordinary Princeton Delusions and the Madness of the New York TimesDecember 6, 2011
All of the popular press that the Austrian school of economics, the Mises Institute, the Austrian business cycle theory, and the Physiocrats like Frederic Bastiat have garnered lately has led Paul Krugman to try to rewrite Hayek out of the history of macroeconomics contra all facts against him.
“Friedrich Hayek is not an important figure in the history of macroeconomics.”
Yet, he was only willing to do so under the cover of a David Warsh article where Warsh states: “With the publication of ‘The Use of Knowledge in Society’ in the American Economic Review in 1945, [Hayek] essentially won on the ‘calculation debate,’ conducted with Ludwig von Mises and Oscar Lange, concerning the possibility of central planning.”
Krugman neglects to mention that Warsh goes on to discuss the contributions of Dr. Robert Nozick, Rep. Ron Paul, and George Mason Economics professor Russ Roberts and filmmaker John Papola’s two widely-viewed videos, “Fear the Boom and Bust” and “The Fight of the Century.” Or, his citing approvingly of Bruce Caldwell of Duke University‘s summation that [Hayek's] “‘twin ideas of evolution and spontaneous order’ become prominent, especially the idea of cultural evolution, with its emphasis on rules, norms, and decentralization.”
Krugman may also want to reread Warsh’s final paragraph where he states:
And, then we can read the words of the Nobel committee that awarded Professor Friedrich von Hayek the Nobel:
“Hayek’s contributions in the fields of economic theory are both deep-probing and original. His scholarly books and articles during the 1920s and 30s sparked off an extremely lively debate. It was in particular his theory of business cycles and his conception of the effects of monetary and credit policy which aroused attention. He attempted to penetrate more deeply into cyclical interrelations than was usual during that period by bringing considerations of capital and structural theory into the analysis. Perhaps in part because of this deepening of business-cycle analysis, Hayek was one of the few economists who were able to foresee the risk of a major economic crisis in the 1920s, his warnings in fact being uttered well before the great collapse occurred in the autumn of 1929…
“His conclusion is that it is only through a far-reaching decentralization in a market system with competition and free price formation that it is possible to achieve an efficient use of all this knowledge and information. Hayek shows how prices as such are the carriers of essential information on cost and demand conditions, how the price system is a mechanism for communication of knowledge and information, and how this system can mean an efficient use of highly decentralized resources of knowledge.
“Hayek’s ideas and analyses of the viability of economic systems, presented in a number of writings, have provided important and stimulating impulses to the great and growing area of research which is named comparative economic systems.”
For some reason or another I missed this very impressive resource list of essays, books, and videos that Tom Woods put together for those interested in a beginner’s guide to Austrian economics.
Tom begins with elementary texts on economic reasoning and then supplements this with a video series by various excellent professors who discuss one chapter of Henry Hazlit’s Economics in One Lesson each.
He then builds on this basic knowledge with a variety of books, audio, and video that will keep you busy for the rest of the year.
And when you are done you can proceed here to the Mises Media page and here then to the Molinari Institute’s Heritage of Dissent: An Online Library of Radical Libertarian Classics to keep you occupied for the next decade.
Libertarianism.org has released this exclusive video from November 22, 1983 of F. A. Hayek discussing the evolution of morality and social norms, arguing that they result from unplanned, emergent processes. He contrasts this conclusion with other philosophical accounts of law and morality.
A short clip from a rare Murray Rothbard lecture is also available, but I would encourage others to ask that the complete lecture on “Mises, Keynes, Friedman, Laffer: The Austrian Perspective” be made available.
The whole press conference is quite embarrassing for the economics profession.
Robert Wenzel reports on Roubini Attacks Austrian Economists at Economic Policy Journal:
Nouriel Roubini is very well connected in the world of the financial power elite, but that doesn’t mean he knows is ass from his elbow when it comes to Austrian economics. He tweets:
“The austerians’ Austrian austerity will not lead to Schumpeterian ‘creative destruction’ but rather ‘deadly destructive depression’”
First of all, modern day Austrians see Schumpeter as a marginal player when it comes to the Austrian school of economics.
The most significant thinkers in Austrian economics are Ludwig von Mises, Murray Rothbard and Friedrich Hayek. After these three, Carl Menger and Eugene von Bohm-Bawerk would be added to the list.
Second, there are no Austrian economists who would be in favor of the current austerity programs being called for in the PIIGS countries, by globalist organizations such as the IMF, World Bank and the OECD.
Austrians view the IMF etc. as bankster enforcers, who exist for one reason and one reason only, to ensure that the banksters are paid. Austrians view the current increased taxes, as part of austerity programs in PIIGS countries, with horror, and as the state taking by force from the people and handing the funds to the banksters.
Rather than banksters getting paid, Austrians would rather see the the PIIGS countries go into bankruptcy, default on their debt and free the people. The same view holds with regard to the Austrian position on US Treasury debt. Treasury default is the Austrian solution, not phony “austerity” programs of tax reform, aka tax increases, and government programs that are “paid for” by shuffling imaginary cuts in to later years. Bottom line: Austrians aren’t in favor the current size of government, anywhere. It’s not about austerity, but about eliminating the government money grab on behalf of banksters.
Austrians are also in favor of ending the social-welfare programs, so that the countries can again grow and prosper, but this has nothing to do with the current austerity programs proposed for the PIIGS. This is a position Austrians hold relative to all state social-welfare programs, regardless of the debt situation of a country.
Roubini is shockingly clueless with regard to Austrian economics and its position on the current eurozone crisis and the crisis in the United States.
What would Ludwig von Mises and FA Hayek say?
I do not like this Uncle Sam, I do not like his welfare-warfare scam.
I do not like these dirty crooks, or how they lie and cook the books.
I do not like when Congress steals, I do not like their secret deals.
I do not like these dirty bombs, or how they kill without any qualms.
I do not like their fiat money, it is worthless paper and all too funny.
I do not like taxation as theft, I will be happy when none are left.
I do not like this kind of hope. I do not like it. nope, nope, nope!
Judge Napolitano explains the battle between Austrian free market economists and progressive American socialist economists over the control of the commanding heights of the global economy on Freedom Watch.
Barack Obama moments ago proclaimed that no one is advocating for default.
San Jose State University Assoc. Professor Jeffrey Rogers Hummel calls for exactly such a default:
But my major disagreement with Tyler [Cowen] and Arnold [Kling] is that I believe that a U.S. government default, rather than being “the end of the world,” could possibly be a good thing. I even advocated repudiating the national debt in a 1981 issue of CALIBER (the newsletter of the California Libertarian Party), long before predicting a default. My arguments were moral, economic, and political, and I would only soften them slightly today.
The moral argument for repudiation is easiest to follow although by itself says nothing about the practical results. Treasury securities represent a stream of future tax revenues, and investors have no more just claim to those returns than to any investment in a criminal enterprise. I favor total repudiation of all government debt for the same reason I favor abolition of slavery without compensation to slaveholders.
The economic argument depends on whether Ricardian Equivalence holds. Repudiating government debt eliminates future tax liabilities. To the extent that people correctly anticipate those liabilities, the value of private assets (including human capital) should rise over the long run by the same amount that the value of government securities falls. Thus, people will gain or lose depending how closely their wealth is associated with the State. If on the other hand, people underestimate their future tax liabilities, they suffer from a fiscal or “bond illusion” in which Treasury securities make them feel wealthier than they actually are. Debt repudiation will bring their expectations into closer alignment with reality, which should increase saving.
LVMI’s own Bob Murphy has made the same point:
Gary North has stated default will come, and that the vast majority of the people of the United States will benefit from it:
Liberty will receive a shot in the arm when this phrase provokes universal laughter: “The full faith and credit of the United States.” That day is fast approaching. The credit rating of the United States government will be marked down from AAA to AA. It will then be marked down to A. For every notch down that it falls, the national day of deliverance draws closer. American liberty is measured inversely to the credit rating of the United States government.
The President should hear from these voices and this rationale. I highly doubt he has even considered these arguments and would greatly benefit from a week at Mises University.
The Prehistory of Modern Economic Thought: The Aristotle in Austrian Theory by Justin Ptak (Institute for Business Cycle Research)
Action, Coordination, and Exchange: Voluntary Response to Stimuli in Profit-Seeking Endeavors by Justin Ptak (Institute for Business Cycle Research)
Praise or damn a free society, mutually beneficial exchange, and voluntary actions, one must read and contend with Hayek’s The Use of Knowledge in Society.
“What is the problem we wish to solve when we try to construct a rational economic order? On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences, and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions. [But, how now that we live in this unknowable world of scarce resources and yet happen to find ourselves living in the relative lap of luxury and civilization despite coercive governments best efforts?...]“
Now read Mises’s 1920 paper on economic calculation under socialism.
The ASC is the international, interdisciplinary meeting of scholars working in the intellectual tradition of the Austrian School, the oldest and yet fastest growing school of economic thought.
* Mises Lecture: Helio Beltrao, Mises Institute Brazil
* Hazlitt Lecture: David Stockman, former budget director of Reagan administration
* Hayek Lecture: William Butos, Trinity College
* Rothbard Lecture: Philipp Bagus, University Rey Juan Carlos in Madrid
* Church lecture: Mustafa Akyol, Turkish Daily News
The complete schedule including the awarding of the Lawrence Fertig Prize.
Today is the 85th anniversary of the birth of Murray Newton Rothbard, one of the greatest economists of the Austrian school, philosophers of liberty, and individual anarchists who defined libertarianism and provided the theoretical framework for a free-market anarchism that is known as anarcho-capitalism today.
He certainly would be overjoyed and giddy about the events of the last two months seeing a rebirth of freedom across many regions of the globe. Moreover, he would be immensely satisfied by the spread of opposition toward military, political, and economic interventionism in the affairs of man.
His ideas today are even more alive than ever before as the truths of self-ownership, natural property rights, and universal ethics expand and create greater peace, liberty, and prosperity.
Moving away from pulp and into the digital age:
1. The Philosophy of Liberty – Ken Schoolland (2006)
2. The Sunset of the State – Stefan Molyneux (2010)
3. Pirates & Emperors – Schoolhouse Rock (2006)
4. Money, Banking, and the Federal Reserve – Mises Institute (1996)
5. Who Really Controls America – George Carlin (2008)
6. The Story of Your Enslavement – Stefan Molyneux (2010)
7. “Fear the Boom and Bust – A Hayek vs. Keynes Rap Anthem” – John Papola and Russ Roberts (2010)
8. The Future of Austrian Economics – Murray Rothbard (1990)
9. The Errors of Classical Liberalism and the Idea of a Private Law Society – Hans Hoppe (2008)
10. How To Advance Liberty – Leonard Reed (1978)
In response to Art’s more contemporary list of works on the political economy of liberty:
1. Gustave de Molinari – The Production of Security (1849)
2. Lysander Spooner – Natural Law or the Science of Justice (1882)
3. Auberon Herbert – The Right and Wrong of Compulsion by the State (1885)
4. Benjamin Tucker – Why I Am An Anarchist (1892)
5. Voltairine de Cleyre – Why I Am An Anarchist (1897)
6. Franz Oppenheimer – The State (1922)
7. Albert Jay Nock – Our Enemy, The State (1935)
8. Morris and Linda Tannehill – The Market for Liberty (1970)
9. David Friedman – The Machinery of Freedom (1973)
10. Murray Rothbard – Society Without a State (1974)
Why free market Austrian economics have inspired a rap video and attracted new fans.
Was the economic crisis caused by fundamental problems with the system rather than a mere failure of policy?
This week, Jamie Whyte and Analysis looks at the free market Austrian School of FA Hayek. The global recession has revived interest in this area of economics, even inspiring an educational rap video.
“Austrian” economists believe that the banking crisis was caused by too much regulation rather than too little. The fact that interest rates are set by central banks rather than the market is at the heart of the problem, they argue. Artificially low interest rates sent out the wrong signals to investors, causing them to borrow to spend on “malinvestments”, such as overpriced housing.