Michael Perelman wrote: > I suspect that Hayek took a lot from volume 2 of Capital.
I understand Bohm-Bawerk and others helped with this learning. > ... Interference with the market could > create problems, such as inflation, which would upset the balance > between the production of capital goods and final consumer goods. The > result would be a crisis of disproportion, somewhat like the imbalances > in volume 2 of Capital. The key, as I understand it, is when the actual interest rate got below Wicksell's "natural" interest rate, encouraging excessive capital-intensity (roundaboutness) or above it, encouraging insufficient capital intensity. I guess there were other kinds of disproportionalities, so that the "structure of supply" didn't match the "structure of demand." > Part of his crisis theory also resembled Marx's discussion of > fictitious capital in which financially-based decisions would cause > prices to become increasingly disconnected with the underlying values... Finance (inflation of credit, though not necessarily of prices) could cause the differences between the actual and natural rates, but so could government policy. BTW, the Austries and their colleagues saw "inflation" as happening during the 1920s even though prices were essentially flat (at least in the US and most other major capitalist countries, but not in Germany). Though this was credit inflation, not price inflation, they did like deflation and the Andrew Mellon strategy. They wanted "nature to take its course," to purge the economy and to allow new prosperity. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
