How do I answer this article?
http://delong.typepad.com/sdj/2011/11/fictitious-wealth-and-ludwig-von-mises.html
I thought this was a funny post.
"never mind that he is a big fan of the political leadership of Benito Mussolini" The quote usually offered (from Michael Lind, for instance) is a prefatory concession from Mises in "Liberalism"* to his opponents, which he follows up by saying fascism will end in disaster. [It is one hell of a prefatory concession.] *Something Mises was in favor of and Mussolini was not. Relative to his economics, that political prognostication holds up very well (despite being written at a time before fascist violence hit the extremes we associate it with). Steve Horwitz has been making some arguments about Mises actually accepting an expansion of the money supply when velocity drops, though Rothbardians aren't having any of it. I wouldn't bother engaging with people that have this complex a view of the school...that is as incorrect in reasoning as this... "that your fiat money has value, and that value is just equal to the discount from its cost of production that your other wealth incurs because it is illiquid." Wow, value analysis! One has to distinguish between fiat *currency* in the role of token money, as a proxy measure of value and means of exchange, and fiat *money* "in itself", i.e. as a savings horde outside of circulation. In this latter case fiat money is "fictitious" value, which is only to say that fiat is immediately potential credit money, realized when it changes hands as investment capital, or exchanged against naturally occurring use values, such as land. The same is true of a horde of gold: in itself as such it is also a fictitious value, potential credit money. As such credit money is at root a promissory note on future value, whose present value is not the illiquidity discount in circulation, but the State tax revenue or, in the (generally 19th century case of private banknote issuance) a banks' current net cash flow. Credit money is basically capitalist planning - and in an aside, we've seen how well that works, lately! It is therefore not surprising that the foundation of a National Debt - first by the Dutch in the late 16th century, then the English a century later - and the promotion of a tax to sustain that debt, was an absolute condition for the rise of capitalism. Of course the Austrian school would see that history from the wrong end of the telescope. "If only the Dutch hadn't created a National Debt, the Tulip Bubble would not have happened...." and so forth they would sputter, it never occurring to them that the capitalist system that they profess to be the "best" defenders of, would have never come into existence in the first place, or would have taken another 1000 years to appear. Which is basically the Austrian School prescription: The magic of the capitalist system will make us all Jetsons.....if only we wait 1000 years! The poster who associated the Austrian School with "feudal landlords with loads of money" is not far off the mark: Ever since Carl Menger was made Court Jester of the Austro-Hungarian Hapsburg monarchy in the 19th century, this school is best seen as the representative of the traditional Central European landowning aristocracy, one that however, with the nasty experience of the French revolution and Napoleonic Wars still fresh in the mind, decided that the "English way" was the way to go, and were in Menger's time well on the road to consciously converting themselves into a combination of large scale capitalist farmers and idle financiers, a la Bismarck and Prussian Junkerdom. They did so on the basis of a relatively backward economic sector - Central European agriculture - whose corresponding low wages and relative technical underdevelopment meant high rents and super profits for them. And those rents only became higher with the advance of capitalist industry outside their sector. Consequentially they had a vested interest in the "development of underdevelopment" and were particularly hostile to measures that might raise wages - or taxes, particularly on land. Hence the hostility to "fiat currency". They worked to preserve their land monopoly and foreclose on the possibility of the rise of a middling layer of peasant farmers a la France - and its Revolution - with many of these emigrating to the U.S. instead, thereby blocking the emergence of farmer households under capitalist conditions who could only survive by increasing labor productivity and, since they could not own slaves or command serfs, could only do so mainly by investment in labor saving machinery. But *that* happened in the U.S. instead of Central Europe. I'd submit to you that, far from being an anachronism, this retrograde stance has become the position of the majority of today's global capitalist class, the "1%", (70 million people globally!), as the income stream for these increasingly consists of rents and super profits from the "development of underdevelopment", rather than from profits of enterprise normalized via competition. That is the real social basis for latter day Austerianism, and the reason for the general rejection of real Keynesian measures - rather than as the "policy errors" of "bad individuals". The Rentier has come to euthanize the Economy! This poster has an intricate view of the mentality of the people the people he is discussing, you will not get through to them. The last few paragraphs here are correct in their observation of what big money is currently doing, but they seem to think that Austrianism is somehow a gateway to the state privileges that got them where they are today. They may very well be right that if/when society implodes that Austrianism will reign (due to the Elites posturing), but it will reign from the balconies of the big money players, not the "margin" where economic activity is supposed to be based around. Just as some people on this board dismiss Webster Tarpley for his rhetoric involving economics and the Austrian school, he and 'they' are going to have critically more acceptable theories of strategy that resonate with the masses. However, the poster in my quoted selection did use the word "Consequentially." He used it. ('period'; that should be enough) And he used it incorrectly. His rhetoric betrays his wit. "The Fed does not make predictions. It makes forecasts..." - Mustang19 | Post Points: 20
[It is one hell of a prefatory concession.]
*Something Mises was in favor of and Mussolini was not.
Relative to his economics, that political prognostication holds up very well (despite being written at a time before fascist violence hit the extremes we associate it with).
Steve Horwitz has been making some arguments about Mises actually accepting an expansion of the money supply when velocity drops, though Rothbardians aren't having any of it.
I wouldn't bother engaging with people that have this complex a view of the school...that is as incorrect in reasoning as this...
"that your fiat money has value, and that value is just equal to the discount from its cost of production that your other wealth incurs because it is illiquid." Wow, value analysis! One has to distinguish between fiat *currency* in the role of token money, as a proxy measure of value and means of exchange, and fiat *money* "in itself", i.e. as a savings horde outside of circulation. In this latter case fiat money is "fictitious" value, which is only to say that fiat is immediately potential credit money, realized when it changes hands as investment capital, or exchanged against naturally occurring use values, such as land. The same is true of a horde of gold: in itself as such it is also a fictitious value, potential credit money. As such credit money is at root a promissory note on future value, whose present value is not the illiquidity discount in circulation, but the State tax revenue or, in the (generally 19th century case of private banknote issuance) a banks' current net cash flow. Credit money is basically capitalist planning - and in an aside, we've seen how well that works, lately! It is therefore not surprising that the foundation of a National Debt - first by the Dutch in the late 16th century, then the English a century later - and the promotion of a tax to sustain that debt, was an absolute condition for the rise of capitalism. Of course the Austrian school would see that history from the wrong end of the telescope. "If only the Dutch hadn't created a National Debt, the Tulip Bubble would not have happened...." and so forth they would sputter, it never occurring to them that the capitalist system that they profess to be the "best" defenders of, would have never come into existence in the first place, or would have taken another 1000 years to appear. Which is basically the Austrian School prescription: The magic of the capitalist system will make us all Jetsons.....if only we wait 1000 years! The poster who associated the Austrian School with "feudal landlords with loads of money" is not far off the mark: Ever since Carl Menger was made Court Jester of the Austro-Hungarian Hapsburg monarchy in the 19th century, this school is best seen as the representative of the traditional Central European landowning aristocracy, one that however, with the nasty experience of the French revolution and Napoleonic Wars still fresh in the mind, decided that the "English way" was the way to go, and were in Menger's time well on the road to consciously converting themselves into a combination of large scale capitalist farmers and idle financiers, a la Bismarck and Prussian Junkerdom. They did so on the basis of a relatively backward economic sector - Central European agriculture - whose corresponding low wages and relative technical underdevelopment meant high rents and super profits for them. And those rents only became higher with the advance of capitalist industry outside their sector. Consequentially they had a vested interest in the "development of underdevelopment" and were particularly hostile to measures that might raise wages - or taxes, particularly on land. Hence the hostility to "fiat currency". They worked to preserve their land monopoly and foreclose on the possibility of the rise of a middling layer of peasant farmers a la France - and its Revolution - with many of these emigrating to the U.S. instead, thereby blocking the emergence of farmer households under capitalist conditions who could only survive by increasing labor productivity and, since they could not own slaves or command serfs, could only do so mainly by investment in labor saving machinery. But *that* happened in the U.S. instead of Central Europe. I'd submit to you that, far from being an anachronism, this retrograde stance has become the position of the majority of today's global capitalist class, the "1%", (70 million people globally!), as the income stream for these increasingly consists of rents and super profits from the "development of underdevelopment", rather than from profits of enterprise normalized via competition. That is the real social basis for latter day Austerianism, and the reason for the general rejection of real Keynesian measures - rather than as the "policy errors" of "bad individuals". The Rentier has come to euthanize the Economy! This poster has an intricate view of the mentality of the people the people he is discussing, you will not get through to them. The last few paragraphs here are correct in their observation of what big money is currently doing, but they seem to think that Austrianism is somehow a gateway to the state privileges that got them where they are today. They may very well be right that if/when society implodes that Austrianism will reign (due to the Elites posturing), but it will reign from the balconies of the big money players, not the "margin" where economic activity is supposed to be based around. Just as some people on this board dismiss Webster Tarpley for his rhetoric involving economics and the Austrian school, he and 'they' are going to have critically more acceptable theories of strategy that resonate with the masses. However, the poster in my quoted selection did use the word "Consequentially." He used it. ('period'; that should be enough) And he used it incorrectly. His rhetoric betrays his wit. "The Fed does not make predictions. It makes forecasts..." - Mustang19 | Post Points: 20
"that your fiat money has value, and that value is just equal to the discount from its cost of production that your other wealth incurs because it is illiquid." Wow, value analysis! One has to distinguish between fiat *currency* in the role of token money, as a proxy measure of value and means of exchange, and fiat *money* "in itself", i.e. as a savings horde outside of circulation. In this latter case fiat money is "fictitious" value, which is only to say that fiat is immediately potential credit money, realized when it changes hands as investment capital, or exchanged against naturally occurring use values, such as land. The same is true of a horde of gold: in itself as such it is also a fictitious value, potential credit money. As such credit money is at root a promissory note on future value, whose present value is not the illiquidity discount in circulation, but the State tax revenue or, in the (generally 19th century case of private banknote issuance) a banks' current net cash flow. Credit money is basically capitalist planning - and in an aside, we've seen how well that works, lately! It is therefore not surprising that the foundation of a National Debt - first by the Dutch in the late 16th century, then the English a century later - and the promotion of a tax to sustain that debt, was an absolute condition for the rise of capitalism.
Of course the Austrian school would see that history from the wrong end of the telescope. "If only the Dutch hadn't created a National Debt, the Tulip Bubble would not have happened...." and so forth they would sputter, it never occurring to them that the capitalist system that they profess to be the "best" defenders of, would have never come into existence in the first place, or would have taken another 1000 years to appear. Which is basically the Austrian School prescription: The magic of the capitalist system will make us all Jetsons.....if only we wait 1000 years!
The poster who associated the Austrian School with "feudal landlords with loads of money" is not far off the mark: Ever since Carl Menger was made Court Jester of the Austro-Hungarian Hapsburg monarchy in the 19th century, this school is best seen as the representative of the traditional Central European landowning aristocracy, one that however, with the nasty experience of the French revolution and Napoleonic Wars still fresh in the mind, decided that the "English way" was the way to go, and were in Menger's time well on the road to consciously converting themselves into a combination of large scale capitalist farmers and idle financiers, a la Bismarck and Prussian Junkerdom. They did so on the basis of a relatively backward economic sector - Central European agriculture - whose corresponding low wages and relative technical underdevelopment meant high rents and super profits for them. And those rents only became higher with the advance of capitalist industry outside their sector.
Consequentially they had a vested interest in the "development of underdevelopment" and were particularly hostile to measures that might raise wages - or taxes, particularly on land. Hence the hostility to "fiat currency". They worked to preserve their land monopoly and foreclose on the possibility of the rise of a middling layer of peasant farmers a la France - and its Revolution - with many of these emigrating to the U.S. instead, thereby blocking the emergence of farmer households under capitalist conditions who could only survive by increasing labor productivity and, since they could not own slaves or command serfs, could only do so mainly by investment in labor saving machinery. But *that* happened in the U.S. instead of Central Europe.
I'd submit to you that, far from being an anachronism, this retrograde stance has become the position of the majority of today's global capitalist class, the "1%", (70 million people globally!), as the income stream for these increasingly consists of rents and super profits from the "development of underdevelopment", rather than from profits of enterprise normalized via competition. That is the real social basis for latter day Austerianism, and the reason for the general rejection of real Keynesian measures - rather than as the "policy errors" of "bad individuals". The Rentier has come to euthanize the Economy!
This poster has an intricate view of the mentality of the people the people he is discussing, you will not get through to them.
The last few paragraphs here are correct in their observation of what big money is currently doing, but they seem to think that Austrianism is somehow a gateway to the state privileges that got them where they are today.
They may very well be right that if/when society implodes that Austrianism will reign (due to the Elites posturing), but it will reign from the balconies of the big money players, not the "margin" where economic activity is supposed to be based around.
Just as some people on this board dismiss Webster Tarpley for his rhetoric involving economics and the Austrian school, he and 'they' are going to have critically more acceptable theories of strategy that resonate with the masses. However, the poster in my quoted selection did use the word "Consequentially." He used it. ('period'; that should be enough) And he used it incorrectly. His rhetoric betrays his wit.
See the answer to the second Q of this wonderful article:
http://smilingdavesblog.blogspot.com/2011/08/demand-for-money.html
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
Thank you for your insights, I didn't even want to begin to comment. It really just sounds like a person who dislikes wealth and thinks that world CAN revolved by everyone holding hands and singing in the park.
Thanks Dave, I just skimmed what you have in your blog, i think it is what i was looking for, but will read more in depth when im not on company time.