This article examines key episodes in US monetary history to identify lessons that may inform the development of a more stable and effective monetary system. Historically, gold and silver played central roles in the US economy, while departures from commodity-based money often coincided with periods of economic instability. In the historical transitions analyzed, a return to hard money and reduced monetary intervention was frequently followed by economic recovery. This recurring pattern suggests that shifts away from and back to hard-money systems have had measurable effects on inflation, business cycles, and financial crises. By analyzing five significant historical episodes, as well as current economic conditions, the article offers a critical assessment of contemporary proposals for reintroducing a sound monetary standard and their potential implications for economic stability.
This article develops a typology of knowledge in economics, drawing on the works of Carl Menger and F. A. Hayek, to clarify how different types of knowledge affect production, coordination, and entrepreneurial profit. It organizes economically relevant knowledge along two axes—the physical world versus the catallactic world, on the one hand, and general versus applied, on the other—and adds a temporal dimension to distinguish knowledge problems from uncertainty. The framework reveals that while physical-world knowledge sets the boundaries of what can be produced, catallactic-world knowledge guides what should be produced and how. The article applies this typology to Austrian theories of the market process, showing that uncertainty arises when value knowledge is unavailable at the time of action and that entrepreneurial profit stems from bearing this uncertainty rather than from superior knowledge. This conceptual separation advances the understanding of economic causality and the distinct functions of knowledge in market processes.
This article offers an economic analysis, along with empirical illustrations, of the controversy over COVID-19 models of communication and management. It compares mainstream and heterodox models—that is, the interventionist model based on bureaucratic coaction and the liberal model based on agile market alternatives or spontaneous and flexible social coordination. It is also a study of political economy, communications, and the management of public health and security issues from the perspective of Austrian economics. The analysis is based on Mises’s theorem about the impossibility of economic calculation under centralized, coactive systems (the interventionist model) as well as other economic principles, such as that of opportunity cost. In this context, the article also pays attention to the collateral problems and secondary effects of the interventionist model application. The conclusion proposes a solution to the problem of economic well-being that involves dynamic efficiency and technological change.
Within the Austrian school, labor economics is among the topics least emphasized, so that crucial concepts such as the disutility of labor and opportunity cost are divorced from their original contexts. This article examines the origins and evolution of the disutility of labor postulate and analyzes how this concept affected the thinking of major Austrian theorists such as Ludwig von Mises. We trace the subject back to William Stanley Jevons, David Ricardo, David I. Green, and Philip Wicksteed and find that the assumption of the disutility of labor went from being grounded in real cost terms to opportunity cost terms. Notably, we offer a novel finding in illustrating Mises’s changing thoughts on the matter as they developed from a theory similar to that of Jevons into one similar to that of Wicksteed and Green. Finally, an examination of the real cost and opportunity cost doctrines finds that both are at odds with the core principles of Mengerian marginal analysis, challenging the typical manner in which the disutility of labor is treated by Austrian economists.
Mises (1953, 1990, 1998) put the theory of money on a sound basis by integrating it with marginal utility theory and clearly explaining its value in these terms. One of Mises’s important conclusions is that demand for money is always demand to hold—that is, money’s value comes from being held (Hutt 1956; Hoppe 2012), not from being exchanged. What Mises termed secondary media of exchange (Mises 1998, 459) are partial substitutes for money. A person holds various claims and commodities to economize on the need to hold money, their high degree of secondary marketability making them suitable for this purpose. Salerno (2010a), building on Rothbard’s (2009) extension of Misesian monetary theory, presents a simple model distinguishing between the exchange demand for money and the reservation demand for money. We aim, first, to clarify some points in this model to in turn clarify our claim that demand for money is always demand to hold. Second, expanding on Žukauskas and Hülsmann (2019), who apply the Rothbard–Salerno model to the demand for financial assets and its relationship to the demand for money, we try to extend that model to incorporate close substitutes for money—what Mises calls secondary media of exchange. The model allows us to better understand what has been called the quality of money (Bagus 2009, 2015; Bagus and Howden 2016; Žukauskas 2021)—the idea that high-quality money will have a higher reservation demand, while lower quality money will have a lower reservation demand. Similarly, the higher the quality of money, the lower the demand for secondary media of exchange, and vice versa. In this way, we can consider the existence and importance of secondary media of exchange to be a proxy for the quality of money.
In 2015, David Thomas and I discovered a lacuna in Austrian capital structure theory. In this article, I will (1) explain the sequestered capital lacuna; (2) discuss the circumstances, good fortune, and scholarly works (especially those of Friedrich Hayek and Roger Garrison) that led to our discovery; (3) draw attention to the utility of sequestered capital as a means for uncovering operational insights about the timing of turning points of boom/bust phenomena (e.g., the Dutch tulipmania and the 1929 boom and bust of blind investment trusts); (4) present evidence that despite our having had seven publications on the subject (several accepted enthusiastically by reviewers and editors of Austrian journals), our discoveries remain largely overlooked by Austrian scholars; and (5) conclude that integrating sequestered capital into Austrian capital theory and Austrian business cycle theory would improve the ability of Austrian scholars to defend free-market capitalism from criticisms that investment is driven by animal spirits (John Maynard Keynes), speculative orgies (John Kenneth Galbraith), and irrational exuberance (George Akerlof, J. Bradford De Long and Andrei Shleifer, Robert Shiller, Richard Thaler, etc.).
