It is argued in that paper that Hayek came out the winner in the debate opposing him to Keynes. Keynes argued in favour of specific economic policies without a prior analysis of the causes of business cycles. His discussion of economic policy is backed on an ad hoc account of cycles that would, according to him, be based on the irrationality of economic actors and the non-effectiveness of price adjustments. As a result, he says, quantities have to adjust which leads to unemployment. Hayek and the Austrians propose, by contrast, a well-articulated theory of business cycles rooted in a micro-economic approach (agents are rational, albeit badly informed). This leads them to identify the source of the cycle in monetary shocks. In our modern economies, as in the Austrian theory, economic policies conducted by the states are the main driver of the cycles. The consequences of this analysis in terms of economic policy are clear: When excessive regulation and fiscal burden cause a recession the solution must be found in tax cuts and deregulation, not in (Keynesian) monetary or fiscal policies that will do nothing but foster mal-investment.

June 22, 2016

Understanding Financial Instability: Minsky Versus the Austrians

Ludwig Van Den Hauwe

Page range: 25-60

Abstract

Although Minsky’s interpretation of Keynes’s macroeconomics and essential message clashes with authoritative alternative interpretations, it has become increasingly influential during the years following the Global Financial Crisis, even in mainstream circles. This paper offers a critical evaluation of Minsky’s Financial Instability Hypothesis from the perspective of the alternative Austro-Wicksellian paradigm. Although some of the similarities and/or analogies between Minsky’s approach and that of the Austrian School suggest a more than merely superficial affinity between the two theoretical frameworks and although some scope for cross-fertilization between both approaches can be found, both theoretically and empirically, at a fundamental conceptual level both theories remain incompatible and difficult if not impossible to reconcile, in particular in terms of fundamental causality and in terms of policy conclusions and prescriptions. Despite the fact that Minsky’s policy conclusions are multifaceted and somewhat eclectic, they manifest a lack of familiarity with the conclusions of the Austrian analysis of the problems of central planning by Big Players such as Big Bank and Big Government. Both approaches also offer contrasting interpretations of the historical experience of the Global Financial Crisis.

July 19, 2016

The Case for Repairing Broken Channels without the Use of Unconventional Monetary Policy

Patrick Mardini

Page range: 61-76

Abstract

The paper shows that the literature on broken channels (1) fails to provide an explanation of the root causes of the crisis, (2) mistakes a subjective human behavior for a mechanical failure and (3) confuses market adjustment mechanisms. From this perspective, the policy aiming to deploy unconventional monetary policies to overcome the broken channels is misguided. The paper fits broken channels into the framework of a more comprehensive theory of the business cycle and suggests a different policy recommendation.

June 30, 2016

Cultural Consequences of Monetary Interventions

Jörg Guido Hülsmann

Page range: 77-98

Abstract

Hayek and Keynes are usually perceived as antipodes in one of the grand macroeconomic debates of the twentieth century. But they also agreed on some basic issues of monetary theory, most notably on the harmful character of money hoarding and the desirability of a flexible money supply to offset or neutralise changes in the demand for money. In our paper we highlight some of the cultural implications of a permanent expansion of the money supply. We will focus on the specific case of credit expansion ( ex nihilo creation of money through credit) which has held centre stage of the monetary evolution of the past two hundred years and, even more specifically, on credit expansion pushed to such an extent that it entails permanent price-inflation.

June 23, 2016

The U.S. Monetary Policies Against the Great Recession of 2008: A Critique from the Deflationist Viewpoint of the Austrian School

Renaud Fillieule

Page range: 99-111

Abstract

Monetary and credit expansions have been the main tools used by the U.S. government and central bank to try and recover economically from the Great Recession of 2008. This paper expounds a radical criticism of these Keynesian policies, criticism developed by some contemporary economists of the Austrian School: the appropriate and fair remedy for this kind of crisis is not reflation but deflation.

About this journal

Objective
The Journal des Economistes et des Etudes Humaines (JEEH) is a journal of political economy and interdisciplinary economic studies. It addresses economic issues in political theory, social dynamics, social science methodology, and philosophy. Today, JEEH has an international audience, and welcomes contributions written by scholars from around the world.

JEEH's goals are:

To bring together economics with neighboring disciplines such as law, history, political science, sociology, philosophy, psychology, and anthropology
To promote the development of the Austrian approach to economics (Austrian School) and to provide discussion and controversy
To reconcile economics with the ethical and policy-oriented principles which make coordinated interaction between human beings possible

Topics

liberalism
economic law
political economy
religion and economy
ethics and economy
market laws

Article formats
Research articles, Notes and comments

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