Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

INTRODUCTIONThe economic analysis of juridical institutions has cometo the fore in recent years and promises to become oneof the most fruitful spheres of economics. Much of thework completed thus far has been strongly influenced by traditionalneoclassical assumptions, namely by the concept ofstrict maximization in contexts of equilibrium. Still, economicanalyses of law reveal the shortcomings of the traditionalapproach and do so perhaps better than any other branch ofeconomics. In fact, juridical institutions are so intimatelyinvolved in daily life that it is notoriously difficult to apply thetraditional assumptions of economic analysis to them. I havealready attempted elsewhere to expose the dangers the neoclassicalperspective brings to the analysis of juridical institutions.1 Economic analyses of law are certainly necessary, butthey call for a less restrictive methodology than has generallybeen used to date, one more suited to this particular field ofresearch. The subjectivist view is a more fitting approach.Developed by the Austrian School, it is based on their conceptof creative human action or entrepreneurial activity andimplies a dynamic analysis of the general processes of socialinteraction. This perspective promises to make great contributionsto the future development of the economic analysis ofjuridical institutions.In addition, most studies of juridical institutions carriedout so far have had exclusively microeconomic implicationsbecause, among other reasons, theorists have simply borrowedthe traditional analytical tools of neoclassical microeconomics1 See Jesús Huerta de Soto, “The Ongoing Methodenstreit of the AustrianSchool,” Journal des Économistes et des Études Humaines 8, no. 1(March 1998): 75–113.xlv