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

512 Money, Bank Credit, and Economic Cyclesin the grip of a crisis, shares many of the theoretical errors ofmonetarist macroeconomics. 3 2A CRITIQUE OF MONETARISMTHE MYTHICAL CONCEPT OF CAPITALIn general the Neoclassical School has followed a traditionwhich predated the subjectivist revolution and whichdeals with a productive system in which the different factors3 The following words of John Hicks offer compelling evidence that thesubjectivist revolution sparked off by the Austrian School lay at the coreof economic development until the eruption of the neoclassical-Keynesian“counterrevolution”:I have proclaimed the “Austrian” affiliation of my ideas; thetribute to Böhm-Bawerk, and to his followers, is a tribute thatI am proud to make. I am writing in their tradition; yet I haverealized, as my work has continued, that it is a wider and biggertradition than at first appeared. The “Austrians” were nota peculiar sect, out of the main stream; they were in the mainstream; it was the others who were out of it. (Hicks, Capitaland Time, p. 12)It is interesting to observe the personal scientific development of SirJohn Hicks. The first edition of his book, The Theory of Wages (London:Macmillan, 1932), reflects a strong Austrian influence on his earlywork. Chapters 9 to 11 were largely inspired by Hayek, Böhm-Bawerk,Robbins, and other Austrians, whom he often quotes (see, for example,the quotations on pp. 190, 201, 215, 217 and 231). Hicks later becameone of the main architects of the doctrinal synthesis of the neoclassical-Walrasian School and the Keynesian School. In the final stage of hiscareer as an economist, he returned with a certain sense of remorse tohis subjectivist origins, which were deeply rooted in the AustrianSchool. The result was his last work on capital theory, from which theexcerpt at the beginning of this note is taken. The following statementJohn Hicks made in 1978 is even clearer, if such a thing is possible: “Inow rate Walras and Pareto, who were my first loves, so much belowMenger.” John Hicks, “Is Interest the Price of a Factor of Production?”included in Time, Uncertainty, and Disequilibrium: Exploration of AustrianThemes, Mario J. Rizzo, ed. (Lexington, Mass.: Lexington Books, 1979),p. 63.