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

578 Money, Bank Credit, and Economic CyclesChicago School were already prescribing the typical Keynesianremedies for depression and fighting for large budgetdeficits. 96Table VII-1 recapitulates the differences between the Austrianperspective and the major macroeconomic schools. Thetable contains twelve comparisons that reveal the radical differencesbetween the two approaches. 9796 Frank H. Knight, Henry Simons, Jacob Viner and theirChicago colleagues argued throughout the early 1930’s forthe use of large and continuous deficit budgets to combat themass unemployment and deflation of the times. (J. RonnieDavies, “Chicago Economists, Deficit Budgets and the Early1930’s,” American Economic Review 58 [June 1968]: 476)Even Milton Friedman confesses:So far as policy was concerned, Keynes had nothing to offerthose of us that had sat at the feet of Simons, Mints, Knightand Viner. (Milton Friedman, “Comment on the Critics,”included in Robert J. Gordon, ed., Milton Friedman’s MonetaryFramework [Chicago: Chicago University Press, 1974], p. 163)Skousen, commenting on both perspectives, states:No doubt one of the reasons why the Chicago school gainedgreater acceptance was that there were some things they hadin common with the Keynesians: they both used aggregateconcepts; they both relied on empirical studies to supporttheir models; and they both favoured some form of governmentinvolvement in the macroeconomic sphere. Granted, theChicagoites favored monetary policy, while the Keynesiansemphasized fiscal policy, but both involved forms of state interventionism.(Mark Skousen, “The Free Market Response toKeynesian Economics,” included in Dissent on Keynes, p. 26;italics added)On this topic see also Roger W. Garrison’s article, “Is Milton Friedmana Keynesian?” published as chapter 8 of Dissent on Keynes, pp. 131–47.Also, Robert Skidelsky confirmed that the Keynesian “remedies” forrecession were nothing new to the theorists of the Chicago School in the1930s. See Robert Skidelsky, John Maynard Keynes: The Economist as Saviour,1920–1937 (London: Macmillan, 1992), p. 579. Finally, see the morerecent, well-documented article by George S. Tavlas, “Chicago, Harvardand the Doctrinal Foundations of Monetary Economics,” Journal of PoliticalEconomy 105, no. 1 (February 1997): 153–77.97 This table appeared in our preface to the Spanish edition of F.A.Hayek’s Contra Keynes and Cambridge [Contra Keynes y Cambridge, p. xii].