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

A Critique of Monetarist and Keynesian Theories 579Table VII-1 groups monetarists and Keynesians togetherbecause their similarities far outweigh their differences. Neverthelesswe must acknowledge that certain important differencesdo separate these schools. Indeed, though both lack acapital theory 98 and apply the same “macro” methodology tothe economy, 99 monetarists concentrate on the long term andIt is a personal adaptation of the tables included in Hayek’s The PureTheory of Capital, pp. 47–49, and Skousen’s The Structure of Production, p.370. Huerta de Soto, “The Ongoing Methodenstreit of the AustrianSchool,” p. 96, also includes a table which contrasts the Austrian andneoclassical viewpoints, and the information contained there is essentiallyreproduced here as well.98 Except for the Austrian school and some sectors of theSwedish and early neoclassical school, the contending macroeconomictheories are united by a common omission. Theyneglect to deal with capital or, more pointedly, the economy’sintertemporal capital structure in any straightforward andsatisfactory way. Yet capital theory offers the richest and mostpromising forum for the treatment of the critical time elementin macroeconomics. (Roger W. Garrison, “The Limits ofMacroeconomics,” in The Cato Journal: An InterdisciplinaryJournal of Public Policy Analysis 12, no. 1 [1993]: 166)99 Luis Ángel Rojo states:On the whole, the current macroeconomic outlook is characterizedby a high degree of confusion. Keynesian economicsis in the grip of a deep crisis, as it has failed to adequatelyexplain, much less control, the course of events. At the sametime, new ideas have not yet taken root and are still an easytarget in light of the empirical evidence.Though we believe Rojo’s diagnosis is correct, and he refers to the theoreticalfailings of both Keynesians and monetarists, it is unfortunate thathe neglects to mention the need to base macroeconomics on an adequatecapital theory which permits the correct integration of the “micro” and“macro” aspects of economics. See Luis Ángel Rojo, Keynes: su tiempo yel nuestro (Madrid: Alianza Editorial, 1984), pp. 365ff. In the same bookRojo makes a brief and largely insufficient reference to the Austrian theoryof the economic cycle (see pp. 324–25). Ramón Febrero provides auseful summary of the current state of macroeconomics and attempts tobring some order to its chaotic and diffuse condition in his article, “Elmundo de la macroeconomía: perspectiva general y concepciones originarias,”in Qué es la economía, Ramón Febrero, ed. (Madrid: EdicionesPirámide, 1997), chap. 13, pp. 383–424. Unfortunately Febrero does not