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

730 Money, Bank Credit, and Economic Cyclesbankers, should take advantage of the expropriation whichcomes with the possibility of creating money. Thus his proposalof a 100-percent reserve requirement is not the logical result ofapplying traditional legal principles to banking, as in the case ofMurray N. Rothbard. Instead, it represents an attempt to assistgovernments in administering a stable monetary policy by preventingthe elastic, distorting credit expansion which all fractional-reservebanking systems generate from nothing. In thissense, Maurice Allais simply follows the old tradition establishedby some members of the Chicago School, who proposeda 100-percent reserve requirement to make government monetarypolicy more effective and predictable.butte à de puissantes oppositions, il a passé ses dernièresannées dans la gêne, et sans l’aide de quelques amis, il n’auraitguère pu disposer d’une vie décente. Une société qui n’estpas capable d’assurer à ses élites, et en fait à ses meilleursdéfenseurs, des conditions de vie acceptables, est une sociétécondamnée. (p. 307)Although in practice Maurice Allais fully agrees with the analysis andprescriptions of the Austrian School on matters of money and cycles, heembraces the mathematical development of the general equilibriummodel and thereby separates radically from the Austrians, as certainfundamental errors in his analysis attest (Huerta de Soto, Socialismo, cálculoeconómico y función empresarial, pp. 248–49). Pascal Salin has thereforeconcluded that rather than a liberal economist of the same type asHayek, Maurice Allais is a “social engineer” with strong personal laissez-faireleanings, a theorist whose mathematical analysis often leadshim to a pragmatic utilitarianism which Hayek and Austrian scholars ingeneral would clearly label “constructivist” or “scientistic.” See PascalSalin, “Maurice Allais: Un économiste liberal?” manuscript pendingpublication, p. 12. Salin has also published a paper in which he analyzesthe Austrian theory of economic cycles and the banking-policy prescriptionsthat derive from it. See Pascal Salin, “Macro-StabilizationPolicies and the Market Process,” Economic Policy and the Market Process:Austrian and Mainstream Economics, K. Groenveld, J.A.H. Maks, and J.Muysken, eds. (Amsterdam: North-Holland, 1990), pp. 201–21. In footnote98 of chapter 8, we explain why we cannot agree with Salin’s stancein favor of fractional-reserve free-banking.