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

738 Money, Bank Credit, and Economic Cyclesparticularly suspicious of proposals to create an artificialcurrency, no matter how many advantages such a plan may atfirst appear to have. 36when, for the first time in history, people began to demand a certaingood as a medium of exchange. Therefore this theorem reflectsMenger’s theory on the spontaneous emergence and evolution ofmoney, but in this case there is a retroactive effect. Mises’s monetaryregression theorem is of capital importance in any project for reformingthe monetary system, and it explains why in this field there can be no“leaps in the dark,” attempts to introduce ex novo monetary systemswhich are not the result of evolution and which, as in the case ofEsperanto with respect to language, would inevitably be condemned tofailure. On the monetary regression theorem, see Mises, Human Action,pp. 409–10, 425 and 610. The introduction in the market of new paymenttechnologies (first paper, then plastic cards, and now electronic“money”) does not affect at all the conclusion of our analysis. It is notpossible nor convenient to try to introduce a constellation of private fiatelectronic moneys competing among themselves in a chaotic world offlexible exchange rates, especially when we already know the finalresult of the secular and free monetary evolution of humankind: a singleworldwide commodity (gold) that cannot be manipulated either byprivate individuals or public servants. For these reasons we cannotaccept the proposal of Jean Pierre Centi, “Hayekian Perspectives on theMonetary System: Toward Fiat Private and Competitive Moneys,” inAustrian Economics Today I, The International Library of Austrian Economics,Kurt R. Leube, ed. (Frankfurt: FAZ Buch, 2003), pp. 89–104. Seealso footnote 104.36 The best-known plan for the denationalization of money appears inHayek’s 1976 book, Denationalisation of Money. Nevertheless Hayek’sfollies in support of artificial monetary standards began thirty years earlier:“A Commodity Reserve Currency,” Economic Journal 53, no. 210(June–September 1943): 176–84 (included as chapter 10 of Individualismand Economic Order, pp. 209–19). While we consider Hayek’s Mengeriananalysis of the evolution of institutions to be correct, and we agree thatit would be highly beneficial to permit in the monetary field as well theprivate experimentation characteristic of markets, we find it regrettablethat Hayek ultimately proposed a completely artificial standard (comprisedof a basket of various commodities) as a new monetary unit.Although one can interpret Hayek’s proposal as a procedure for returningto traditional money (a pure gold standard and a 100-percentreserve requirement), Hayek clearly earned the criticism certain Austrianeconomists leveled against him. These economists judged his proposalsquite severely and called them “scientistic” and “constructivist.”