WEBVTT NOTE Theory of Money and Fiduciary Media 1 00:00:00.000 --> 00:00:05.500 Well, it is a great honor to be here and to be able to present this book, The Theory of Money and Fiduciary Media. 2 00:00:05.500 --> 00:00:13.000 This, as Mark said, this collection of essays is actually edited by Guido Hulsman, who was the one who was responsible for the project. 3 00:00:13.000 --> 00:00:19.000 But since Guido could not be here, it falls to me as one of the contributors to try to say something about... 4 00:00:23.500 --> 00:00:29.500 It falls to me to try to say something about the book and the contributions that it hopes to make. There it is. 5 00:00:30.000 --> 00:00:46.000 So yeah, so ideally Guido would have been able to do this, but since he couldn't be here you're just going to have to, you won't get the handsome German, you're just going to have to settle for the extraordinarily handsome American instead. 6 00:00:46.000 --> 00:00:58.000 By the way, this show just goes to show you why you should never write jokes in advance, because I wrote this before I realized that I was going to be speaking at the same time as Dr. Hoppe, so I didn't mean to imply that there aren't any other attractive Germans here. 7 00:00:58.000 --> 00:01:16.000 As to the book, so this book, as you can see from the subtitle, this book is a celebration of the 100th anniversary of Mises's first great work, The Theory of Money and Credit, which was first published in German in 1912. 8 00:01:16.000 --> 00:01:23.000 The title of this volume, The Theory of Money and Fiduciary Media, might appear somewhat obscure because that title is not well known in English. 9 00:01:23.000 --> 00:01:33.000 But The Theory of Money and Fiduciary Media is actually the literal translation of the original German title of the book, which was shortened simply to credit for the English version. 10 00:01:33.000 --> 00:01:46.000 And in a sense, it's fitting that Guido brought back the original title for this centennial celebration, because this new collection helps to clarify many of the issues that Mises raised in The Theory of Money and Credit 11 00:01:46.000 --> 00:01:55.000 that have since become lost or perhaps confused due to these simple changes in translation or perhaps between different editions of the book. 12 00:01:55.000 --> 00:02:09.000 And those changes are actually the subject of the first essay in the collection, which is by Guido, where he discusses how Mises' thoughts on money evolved over the course of the different editions of The Theory of Money and Credit. 13 00:02:09.000 --> 00:02:39.000 But I should first say some sort of general things about this collection. This book is broadly intended for an academic audience, but I think it would also be very useful for students who have studied the basics of Austrian economics and would like to read more, and also for the interested lay person who simply wishes to further explore Austrian ideas, particularly with regard to money. In many ways, I think the collection can serve as an important companion to The Theory of Money and Credit. 14 00:02:39.000 --> 00:02:48.000 because it helps to explain the great originality of Mises' work and why it is so truly revolutionary in the history of economic thought. 15 00:02:48.000 --> 00:02:56.000 The book contains 13 essays by different economists, each discussing a different aspect of the theory of money and credit. 16 00:02:56.000 --> 00:03:05.000 The papers cover a fairly wide range of topics, including how the theory of money and credit first came to be written and Mises' influences in writing it, 17 00:03:05.000 --> 00:03:11.000 along with comparisons between Mises and his predecessors. 18 00:03:11.000 --> 00:03:16.000 It also explores how Mises' ideas on money and banking evolved over the course of his career. 19 00:03:16.000 --> 00:03:22.000 A great deal of the collection is devoted to discussing Mises' contributions that still remain overlooked, 20 00:03:22.000 --> 00:03:29.000 as well as the necessity for contemporary economists and policy makers to understand the theory of money and credit. 21 00:03:29.000 --> 00:03:34.000 And all these are in addition to explaining just many of the fundamental contributions Mises made 22 00:03:34.000 --> 00:03:40.000 that people are perhaps more familiar with, such as his introduction of the Austrian business cycle theory. 23 00:03:40.000 --> 00:03:50.000 With these topics in mind, one of the ideas the collection hopes to bring out is the extraordinary scope of the project of The Theory of Money and Credit. 24 00:03:50.000 --> 00:04:00.000 I think for any ordinary economist, even one of the accomplishments of this book would have been enough on which to build a career, but Mises made many such contributions. 25 00:04:00.000 --> 00:04:08.000 I mean, I think it would have been entirely reasonable for him to have presented, say, the outlines of the Austrian business cycle theory and just simply called it a day. 26 00:04:08.000 --> 00:04:22.000 But in addition to that idea, he made dozens of other path-breaking contributions as well, such as the integration of the Austrian value theory with the theory of money and the development of the regression theorem. 27 00:04:22.000 --> 00:04:27.000 He also developed a sophisticated typology of money. 28 00:04:27.000 --> 00:04:39.000 He developed new interpretations of monetary history and the history of economic thought, and of course new ways of thinking about monetary institutions, monetary policy, and of course monetary reform. 29 00:04:39.000 --> 00:04:53.000 All of these are discovered, are covered in some way or another in this collection, and each of them I think is vital in understanding Mises' own thinking, as well as the differences between his approach and the ideas that have been adopted by the mainstream. 30 00:04:53.000 --> 00:05:03.000 And that is actually yet another subject covered in the collection in a paper devoted to studying the significance of Mises' ideas in contemporary mainstream macroeconomics teaching. 31 00:05:03.000 --> 00:05:16.000 So these essays, they can also help us understand and appreciate how Mises' ideas compare to other Austrians, as well as many fellow travelers and even enemies of Austrian economics. 32 00:05:16.000 --> 00:05:32.000 And how, again, just the extraordinary scope of this project and how Mises sifted through their own work and integrated into his own, sorting through their valuable ideas and discarding the ones that he found to be misleading. 33 00:05:32.000 --> 00:05:42.000 And just in general, the importance of Mises in taking this first great step in developing what would become an entire system of economic doctrine. 34 00:05:42.000 --> 00:05:53.000 So even though Mises would only fully develop his views on economics in the decades following his first book, it's astonishing to see how many of the seeds were already planted in 1912. 35 00:05:53.000 --> 00:06:07.000 In addition, I should also emphasize that this collection is not simply an appreciation of Mises' book, but actually also represents ongoing original research in Austrian monetary theory and macroeconomics. 36 00:06:07.000 --> 00:06:12.480 Economics. And while the contributors do each attempt to to pay tribute to Mises 37 00:06:12.480 --> 00:06:17.320 ideas and to draw out certain strands of his thought which have not yet received 38 00:06:17.320 --> 00:06:21.260 attention, the essays in the collection also develop his ideas and push the 39 00:06:21.260 --> 00:06:25.720 boundaries of research in new directions. A couple examples of this are 40 00:06:25.720 --> 00:06:30.080 Nikolai Gurchev's article which focuses on the interbank market and how it 41 00:06:30.080 --> 00:06:34.880 functions as a limit to credit expansion, and also Philip Baggis article 42 00:06:34.880 --> 00:06:41.880 Contrasting the Austrian business cycle theory with a series of contemporary mainstream views of the business cycle. 43 00:06:41.880 --> 00:06:46.880 I suppose, though, I am in a position to speak best about my own paper. 44 00:06:46.880 --> 00:06:57.880 My essay looks at the theory of money and credit in comparison to the work of two contemporaries of Mises, namely Joseph Schumpeter and Rudolf Hilferding, 45 00:06:57.880 --> 00:07:03.880 Because as it turns out, there were not one but three important treatises on money and banking 46 00:07:03.880 --> 00:07:11.880 published by promising young Viennese economists about a hundred years ago, in consecutive years in fact. 47 00:07:11.880 --> 00:07:14.880 Hilferding's Finance Capital appeared in 1910, 48 00:07:14.880 --> 00:07:21.880 Schumpeter's famous Theory of Economic Development was from 1911, and of course Mises' book in 1912. 49 00:07:21.880 --> 00:07:24.880 And this is an interesting moment in my opinion in the history of economic thought 50 00:07:24.880 --> 00:07:29.880 because each of these economists was a kind of young representative of a different school of thought. 51 00:07:29.880 --> 00:07:35.880 Mises naturally was continuing the Austrian tradition founded by Menger and especially Boehm-Bawerk. 52 00:07:35.880 --> 00:07:44.880 And Schumpeter was developing his own sort of personal version of the Vorazian system. 53 00:07:44.880 --> 00:07:50.880 And then lastly, Rudolf Hilferding I think is probably the least well-known, but he was also an interesting character. 54 00:07:50.880 --> 00:08:02.880 He was a member of what's called the Austro-Marxist School, which is sort of an odd branch of Marxism centered around Vienna in the two or three decades after the turn of the century. 55 00:08:02.880 --> 00:08:10.880 But in any case, Hilferding was a sort of a theoretical successor to Marx and was one of the leading lights of the young Marxists. 56 00:08:10.880 --> 00:08:18.280 But the result of each of their individual research agendas was a different theory of money and banking 57 00:08:18.280 --> 00:08:22.880 and the role that both of those play in transforming the economy. 58 00:08:22.880 --> 00:08:27.480 Whether that means transformation through growth or cartelization of industry or business cycles 59 00:08:27.480 --> 00:08:32.880 or the emergence of socialism or what have you, these were topics that they all addressed. 60 00:08:32.880 --> 00:08:37.480 And an important secondary theme much related to the idea of this transformation, 61 00:08:37.480 --> 00:08:43.480 This transformative power of money and banking is the role that entrepreneurs play in this process. 62 00:08:43.480 --> 00:08:49.480 In fact, as far as Schumpeter's book is concerned, the entrepreneur is almost the only thing that people remember about it. 63 00:08:49.480 --> 00:08:57.480 But nevertheless, each of these books was focused intensely on monetary problems and represented advances in their own individual ways. 64 00:08:57.480 --> 00:09:06.480 And what I do in my essay is to try to contrast these different ideas and explain some of the origins of the disputes between these authors. 65 00:09:06.480 --> 00:09:19.480 Because in addition to setting out original ideas, a lot of what each of them had to say turned out to be a further development of some disputes that had started in the 19th century in Britain. 66 00:09:19.480 --> 00:09:33.480 In particular, there were two major groups that became known as the currency school and the banking school that engaged in a long debate about monetary theory and policy in Britain, particularly with regard to the Bank of England. 67 00:09:33.480 --> 00:09:45.480 These two groups ended up exercising a powerful influence on monetary thinking for quite some time, one example of which are these treatises from just after the turn of the century. 68 00:09:45.480 --> 00:10:01.480 I should say also that in addition to the currency and banking schools, there was also a school devoted to free banking, and that has received some attention in Austrian circles as well. 69 00:10:01.480 --> 00:10:22.480 I deal mostly with the first two groups, but the problems of monetary policy and especially issues concerning fiduciary media and Mises' thoughts on fractional reserves and how those ideas relate to free banking, those are also very important parts of this British heritage in Mises' monetary writings. 70 00:10:22.480 --> 00:10:27.480 and those issues are discussed in more detail by Joseph Salerno in his essay in this collection 71 00:10:27.480 --> 00:10:35.480 in which he talks about Mises' position in the history of thought as a currency school free banker 72 00:10:35.480 --> 00:10:39.480 although there's never actually been any controversy about fractional reserves 73 00:10:39.480 --> 00:10:44.480 so I don't know why Salerno devotes so much space to them but we'll have to forgive him 74 00:10:44.480 --> 00:10:50.480 but in any case what these essays try to show is that Mises for all his originality 75 00:10:50.480 --> 00:11:06.480 also considered himself, was also very humble in a sense because he considered himself simply to be the most recent member in a monetary tradition that had its roots mostly in the 19th century British currency school. 76 00:11:06.480 --> 00:11:15.480 So I think I'm pretty much out of time. So just to close, I would just like to say again that although this book is a celebration of one of the great treatises in economics, 77 00:11:15.480 --> 00:11:27.480 It is not simply a retrospective, but shows quite well, in my opinion, that we still have a great deal to learn from reading the masters and that there is enormous research potential in the classics. 78 00:11:27.480 --> 00:11:41.480 I think this collection hopes to show that it is through the serious study and appreciation of the work and the brilliance of economists like Mises that we can truly look to some sort of a future in Austrian economics. 79 00:11:41.480 --> 00:11:43.480 and Economics. So, thank you.