The Theory of Money and Credit
The book is not an entirely new book, it is just a new edition, enlarged edition, but
I'm sure most people have not seen the book before. It went out of print many years ago
and thanks to Doug French and Diana Forbus and the Mises Institute, it just has been reissued.
I just want to say a few words about one of the central themes of the book
and then make a few remarks about some of the extensions of that central theme.
Economics was once part of what is called a moral science, and in this moral science, the concept of property was a very important concept.
During the stage of economics being part of moral science, economics and ethics was in a way mixed up,
And in the meantime, the concept of property has almost entirely disappeared from the discipline of economics.
But you can still recognize, of course, that implicitly the concept still plays an important role.
For instance, we could not talk about exchange without having some idea of property or what is a voluntary exchange
Exchange that requires us in a way to think about property also, even concepts like prices,
exchange ratios between different property owners exchanging their property and so forth.
But as a result of economics becoming what is called a value-free science, Essex has
more and more disappeared from the discourse among economists, and despite the fact that
even in order to speak about value-free science, we must also presuppose certain values, namely
Respect for Reason, Respect for Argumentation, the Force of Arguments and so forth.
In Mises you find very little talk about property, especially in his economic works.
You find much more talk about property in Murray Rothbard and my book has set itself
have the task, so to speak, to reintegrate economics and ethics without, however, disputing or changing the fact that there is a clear-cut distinction between a value-free, positive economics on the one hand and ethics as a normative discipline on the other hand.
and I do this reintegrating of economics and ethics in purely theoretical pieces and also in a number of applied pieces.
What I want to do here in a few minutes is just to say a few words about my writings in the book on pure ethics
and then end with a few remarks about applications.
What I try to accomplish in the book is to present some axiomatic foundation of ethics in the same way as Mises presents an axiomatic foundation of economics.
Most of you are familiar with Mises' work where he begins his economics with the so-called axiom or axiom of action and this axiom of action is axiomatic because you cannot not act.
Act, whenever you try to refute that humans act you have to engage yourself in an activity
and so we have so to speak a firmly established starting point from which all of economic
theory is derived and what I do in the book is to show we have in Essex we have a very
similar axiomatic starting point which is called the axiom of argumentation or also
are also the a priori of argumentation. We cannot deny that we can argue, engage in a discussion with each other, because if we would deny this, then we would already be engaged precisely in argumentation.
So we have a firmly established starting point, a starting point that cannot possibly be denied
as being a starting point beyond which you cannot possibly go, and once we have the starting
point of we have to argue with each other, it follows that no statement, no proposition
that denies this starting point can possibly be defended or we can also say that whatever
must be taken for granted insofar as we engage in discussions with each other cannot again
be disputed in terms of its validity because if we would dispute it then we are engaged
in what is called a performative contradiction, the content of our statement would be contradicted
by the very fact of making this statement.
And the second thing I do is to delineate what the task of Essex is.
The task of ethics is conflict avoidance or peaceful cooperation and we are confronted
with the possibility of conflicts because there exists scarcity and in order to solve
the problem of how can we avoid conflicts given the fact of scarcity, it is obviously
It would be required that we must have exclusivity rules or rules of property that assign the right to control scarce resources to one person rather than to another.
So scarcity is one of the requirements of having ethical problems.
The other requirement for having ethical problems is the fact that we must have rational entities being involved in conflicts, entities that can argue and discuss with each other.
A further requirement for any type of ethics is it must be a discipline that formulates rules which are universalizable.
That is to say, all people, all arguers must be capable in principle of agreeing to these rules and a further requirement for any type of ethics is we must formulate rules that allow us to act from the very beginning of mankind on.
That is, we must be able to start right away.
And the solution to this problem is well known in these circles.
That is, we must have self-ownership.
We must be owners, exclusive owners of our own physical bodies
in order to be able to engage in argumentation.
If I don't own myself and I would not recognize the self-ownership of my opponents in an argument then obviously we could not possibly engage in I say this, you say something else and so forth and arguing back and forth.
So self-ownership cannot possibly be denied as a valid principle without falling into a contradiction.
And the second rule is we must have the right to appropriate previously unowned resources.
If we would not have the right to appropriate, acquire the right of exclusive control of
previously unknown resources then we would all die out and if we would all die out then
obviously no ethical problem would exist whatsoever.
So two principles are entirely sufficient in order to come up with a theory of property
the rights that cannot possibly be disputed by anyone, the right to own ourselves, our own body, and the right to acquire previously unowned resources and acquire thereby exclusive control over these resources and these two principles are by no means just conventions.
Conventions are rules for which we have alternatives, so to speak.
A convention is, for instance, that we use the Latin alphabet when we engage in written communication with people.
And we have an alternative to these conventions. We can also use the Cyrillic alphabet, for instance.
But the rules that I mentioned, self ownership and ownership in originally appropriated resources,
there is no alternative to them if we understand that the purpose of ethical rules is to avoid any type of conflict
and to allow people to act from the very beginning of mankind on.
No other rules can possibly achieve this result of conflict free interaction except these two rules.
Just a few words about other things that you find in this book, besides these purely abstract
inquiries about the foundations of ethics.
I have a number of applied investigations on money, for instance, and there I show the
importance of the distinction between money as property on the one hand and property titles,
that is, tickets that show you to be the owner of a certain piece of property.
And once you introduce the distinction between money as property and property titles, then
you come to a correct assessment of the legal quality of fractional reserve banking.
Fractional reserve banking is nothing else but an increase in the number of property
titles without an increase in the quantity of property in existence, which in all other
cases would be of course considered to be a fraudulent thing to do, you increase the
number of titles to a car without having additional cars available, from which it clearly follows
that practices like this should be considered illegal.
I have an investigation about the property status of so-called public goods, there's
a chapter on Marxism and Austrianism showing a certain similarity and yet fundamental differences,
for instance about their concept of class, classes, exploiters and exploited certain parallels
and at the same time fundamental differences.
I have a chapter on Keynes where I demolish his theory of money and unemployment and employment.
I have a chapter on Hayek, where I criticize Hayek's contribution to the so-called calculation
debate.
I believe that the mistake that Hayek, also that Hayek makes in contrast to the correct
views that Mises espouses is to consider the fundamental problem of socialism, the fact
that certain information is unavailable to people and that you cannot concentrate all
sorts of knowledge in one person's head.
And I try to show that the truly fundamental problem of socialism is rather the fact that
there exists no private property and only because there exists no private property certain
The types of information are by definition then not available, namely the information about prices.
I have chapters on the origin of states and the inclination of states or the tendency of states to engage in war and imperialism.
And in particular also some interesting remarks about what I call monetary imperialism, that is the setting up of institutional arrangements that allow some states to exploit the population of other states without going to war,
through systems such as the Bretton Woods system and the practice of client states to use the currency of other states as their own reserve currency.
With that I conclude and I give the microphone to my next person.