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More on Mises's Theory of Money and Credit

John Cochran at the Circle Bastiat blog considers The Theory of Money and Credit “foundational.” I do not, and perhaps my explanation will be useful for thinking about the place of the Austrian School within economics more generally. Here is a list, not quite complete, of economists who were doing important work on monetary theory or business cycles within ten or so years on either side of the publication of The Theory of Money and Credit:

Albert Aftalion, Benjamin Anderson, James Angell, Harry Gunnison Brown, Edwin Cannan, Gustav Cassel, Thomas Nixon Carver, Charles Conant, David Davidson, Irving Fisher, Frank Graham, Ralph Hawtrey, Karl Helfferich, Edwin Kemmerer, John Maynard Keynes, David Kinley, Georg Knapp, J. Laurence Laughlin, Frederick Lavington, Alfred Marshall, Arthur Pigou, Dennis Robertson, Joseph Schumpeter, Frank Taussig, Horace White, Knut Wicksell, John H. Williams, and Hartley Withers.

Except to a few people who are interested in both monetary theory and the history of economic thought, most of the names will be meaningless. Fisher and Wicksell were foundational: they are the only ones I consider geniuses, whose contributions were so original that it is hard to imagine monetary theory without their ideas. (Keynes of course also left a lasting impression, but The General Theory of Employment, Interest and Money was published in 1936, well beyond the period I am considering here. Schumpeter was likewise important, but for his concept of the entrepreneur.) Among the others, if any one, two, or three — including Mises, the only full Austrian on the list (Schumpeter being a demi Austrian School member) — had not written on monetary theory, it would have mattered little for the progress of the subject. The cohort was large and talented enough that other members would have filled in most of the gaps.

Compare that to the debate about socialist economic calculation. Mises was not part of a cohort; he created the debate. When Friedrich Hayek later went back to look for antecedents, in the introductory essay to the book Collectivist Economic Planning, he found little, and even less that was widely known to his fellow economists.

Socialism continues to be cited even by those who do not like Mises much. The Theory of Money and Credit has no influence today that I can detect outside of the Austrian School. It is a work of talent but not a work of genius.