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Final words (for now) on The Theory of Money and Credit
Posted By Kurt Schuler On November 27, 2012 @ 11:34 pm In Economic Thought,Fiat Money,Financial Markets,Free Banking | 16 Comments
Several writers of comments were in high dudgeon about my view that Ludwig von Mises's Theory of Money and Credit is a good but not a great book. I gave three reasons: (1) I had some criticisms of the book, which I made in my first post on the subject. (2) I do not think it stands out from the large body of important work on monetary economics produced by Mises's contemporaries, whom I listed in my second post on the subject and most of whom I have read. (3) After a century, the book's influence is negligible outside the Austrian School.
Some of the comments proposed that (2) and (3) were a kind of argument from authority. My only partly joking reply was that that I was not making an argument from authority, I was making an argument from thousands of authorities. In a mature discipline such as economics, and for many of its subfields, the amount that any one person can know — really know, in the sense of having pondered and understood deeply — is limited. Other than perhaps a few exceptional minds (who are unlikely to be spending their time blogging), we get most of what we know from accepting things on authority. If you have read The Theory of Money and Credit, for instance, but have not read Ricardo, the Currency School and Banking School writers of the 19th century, Wicksell, Knapp, and other writers Mises refers to, and you think Mises is correct about them and their ideas, you are accepting those views on his authority. If you have not read the contemporaries of Mises I listed in my previous post (many of whom Mises cites in The Theory of Money and Credit) you are also accepting on the authority of Mises, or maybe of Murray Rothbard or some later Austrian School writer, that they are not worth your while. You may be correct. I simply wish to point out that your judgement is not based on first-hand acquaintance with the material in question, but on authority.
Over time, a bit of work endures in influence and most does not. The Theory of Money and Credit is not influential today outside the Austrian School. Many thousands of minds, each an authority of greater or lesser degree, have determined the result. After a century during which the book has been widely available and Mises's name has been well known, the presumption is weak that there are ideas in the book that deserve to be part of mainstream discourse but still have not been at least partly absorbed. That the presumption is weak does not mean it is zero, but the attempted counterexamples in the comments did not prove what their writers thought. They asked, What about the wide acceptance of Keynes's General Theory? What about the initial strong rejection of Wegener's theory of continental drift? What about the neglect of Socialism for many years? All of those things changed in well under a century. The General Theory, published in 1936, lost its totemic status in the 1970s, though it remains an influential book; Wegener's theory, first proposed in 1912, the same year as The Theory of Money and Credit, became accepted by the 1960s and by the 1970s was being taught in high schools; and Socialism, published in 1922 (and in English translation in 1936), received its full due by about 1990.
After being not so busy, I am now starting to get busier with other things. Accordingly, my replies in the comment section will again become sparse. I do, however, read comments, and appreciate the numerous thoughtful ones.
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