Academic works such as Quinn Slobodian’s Globalists demonstrate that the anti-capitalists and anti-liberals are determined to make their case through factual fabrications and scandalous misinterpretations of what classical liberals such as Ludwig von Mises and Friedrich A. Hayek really said and advocated.
History of Economic Thought
We must recognize that a whole may exhibit properties that are not present in its parts. But problems come in when the method of study for the economy as a whole looks radically different from that used for its parts.
For both social contract theory and monetary theory, theorists are considering something that never happened in the past and that they have no reason to believe will happen in the future. No such considerations are useful.
“We should not claim for liberalism,” Robbins insisted, “that the world it could produce would be perfect.… But we may claim that, with all its deficiencies, it would still provide a safeguard for happiness and spontaneity more efficient than any other which has yet been suggested.”
If the classical liberals of that earlier time could defeat the prevailing beliefs and vested interests supporting human slavery, after its existence for all of human history, some of us believe the same can be done against the existing system of collectivism, interventionism, and welfare statism in both their authoritarian and democratic forms.
The best conclusion that can be drawn from examining these instances is that in response to the familiar rhetorical query – “Are we going the way of the Romans?” – one can reply, truthfully: “No; they occasionally reformed their currency.”
There is a core of the economic way of thinking that can be traced from Adam Smith to Vernon Smith and that deals with basic ideas about human rationality, human sociability, and the coordination of activity through time. Incentives, information, and innovation are part of this core as they derive from the even more primordial ideas of property, prices, and profit-and-loss accounting.
Every activist political movement eventually becomes a caricature of itself. This is certainly true of the so-called alt-right that blasted onto the cultural stage with its “Unite the Right” rally in Charlottesville, Virginia, in 2017.
Fascism often is discussed as though it were the opposite of communism, but such is not precisely the case. Hitler, Mussolini, and Stalin were different in many respects; but the principles of their economic ideologies were the principles of socialism; their initial appeal was to the underprivileged; and the final result, a new despotism, was the same in all three instances.
Fifty years ago, in 1968, Austrian (and Austrian school) economist Friedrich A. Hayek published a monograph called The Confusion of Language in Political Thought. Hayek argued that the words we use and the meanings we give to them greatly influence how we think about the political system and the wider social order in which we live. This is no less so, I would suggest, in the language and the meanings of words used in economics.
There has been a great paradox in the modern world. On the one hand, freedom and prosperity have replaced tyranny and poverty for tens, indeed for hundreds of millions of people around the world over the last two centuries. Yet the political and economic system that historically has made this possible has been criticized and condemned. That political and economic system is liberalism.
The equation of exchange provides building blocks for understanding the dynamics of the market for money.