ȀȂȅ Partʺ: Economics[A] historically continuous component is contained in the objective ex-
change value of money. Ļe past value of money is taken over by the
present and transformed by it.... Prices change slowly because the sub-
jective valuations of human beings change slowly.... If rapid and erratic
valuations in prices were usually encountered in the market, the concep-
tion of objective exchange value would not have attained the significance
that it is actually accorded both by consumer and producer.
In this sense, reference to an inertia of prices is unobjectionable. (ȀȈȀȁ/ȀȈȇȀ,
p.ȀȂȂ)
It is so far as the money prices of goods are determined bymonetary
factors, that a historically continuous component is included in them,
without which their actual level could not be explained. (p.ȀȂȄ)řśŚőť ōŚŐ ŜŞŕŏő şŠŕŏŗŕŚőşş
Without explicitly saying so, then, Mises clearly implies that money’s role
as unit of account contributes to the stickiness of prices. People are in the
habit of formulating their subjective valuations of goods in terms of the
money unit, and subjective valuations ordinarily do not change suddenly.
Even if relatively objective developments do call for a change in the market
value of any ordinary good or of the money unit itself, people require time
to perceive and react to these changes and to reformulate their valuations
of goods in money (ȀȈȀȁ/ȀȈȇȀ, pp.ȀȂȂ–ȀȂȄ;ȀȈȃȈ/ȀȈȅȂ, p.ȃȁȅ).Ȃ
One might add, as Lerner (ȀȈȄȁ, pp.ȀȈȀ–ȀȈȂ) did, that the most sweep-
ing source of price stickiness lies in the very nature of money. In a money
economy, unlike a barter economy, people need not bother about all the
real (relative) prices that might concern them, for a thing’s money price
indicates the value of other things that one might have instead. A price
conveys information and guides decisions, however, only if it is reason-
ably dependable. Imagine how difficult decisions and coordination would
be if a thing’s price today were only a poor clue to its price tomorrow.
Substantial money and price inflation or deflation distorts relative prices
and decisions and impairs coordination because not all money prices can
be equally flexible. On the other hand, stability in the purchasing power
of money tends to reinforce itself and deter accidental or random fluctu-
ations; being the general measure of value supports institutions, habits,
ȂMises is only one of many economists who since long ago have recognized price
stickiness. Ļe notion that attention to it is distinctively a contribution of Keynes is just
wrong as history of economic thought. See myȀȈȈȀ/ȀȈȈȆ.