Chapter Ǻ: Macroeconomics and Coordination ȀȃȈwill help promote an efficient use of this array. Ļe bond and stock mar-
kets play a role in mobilizing information and in facilitating recombina-
tions of the inherited complex of capital goods. A stable unit of account
would aid these market processes and the economic calculation that they
presuppose.
ŏōŜŕŠōŘ ōŚŐ ঩őŞőşŠ
Recognizing the time element as they do, Austrians give great attention
to capital and interest and the importance of saving and investment for
growth of productivity and real incomes. Understanding that branch of
theory is essential to understanding even the basics of economics, espe-
cially microeconomics and the logic of a price system. Böhm-Bawerk and
writers in his tradition have made indispensable contributions here.
Keynes saw investment spending as a strategic part of the total spend-
ing that sustains economic activity, but he did not treat what capital goods
are built or not built as a crucial issue.
Monetarists certainly recognize the importance of capital and interest
theory. Unlike some Austrians, however, they do not see it as a dominant
strand of explaining the fluctuations of boom and recession. Similarly,
although a disequilibrium pattern ofrelativeprices and wages is impor-
tant in some contexts, it is not central to explaining cyclical fluctuations.
Ļe centerpiece of the monetarist story, instead, is a disequilibrium rela-
tion between the nominal quantity of money and the general level of prices
and wages. Crucial here are the factors determining the quantity of money
and the demand for cash balances.
Central-bank policy has much to do with determining the quantity of
money. Trying to keep a target rate of interest below the “natural” rate that
would otherwise clear the credit market entails expanding the quantity of
money, as Knut Wicksell explained; and (less familiarly) trying to keep a
target rate above the natural rate involves shrinking the quantity of money
or slowing its growth. True as all this is, however, it does not elevate capital
and interest theory to the crucial role specifically in macroeconomics that
some Austrians would accord to it.
ō ŝšőşŠŕśŚōŎŘő ŎšşŕŚőşş-ŏťŏŘő ŠŔőśŞť
Partly for such reasons my enthusiasm for Austrian economics does not
extend to a theory propounded by Ludwig von Mises and F.A. Hayek