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The Theory of Money and Credit at 100


Kurt Schuler at Free Banking provides a tribute to von Mises and an assessment of The Theory of Money and Credit on the centenary of its publication (1912 to 2012).

Schuler admits that his assessment is not based on a re-reading of the book, but on a re-skimming and reference to notes from a more through reading at an earlier date. His overall assessment of Mises’s contributions is stronger than his assessment of TMC.

Some samples of the positive parts in the post:

The book was originally published in German, and not translated into English until 1934. That the translation continues to be in print from not one but two publishers is in my view more a testimony to the continuing significance of Mises generally rather than to the book specifically.


Mises’s lesser works bask in the reflected glory of his two dazzling achievements, Socialism and Human Action. [links added]


At the time the book appeared, it made some steps forward in monetary economics. One was its stress on the subjective character of money, monetary exchange, and monetary prices. This is the lesson that has still not been fully enough absorbed into monetary theory; it is acknowledged intellectually but is not “in the bones” of most monetary economists. Another step forward was the book’s emphasis on injection effects, known to some previous economists but not to enough of Mises’s contemporaries. Yet another was Mises’s understanding that what people often think of as differences in the purchasing power of a currency are really differences in the goods offered in different locations; in truth, the purchasing power of money tends to equalize across locations. Mises’s treatment of interest, though brief, linked Austrian and Wicksellian themes.

His conclusion:

If it seems that I judge The Theory of Money and Credit harshly, it is only because Mises did some work that was truly great [emphasis mine], and The Theory of Money and Credit was merely good [emphasis mine]. “Good” is a status still sufficiently rare that the number of books on monetary theory that are its equal in terms of their contribution to the subject would not fill a bookcase.

The book is better than good. Rothbard assessment is included in this description from the mises.org website:

This classic treatise on monetary theory remains the definitive book on the foundations of monetary theory, and the first really great integration of microeconomics and macroeconomics. As Rothbard points out in his introduction to “the best book on money ever written,” economists have yet to absorb all its lessons.

I must admit, while I find TMC foundational, often in my own work, when I draw on Mises, which is frequently, I probably more often turn to Human Action and On the Manipulation of Money and Credit, now available as Causes of the Economic Crisis.

Schuler reminds us, quite rightly how many “important books on money at around the same time by other economists have now been forgotten.” Perhaps this has more to do with the book itself than Schuler will admit. It was not only important at time, but exceptional, if difficult, and important then and now.

John P. Cochran (1949-2015) was emeritus dean of the Business School and emeritus professor of economics at Metropolitan State University of Denver and coauthor with Fred R. Glahe of The Hayek-Keynes Debate: Lessons for Current Business Cycle Research. He was also a senior fellow of the Mises Institute and served on the editorial board of the Quarterly Journal of Austrian Economics.

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