Monetary Theory and the Trade Cycle

Friedrich A. Hayek

Published originally in 1929, Monetary Theory and the Trade Cycle is the first essay Friedrich A. Hayek wrote. It serves as a primer into Hayek’s monetary and capital theories. In it, he takes the time to dismember opposing monetary theories of the trade cycle, discarding faulty analysis and maintaining sound foundations, as to lead to his own monetary theory of the trade cycle.

Hayek’s trade cycle theory is largely based on the headway made in capital theory by Wicksell and Böhm-Bawerk, and Ludwig von Mises’s spectacular insights on monetary theory (The Theory of Money and Credit), and was later further developed in Prices & Production, published in 1931.

Monetary Theory and the Trade Cycle by F. A. Hayek
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F A Hayek
Friedrich A. Hayek

F. A. Hayek (1899–1992) is undoubtedly the most eminent of the modern Austrian economists, and a founding board member of the Mises Institute. Student of Friedrich von Wieser, protégé and colleague of Ludwig von Mises, and foremost representative of an outstanding generation of Austrian School theorists, Hayek was more successful than anyone else in spreading Austrian ideas throughout the English-speaking world. He shared the 1974 Nobel Prize in Economics with ideological rival Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena."  Among mainstream economists, he is mainly known for his popular The Road to Serfdom  (1944).

Mises Daily Friedrich A. Hayek
The ideal of conscious control of social phenomena has made its greatest influence felt in the economic field, writes F. A. Hayek. The present popularity of "economic planning" is directly traceable to the prevalence of the scientistic ideas we have been discussing. As in this field the scientistic ideals manifest themselves in the particular forms which they take in the hands of the applied scientist and especially the engineer, it will be convenient to combine the discussion of this influence with some examination of the characteristic ideals of the engineers. We shall see that the influence on current views about problems of social organization of his technological approach, or the engineering point of view, is much greater than is generally realized. Most of the schemes for a complete remodeling of society, from the earlier utopias to modern socialism, bear indeed the distinct mark of this influence.
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References

New York: Augustus M. Kelley Publishers, 1966, p. 139 92