Chapter Outline

1.   Catallactic and Acatallactic Monetary Doctrine

Money is such an important part of economic life that writers analyzed it before the development of other areas of economic theory. Even after the development of catallactics and the modern subjective theory of value, acatallactic theories of money persist.

[The translator’s note in Appendix B is self-explanatory and needs no summary here. However, we have reproduced the translator’s excellent diagram to illustrate the Misesian classification scheme regarding different monetary concepts.]

Aleatory: Dependent on chance, luck, or an uncertain outcome.

Banker: A person who lends out other people’s money.

Banking School: An English school of thought which argued that the banks were incapable of independently altering the rate of interest or the purchasing power of money, because the market would use clearing operations, bills of exchange, and other techniques to receive the credit it demanded for business purposes.

B

Banker, 135, 137

Banking

business of, 135

deposit, 140

fractional reserve, 140, 148, 171

free, 171–72

loan, 140

School, 153, 157, 160, 175, 228–29

Banknote, 26, 85, 136, 139, 145

Bills of exchange, 139, 151

Bimetallism, 38

Böhm-Bawerk, Eugen von, 18, 62, 81, 177, 179–80

Austrian Macroeconomics:

A Diagrammatical Exposition

Roger W. Garrison

Graphics by Cheryl L. Mallory

Studies in Economics No. 5

INSTITUTE FOR HUMANE STUDIES, INC.

Menlo Park, California

This essay is published for the first time here and, concurrently, as a chapter in New Directions in Austrian Economics (Kansas City: Sheed Andrews and McMeel, 1978), a volume in the Studies in Economic Theory series. The essay was included in a symposium on Austrian economics held at Windsor Castle in September 1976, which was cosponsored by the University College at Buckingham and the Institute for Humane Studies.

Roger W. Garrison received the B.S. degree in Electrical Engineering from the University of Missouri at Rolla in 1967. In 1971, after four years of commissioned service in the United States Air Force, he began graduate study in the field of economics and earned the M.A. degree from the University of Missouri at Kansas City in 1973. The Federal Reserve Bank of Kansas City engaged him as a researcher in banking structure until the end of 1974 when he began work on the Ph.D. degree at the University of Virginia.

The Institute for Humane Studies was founded in 1961 as an independent center to promote basic research and advanced study across a broad spectrum of the humane sciences. Through fellowships, seminars and symposiums, and a variety of publishing activities, the Institute serves a worldwide community of scholars who seek to expand the historical and theoretical knowledge, as well as the practical applications, of libertarian principles.