[Excerpted from An Austrian Perspective on the History of Economic Thought, vol. 1, Economic Thought Before Adam Smith. An audio file of this article, read by Jeff Riggenbach, is available here.]

[Excerpted from “If a Pure Market Economy Is So Good, Why Doesn’t It Exist?,” Quarterly Journal of Austrian Economics, Summer 2010]
 

The Wikipedia entry on the real-bills doctrine advances the controversial proposition that banks can increase the quantity of money without diminishing the purchasing power of each unit. To quote directly, “So long as money is only issued for assets of sufficient value, the money will maintain its value no matter how much is issued.” I will refer to it as the Sproul doctrine.

[From The Burden of Plenty (1935), edited By Graham Hutton.]
 

I want to start by saying something about the phrase “poverty in plenty” of which we hear so much. I cannot help thinking that it may be misleading to some readers. The object of this series is to explain why the economic machine sometimes produces so much less than it could produce, in spite of the fact that so many people consume so much less than they could consume.

[Originally published in the Spectator, January 26, 1945.]

The law of comparative advantage shows us that people can consume more than they would be able to produce on their own. Increasing specialization implies increasing productivity, and our ability to enjoy gains from specialization and trade is one factor that helps explain our high standards of living today. Here is another example that illustrates the logic of comparative advantage.

Can two people still gain from trade even if one person is a lot better at something than the other person? Consider two people: there’s Stan, who is really, really good at sweeping driveways and mowing lawns. There’s also Bob, an immigrant from the future who doesn’t have driveways or lawns in his time and is worse than Stan at both. In the course of a weekend, Stan can sweep a hundred driveways or mow fifty lawns. Bob, on the other hand, can sweep only one driveway or mow only two lawns.

[This article is chapter 6 of Literature and the Economics of Liberty: Spontaneous Order in Culture.]

The demand for building permits and the other related “services” that can only be purchased at city hall in Las Vegas has plummeted. The Las Vegas Review Journal reports that building permit activity in the City of Las Vegas is but a third what it was in 2004.