Christmas and Consumption

Christmas is a make-or-break time for many retailers, and the holiday season’s importance to the American economy is so great that “Black Friday” sales at some retailers, particularly Wal-Mart, are reported as a macroeconomic indicator. The holiday season is indeed festive and inspiring even in spite of clichéd paeans against the “commercialism” of Christmas. But, asks Art Carden, does the Christmastime “bacchanalia of peace on Earth and goodwill towards men” promote economic growth or not?

Economic Outlook 2008: Darkening Clouds

Presidential election years usually are not recessionary but next year will be an exception. Several economic factors are colliding in an almost perfect storm to markedly slow the general economy and the stock market. Unfortunately, we will not be able to “inflate” our way out of this recession this time. We will simply have to take our lumps and let market forces liquidate the bulk of the malinvestments caused by the unprecedented Greenspan money bubble. This liquidation process will not be pretty but it is necessary to restore a sustainable economic recovery in the years ahead.

Hayek on the Paradox of Saving

Chronic underconsumption is an idea most often associated with Keynes, writes Robert Blumen. But while the infamous English economist published his General Theory in 1936, Hayek’s 1929 article “The ‘Paradox’ of Savings” analyzes a similar theory advanced by two Americans a decade before. While the two authors have nearly vanished from history, the insights contained in Hayek’s nearly forgotten article are more necessary today than ever.The two protagonists were college president William Trufant Foster and businessman Waddill Catchings. They aimed to show how the production of goods could increase, with no corresponding increase in the purchasing power of consumers. Under these conditions, not all consumer goods could be sold at prices above producers’ costs. Markets would fail to clear, or producers would take a loss on each sale; the economy would spiral downwards into depression.

Rethinking the history of 20th century wars

These are wonderfully important books, new in the Mises Store.

The first I had never heard of but is hugely significant as the first piece of WWI revisionism to appear in English: How Diplomats Make War by Francis Neilson (1915). It is a beautifully written and well-argued case that Germany was not uniquely to blame. The secret diplomatic corp in all countries brought this disaster about. The book appeared before war censorship clamped down.

The sad, sad fate of renewed copyrights

Here is one example of a million. It occurred to us the other day that it would be useful to have Robert Taft’s book A Foreign Policy for Americans (1951) in print. It is not a great book but an important one for American political history because it establishes the essential non-interventionism of the old Republican tradition. You can buy the book on bookfinder now. There are four copies available, ranging in price from $10 to $30. So putting it out is not a priority for the Mises Institute in any way, but, still, it would be nice.

The Church of Keynes

The work cumbersomely entitled, The General Theory of Employment, Interest and Money, now commonly abbreviated as “The General Theory,” was published in 1936.

Probably no other book has ever produced in so little time a comparable effect, writes Garet Garrett. It has tinctured, modified, and conditioned economic thinking in the whole world. Upon it has been founded a new economic church, completely furnished with all the properties proper to a church, such as a revelation of its own, a rigid doctrine, a symbolic language, a propaganda, a priestcraft, and a demonology.

The revelation, although brilliantly written, was nevertheless obscure and hard to read, but where one might have expected this fact to hinder the spread of the doctrine, it had a contrary result and served the ends of publicity by giving rise to schools of exegesis and to controversies that were interminable because nothing could be settled. There was no existing state of society in which the theory could be either proved or disproved by demonstration — nor is there one yet.

Meeting Ricardo in the Stables

There’s a sort of built-in progressivism to the division of labor that, although it benefits all and almost always will benefit specialists by an absolutely greater amount, provides a greater proportional benefit to those who are relatively unskilled or weak. Again, this notion is so profoundly the opposite of the accepted economic tales of “robber barons” and Dickensian factory owners that it is startling.

The idea of the division of labor isn’t so much about the skilled and the wealthy exploiting the labor of the unskilled and the poor as it is about the benefits of cooperation to everyone. That those who bring better skills or more experience to the cooperation do absolutely better is no surprise, but the fact that those who bring relatively less in the way of skills and experience to the market gain a proportionately greater amount is big and exciting news to a world steeped in the weak tea of socialist labor theory.
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