Wladimir Kraus

The book under review, Capitalism: A Treatise on Economics, has been in print since 1996. Its enormous size and the vast array of topics covered suggest enormous scholarship and devotion. Its expressed purpose is a thorough integration of leading economic phenomena into one unified theory of the market process. Yet virtually no serious attention on the part of academic economists has been paid to its many highly original contributions and bold challenges to received orthodoxy. This review aims at a compressed presentation and analysis of some of the book’s main contributions to political economy, and hopes thereby to kick off a rigorous discussion of its substantive ideas.

Abstract: Essentially, there are two competing views of how to overcome an economy-wide recession/depression. The Austrian view understands the free-play of competition as the most potent means to overcome the short-run mismatch between an excessive boom-level of nominal wages/prices and depressed crisis-level volume of aggregate spending. In the Keynesian view, the disastrous mismatch between desired saving and planned investment inherent in capitalist economies requires the government to step in and take up the burden of spending to infuse the lacking demand for products and labor.

The thought experiment presented in the paper is designed to provide the reader with a direct comparison of major analytical claims of the two competing approaches to assess the ability of each of the two to affect, positively or negatively, employment, capital accumulation, and the general standard of living/real wages.

Wladimir Kraus