Prices and production and other works: F. A. Hayek on money, the business cycle, and the gold standard

This book owes its existence to an invitation by the University of London to deliver during the session 1930-31 four lectures to advanced students in economics, and in the form in which it was first published it literally reproduced these lectures. Hayek was not only a leading champion of liberty in the 20th century. As this massive book reveals, he was also a great economist whose elaboration on monetary theory and the business cycle made him the leading foe of Keynesian theory and policy in the English-speaking world. Here his most important works are collected, re-typeset, indexed for the first time, and beautifully bound in a 536-page hardbound book for the ages. The theory here is the subject of a massively popular video rap song -- one that was oddly accurate! However, to truly understand the nuts and bolts, there is no substitute for Hayek's own works. Together they constitute a complete presentation of Hayekian money and business-cycle theory. Even more, they work together as an excellent elucidation of Austrian macroeconomic theory, which is why this book has already been adopted in some classrooms. The timing could not be better. The entire world economy is now suffering from the effects of bad monetary policy, and with results that Hayek explains in great detail. With "countercyclical" policy again revealed as unworkable, and politicians plotting to make matters worse, the contents of this book have direct bearing on present and future monetary policy. Hayek was barely out of his twenties in 1929 when he published the German versions of the first two works in this collection, Monetary Theory and the Trade Cycle and The Paradox of Saving." The latter article was a long essay that was to become the core of his celebrated book and the third work in this volume, Prices and Production, the publication of which two years later made him a world-renowned economist by the age of thirty-two. But the young Hayek did not pause to savor his success. He was already hard at work on "Reflections on the Pure Theory of Money of Mr. J.M. Keynes," a lengthy critical review of John Maynard Keyness two-volume Treatise on Money, which had been published in 1930. Hayeks two-part review appeared in late 1931 and 1932. There followed within a few years the other three works collected in this volume. "The Mythology of Capital" appeared in 1936 and was a response to Frank Knights hostile criticisms of the Austrian theory of capital. A short article on "Investment That Raises the Demand for Capital" and the monograph "Monetary Nationalism and International Stability" were published in 1937. These seven works taken together represent the first integration and systematic elaboration of the Austrian theories of money, capital, business cycles, and comparative monetary institutions, which constitute the essential core of Austrian macroeconomics. These works have profoundly influenced postwar expositions of Austrian or capital-based macroeconomics down to the present day. The creation of such an oeuvre is a formidable intellectual feat over an entire lifetime; it is an absolute marvel when we consider that Hayek had completed it in the span of eight years (19291937) and still well shy of his fortieth birthday. Hayeks amazingly precocious intellect and creative genius are on full display in these works. "The re-publication of these works in a single volume is a magnificent event that fills a yawning gap in the Austrian macroeconomic literature and provides modern Austrians with a model of how to advance economic theory through reasoned debate and criticism." -Joseph T. Salerno, from the introduction "I congratulate the Ludwig von Mises Institute for bringing back into print Hayeks writings on business cycles. This collection will be a critical touchstone for future thinking in the area." -Danny Quah, London School of Economics, from the preface. Cover......Page 1 Contents......Page 3 Preface......Page 5 Lecture 1: Theories of the Influence of Money on Prices......Page 13 Lecture II: The Conditions of Equilibrium Between the Production of Consumers' Goods and the Production of Producers' Goods......Page 44 Lecture III: The Working of the Price Mechanism in the Course of the Credit Cycle......Page 81 Appendix to Lecture III: A Note on the History of the Doctrines Developed in the Preceding Lecture......Page 113 Lecture IV: The Case for and Against an "Elastic" Currency......Page 117 Appendix to Lecture IV: Some Supplementary Remarks on "Neutral Money"......Page 141 Capital and Industrial Fluctuations......Page 144