Frontpage FeedWhy I may be an Austro-Keynsian
Arnold Kling describes it here. Read the whole thing, it's short. Then we have my comment, reproduced just for you:
It's interesting that Horowitz departs from the standard Austrian
model. Traditionally, it's the increase in the money supply that is the
culprit for Austrians. For Horowitz, it's inflation, whether or not it
was caused by an increase in the money supply. I think this allows him
to avoid Caplan's substantial theoretical critiques of the Austrian
theory of the business cycle. But your right about it needing to be
integrated into a general theory of fluctuations, which takes into
account both Keynes and Schumpeter.
And the question, does Horowitz's version of the ABCT hold water? In particular, does it escape Caplan's criticisms of the traditional ABCT, available here?
I've long had the inuition that the Austrians were on to something even if the formal statement of their theory of fluctuations didn't quite work (Caplan's criticisms are pretty good). Perhaps this is it. By the way, I hesistate to call Horowitz's version "Austrian" because of the difference, but the emphasis on coordination perhaps merits the label, lets just be careful to keep the two versions straight. Perhaps big-A Austrian for the Mises-Hayek theory and little-a austrian for Horowitz's version?. One unAustrian implication which Kling mentions: deflation screws with the coordination process just as much as (according to Kling, more than) inflation.
Money is subject to demand as well as supply...
Austrians may often focus on money supply as the source of inflation simply because it's the most common, visible source of inflation -- and the Fed's ongoing role in making that happen is particularly vexing for those who don't favor centralized intervention into markets.
But I think many Austrians would also readily admit that inflation can happen by other means, as a friend of mine points out here...
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