Errors in Time as Causes of Economic Fluctuations: An Introduction (original) (raw)
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Errors in Time as Causes of Economic Fluctuations
2007
Marco Fanno's major contributions to the theory of fluctuations are considered to be his article "Cicli di produzione, cicli del credito e fluttuazioni industriali" in Giornale degli Economisti e Rivista di Statistica (1931) (henceforth: the Italian article) and his book La teoria delle fluttuazioni economiche (1947 [1956]). Recently, the 1931 article has been translated into English and has been published with an introduction by Augusto Graziani under the title "Production Cycles, Credit Cycles and Industrial Fluctuations" in Structural Change and Economic Dynamics (1993). Even more recently, this translation has been re-published in H. Hagemann[(2002) pp.227-61]. Left rather in the shadow, and relatively little known, is another article published by Fanno on the same topic and in German in 1933. This article was written following an invitation by Rosenstein-Rodan and Oscar Morgenstern and was published with the title "Irrtümer in der Zeit als Ursachen wirtschaftlicher Schwankungen" in the Austrian journal Zeitschrift für Nationalökonomie (1933) (henceforth: the Austrian article) 1 .
The aim of this paper is to compare the Austrian theory of the business cycle with the approaches developed in Italy, during the first decades of the 20th century, mainly by Marco Fanno and Costantino Bresciani-Turroni. It is shown that - although, in both cases, an overinvestment explanation of fluctuations was accepted - Italian economists developed a different theory, both of the starting and of the upper turning point of the cycle. In particular, they argued that fluctuations are mainly caused by the improvement in firms' expectations, while the growing phase of the cycle may be stopped by social conflict (i.e., by workers' reaction to 'forced saving'). Hence, according to these scholars - and outside the Austrian approach - (a) capitalist instability (the alternation of expansionary and contractionary phases) may not be due to exogenous interventions by banks, the State or the unions and (b) the business cycle may be driven by real variables, in that they di...
The reception of Austrian economics in Italy
Russian Journal of Economics
Nowadays the Austrian School enjoys high reputation in Italy: books by Mises, Hayek and other Austrian economists are constantly republished and reviewed with great interest, both inside and outside academic circles. The situation was very different decades ago, when just a few Italian economists devoted attention to the Austrian School. This work studies the reception of Austrian Economics in Italy, from the beginning to our days, so as to bring out, by way of comparison, relevant features of Italian economic culture. We will try to offer just an overview of the entire story, in an attempt to provide useful elements for a deeper analysis of further topics and periods.
A compendium of Italian economists at Oxbridge. Contributions to the evolution of economic thinking
European Journal of The History of Economic Thought, 2018
This book is a survey of the contributions by Italian economists who studied and worked at Oxford and/or Cambridge between the 1950s and the 1990s. It is something less than a systematic Who's Who of the entire roll call of approximately 300 hundred economists who went to Oxbridge during this span of time (100 to Oxford, at least 200 to Cambridgethe estimate is provided by the authors), because not all of them eventually found a place in the story. But it is also much more than a Who's Who, as it tells the story of "the circulation and cross-fertilization of ideas" between Italy and Oxbridge, tracing the main sources of inspiration and the further developments of a number of economic concepts. The focus is on pure economic theory. Personal, institutional and policy implications are not altogether excluded, but remain in the background. The structure of the book centres upon two main chapters (Chapters 2 and 3), on Oxford and Cambridge, respectively, preceded by a brief introduction (Chapter 1) and followed by two short chapters (Chapters 4 and 5) on the celebration of Oxbridge scientists by Italian economists and institutions and on the influence of Oxbridge-Italian economists within the Italian scientific community and civil society. The authors left for themselves only a brief chapter (Chapter 6), just two pages long, to draw some "Conclusions". The early experience of Pasinetti at Oxford, until he moved to Cambridge in 1961, offers a good starting point for the story in the opening pages of Chapter 2, where the controversy with Solow on the analysis of technical progress and the resonance that this controversy and Pasinetti's parallel work on cycles and growth had in Cambridge are briefly outlined. Much space is then duly dedicated to John Hicks and his (and his wife's) special relations with Italy. However, it is on the intellectual, rather than personal relations between Hicks and his Italian students and friends that the authors dwell. The role of Francesco Masera, and of the Bank of Italy's Servizio studi, in creating a link with Linacre College is briefly mentioned. But much more THE EUROPEAN JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
New Directions in Austrian Economics
Southern Economic Journal, 1979
In a decade in which the neoclassical consensus no longer holds sway, many economists are looking for new paradigms, lessexacting to our creduUty and more in conformity with what common experience teaches us about the daily flow of knowledge from man to man and our inability to know the future. Here Austrian economics presents three distinct features by which it maybe distinguished from other contemporary schools of economic thought. The first, and most prominent, feature ofAustrian economics is a radical subjectivism, today no longer confined to human preferences but extended to expectations. It found its perfect expression many years ago in Hayek's statement, "It is probably no exaggeration to say that every important advance in economic theory duñng the last hundred years was a further step in the consistent application of subjecfivism. "1 Secondly, Austrian economics displays an acute awareness of the many facets of time that are involved in the complex network ofinterindividual relaons. Time, as the dimension of the interval between input and output, is important, but it is not allimportant. Menger's rejection of B6hm-Bawerk'stheory ofcapi-New Directions in Austrian Economics tal2 was largely, if not solely, prompted by the latter's disregard of all those economica]ly relevant aspects of time that do not fall under the headings "Üme preference" and "period of producnon." To Menger, time was, in the first place, the dimension in which the complex network of interindividual relations presents itself to us. Austrian economics has retained and cultivated this Mengerian perspective. Time is the dimension ofall change. Iris impossible for time to elapse without the constellation of knowledge changing. But knowledge shapes actíon, and acUon shapes the observable human world. Hence ir is impossible for us to predict any future state of this world. The third feature ofAustrian economics, a coroUary ofsubjec-Üvism and awareness of the protean character of time, is a distrust of all those formalizaUons of economic expeñence that do not llave an identifiable source in the mind of an economic actor. Such distrust naturally engenders skepticism about macroeconomic aggregates. To Austrians, MIeconomic thought is thought within the context of means and ends implying choice. Austrían economics is certainly more than "a pure logic of choice." At some stage, we have to introduce"subsidiary assumptions." Expectaons area good example, the granting of credit is another. But Austrians wiU not accept formalizations of economic experience that altogether defy the category "means and ends," concepts that ale nothing but formalizations of records of statistical observations in which the events recorded appear devoid of their histoñcal character and meaning. In what follows, the impfications of these three feamres will be explored by applying them to a number of problems with which Austrian economists have good reason to concern themselves. But, quite apart from the three features, the Austrians, being such stout defenders of the market economy, are namrídly involved in every attack on ir. An argument currently in fashion among the would-be sopbísticated says that the existence of so few forward markets in the real world proves that the effectiveness of the market process in coordinating economic plans and actíon is gravely hampered. In the climate of our time, the ímplication that here is a promising f'_.ld of government inter
The Review of Austrian Economics, 1999
N ow a full 25 years after the beginning of its revival, the Austrian school seems to have reached a crucial fork in the road. Having spent much energy during the post-revival period on sorting out what the Austrian approach is all about and how it is distinct from the neoclassical mainstream, the school is now faced with the question of how that distinctive approach can be reconciled with some congenial developments in neoclassical economics. There appears to be an increasing trend within the Austrian school toward finding commonalities with these mainstream developments, rather than distancing itself from them. Nicolai Foss's recent book is in many ways an excellent and productive example of this trend. He recapitulates many major Austrian themes while finding ways to connect them to important new work in evolutionary and neo-institutional economics. His attempts to "open up" Austrians to those insights, as well as opening up these other traditions to the contributions of Austrians, are largely successful and serve as a nice model for the kind of work Austrians should aspire to.
The use and abuse of the history of economic thought within the Austrian school of economics
2002
The financial assistance of the JM Kaplan Fund is gratefully acknowledged. I would like to thank the students in my ECON 881 course at George Mason University for comments and criticisms of the argument developed in this essay, as well as Keith Jakee for comments and criticisms on an earlier version. Research assistance from J. Robert Subrick and Peter Leeson is gratefully acknowledged. In addition, I would like to acknowledge the comments of an anonymous referee and the editor on an earlier version. The usual caveat applies.