Talk:Austrian business cycle theory/Archives/2010/December

Sraffa, Kaldor & Hayek

It's rather surprising that this article makes no mention of Sraffa and Kaldor, who convinced most of the profession (and Hayek) that Hayek's version of the Austrian Business cycle was completely wrong in 1932. James Haughton (talk) 22:32, 29 October 2008 (UTC)

The idea that P. Sraffa and N. Kaldor made a positive contribution to the thought of Hayek as in "(and Hayek)" is incorrect. That the expansion of the credit money supply was responsble for the boom-bust of the late 1920s and early 1930's (and that government action in reaction to the bust made matters much worse) was a position that Hayek never moved away from.91.107.84.20 (talk) 14:05, 25 April 2009 (UTC)

Incorrect. Hayek had to acknowledge that his concept of an equilibrium rate of interest was vacuous. Cf this article on the dispute and its impact:

"In his reply Hayek admitted that "there would be no single rate which, applied to all commodities, would satisfy the conditions of equilibrium rates, but there might, at any moment, be as many "natural" rates of interest as there are commodities, all of which would be equilibrium rates" (1932, p. 245). In his rejoinder, Sraffa noticed Hayek’s admission with satisfaction, but he asked him to draw the consequences for his ideal maxim for monetary policy – the proposition that they "all [...] would be equilibrium rates". Sraffa commented: "The only meaning (if it be a meaning) I can attach to this is that his maxim of policy now requires that the money rate should be equal to all the divergent natural rates" (1932b, p. 251).

In view of Sraffa’s devastating criticism it is hardly surprising that even those sympathetic to Hayek felt that his stature as an economic theorist had been seriously damaged in the debate with Sraffa (compare Lachmann, 1986). Keynes, on the other hand, must have been extremely pleased with Sraffa’s performance: it effectively countered the assault on his intellectual project launched by Lionel Robbins and his circle, and it allowed him to develop the General Theory undisturbed by further interventions from the Austrian economist." from "Sraffa’s Reception of the German Economics Literature: A Few Examples", by Heinz Kurz, http://www.dse.unifi.it/spe/indici/numero37/heinz.htm

James Haughton (talk) 02:52, 6 December 2010 (UTC)