Friedrich A. Hayek, “Bemerkungen zur vorstehenden Erwiderung Prof. Emil Lederers” (1930)

Hayek’s reply to Emil Lederer is a compressed defense of his earlier charge that Lederer’s crisis theory belongs near the underconsumptionist argument of Foster and Catchings. Its main thesis is that, whatever Lederer now disavows, his published theory explains crises as the result of saving-led accumulation outstripping consumer purchasing power, and his policy remarks therefore incline toward the same “Konsumfinanzierung” Hayek had criticized.

Angesichts der Schärfe, mit der Lederer mich dabei der oberflächlichen Lektüre seiner Schriften zum Konjunkturproblem zeiht, bleibt mir nichts anderes übrig, als nun durch ausführlichere Wiedergabe der hier in Frage kommenden Äußerungen Lederers zu zeigen, warum ich auch jetzt noch der Ansicht bin, daß die gleichen Einwände, die ich gegen die Ansichten Fosters und Catchings' angeführt habe, ebenso auch gegen die Konjunkturtheorie und die konjunkturpolitischen Vorschläge Lederers gelten.

English translation: Given the sharpness with which Lederer accuses me of a superficial reading of his writings on the cyclical problem, I have no choice but to show, through a fuller reproduction of the relevant statements of Lederer's, why I still hold the view that the same objections which I raised against the views of Foster and Catchings apply equally to Lederer's business-cycle theory and his proposals for cyclical policy.

The article’s structure is evidentiary and critical. Hayek first answers Lederer’s accusation of superficial reading by reproducing passages from Lederer’s writings. He then argues that these passages contain the decisive proposition: general crisis is explained by a gap between output and spendable income.

Eine wirklich allgemeine Störung der Güterproduktion tritt vielmehr dadurch ein, daß die Gesamtmasse der auf den Markt kommenden Produkte sich nicht verkaufen kann, was aber nur der Fall ist, weil die als ‚Einkommen‘ verwendete Kaufkraft geringer ist als die Preissumme aller erzeugten Fertiggüter.

English translation: A truly general disturbance of goods production comes about, rather, through the fact that the total mass of products coming onto the market cannot be sold—which, however, is only the case because the purchasing power used as 'income' is smaller than the sum of prices of all finished goods produced.

For Hayek, this is not a harmless formulation of disproportionality but an erroneous monetary-consumption theory of crisis. Lederer’s claim that accumulation can proceed “too fast” means, in Hayek’s reading, that the value-relation between consumption goods and capital goods must be kept constant if crisis is to be avoided.

Die Akkumulation muß also unter diesen Umständen ‚zu schnell‘ vor sich gehen, d. h. es muß der Punkt bald erreicht werden, an welchem das Kapital zwar als ein akkumuliertes erscheint, die Produktionsanlagen also ausgedehnt sind, aber die Möglichkeit der ‚endgültigen Realisierung der Profite‘ in der Volkswirtschaft durch eine rentable Anlage nicht durchweg gegeben ist.

English translation: Accumulation must therefore, under these circumstances, proceed 'too quickly'—that is, the point must soon be reached at which capital indeed appears as accumulated, the production facilities thus expanded, but the possibility of the 'final realization of profits' in the national economy through a profitable investment is not everywhere present.

Hayek identifies this as the “Grundirrtum”: the idea that a rising share of saving necessarily makes the consumer-goods market unable to realize profits. Lederer’s own hypothetical case—people satisfying only subsistence needs and saving the rest—confirms for Hayek that the argument is not merely about a physical absence of consumption, but about a supposedly inadequate monetary demand for consumption goods.

Allgemeine, dauernde Einschränkung des Konsums würde den oben gekennzeichneten Effekt haben, weil eben in einer kapitalistischen Wirtschaft im Gegensatz zu einer Planwirtschaft die Verringerung des Konsums noch nicht mit Einschränkung der Produktion identisch ist.

English translation: A general, lasting restriction of consumption would have the effect characterized above, because in a capitalist economy—unlike in a planned economy—the reduction of consumption is not yet identical with a restriction of production.

Against this, Hayek restates the Austrian-capital-theoretic point of his earlier article. Crisis does not follow because consumers spend too little; it follows when the structure of production has been drawn into paths no longer justified by the actual relation between demands for capital goods and consumption goods. The crucial inversion is passage-driven and sharp—it is, Hayek notes, the very sentence in which his critique culminates:

Er hätte insbesondere den gesperrt gedruckten Satz finden müssen, daß unter den dargestellten Bedingungen „sich ein Überangebot von Produktionsmitteln ergeben (werde) und damit die Unmöglichkeit, sie rentabel zu verwenden, aber nicht weil die Nachfrage nach Konsumgütern zu klein, sondern im Gegenteil, weil sie zu groß und dringend ist, als daß die Durchführung so langwieriger Produktionsumwege sich rentabel erweisen könnte“

English translation: He ought in particular to have found the specially emphasized sentence that, under the conditions described, ‘an over-supply of means of production will arise, and with it the impossibility of employing them profitably—not because the demand for consumer goods is too small, but on the contrary because it is too great and too urgent for the carrying-out of such lengthy roundabout methods of production to prove profitable.’

This is the conceptual center of the piece. Hayek denies that a minimum volume of consumer purchasing power is required to “buy back” output at profitable prices. Any money stream can sustain a structure if relative demands correspond to the production structure. The crisis problem is not aggregate insufficiency but a mismatch between the supply of intermediate/capital goods and the demand pattern that would make them profitable.

Hayek then turns from theory to policy. He explains why he had attributed only “Sympathien” to Lederer rather than full agreement with Foster and Catchings: Lederer hesitated before their inflationary conclusions. Yet Hayek cites Lederer’s own discussions of consumer credit, public works, and employment policy to show that the practical impulse remains the same. Lederer himself had written:

Immerhin zeigt die Überlegung, daß in besonders versteiften Fällen nur Forcierung des Konsums, selbst um den Preis von Gewinnlosigkeit, ja von Verlusten, die Krise überwinden kann.

English translation: At any rate, the consideration shows that in especially hardened cases only a forcing of consumption—even at the price of an absence of profits, indeed of losses—can overcome the crisis.

Hayek reads such sentences as evidence that Lederer’s anti-crisis policy tends toward credit-created purchasing power. He also objects that Lederer confuses Hayek’s rejection of credit-financed emergency works with a rejection of all cycle policy. Hayek’s position is preventive rather than curative: once a distorted boom has produced malinvestments, “Wunderkuren” cannot remove the damage. Stabilization must occur by restraining the upswing.

Sollte ihm unbekannt geblieben sein, daß die — ich darf wohl sagen heute vorherrschende — Ansicht eine Milderung der Konjunkturschwankungen nur von einer Bremsung des Aufstieges erwartet und daher eine derartige präventive Krisenpolitik ganz an Stelle der alten, wie mir scheint mit Recht, als zwecklos angesehenen kurativen Politik setzen möchte.

English translation: Could it have remained unknown to him that the view—today, I may well say, the prevailing one—expects a mitigation of cyclical fluctuations only from a braking of the upswing, and therefore would put such a preventive crisis policy entirely in place of the old curative policy, which, rightly it seems to me, is regarded as pointless?

The final conceptual move is Hayek’s definition of genuine disproportionality. It is not that the capital stock becomes too large in relation to current consumption as such; capital may be many times greater in value than current consumer-goods output. Hayek fixes the criterion exactly:

Eine solche Disproportionalität kann vielmehr meiner Ansicht nur darin bestehen, daß das Verhältnis des Kapitalgüterangebotes zum Konsumgüterangebot größer ist als das Verhältnis von Kapitalgüternachfrage zur Konsumgüternachfrage.

English translation: Such a disproportionality can, in my view, consist rather only in the fact that the ratio of the supply of capital goods to the supply of consumer goods is greater than the ratio of the demand for capital goods to the demand for consumer goods.

The relevance of the piece lies in this early and pointed formulation of Hayek’s anti-underconsumptionism. It shows him resisting the view that crises are cured by increasing consumption, and insisting instead on relative-demand coordination across the temporal structure of production. Its closing irony is that Lederer takes the collapse of production-goods industries as proof of deficient consumer purchasing power; Hayek treats this as precisely the misunderstanding his capital theory was meant to expose.