The archive.

In this essay, first published in 1932 as Kapitalaufzehrung and here in English translation, Hayek opens what he called an 'economics of decline', the neglected theory of how a society consumes its own capital. His claim is stark: production costs held too high, with wages pushed above equilibrium against rigid money incomes, can make current consumption exceed current output, so that capital is quietly eaten away. The process betrays itself through a shortening of the structure of production, a shift toward quickly finished consumer goods, and a fall in the value of capital equipment before any physical decay shows; depreciation funds go unreinvested and circulating capital becomes unrecoverable. Drawing on Austrian and central European evidence, including Morgenstern's data on Vienna-listed firms, he warns that democratic anti-capitalist majorities may favour levies and public works that devour the very capital they depend on.

What we are confronting here, however, are economic problems towards whose explanation economics has as yet made little direct contribution, even if it offers us the necessary tools for doing so.

Returning to the terrain of his London lectures on Prices and Production, Hayek recasts production as a flow through time, a stream in which resources are allocated not only horizontally among goods but longitudinally among stages serving different future dates. Competitive relative prices supply the signals that keep this changing capital structure coordinated, work that no central planner, lacking the dispersed local knowledge, could perform. Against Keynes he insists that demand for commodities is not demand for labour, and that macroeconomics obscures the relative-price adjustments governing capital, wages, and intermediate goods. Disequilibrium, he argues, is not a flaw but the very thing that keeps the stream moving; price fixing, monopolistic wage-setting, and the craving for security only dam it. The remedy lies not in demand management but in better legal and monetary rules.

Genaugenommen kann eigentlich ein Strom niemals im Gleichgewicht sein, denn gerade das Ungleichgewicht hält ihn in Fluß und bestimmt seine Richtung.

English translation: “Strictly speaking, a stream can never really be in equilibrium, for it is precisely the disequilibrium that keeps it flowing and determines its direction.”

The alternatives among which a person chooses are creations of his own thought, not a menu the world hands down — and from that premise Shackle builds this compact statement of subjectivist economics, written to introduce Alexander Shand's survey of the tradition from Plato to Hayek. Choice becomes creative rather than calculative, its consequences unknowable in advance, so that the future is not merely unknown but partly made. Non-determinism and the unpredictability of history-to-come follow, along with a political corollary: central coercion cannot render human affairs predictable, only extinguish the dispersed invention that renews economic life. Markets earn their place by disseminating knowledge after events occur, never by abolishing uncertainty.

Subjectivism credits the individual with the power of the alchemist who can throw into his crucible whatever his fancy has invented but knows not what will emerge.

Open the issue of money to private enterprise, and let the public, not the state, decide which currencies it will hold: this is the proposal Hayek develops here, extending the argument of The Denationalization of Money. A government monopoly on issue, he contends, has blocked the kind of evolutionary experimentation long seen in law, language, and morals, leaving society ignorant of what the best money would even be. Competing private issuers, disciplined by the threat of depreciation and lost custom, would supply currencies of stable purchasing power, perhaps a unit he calls the Solid, redeemable against a weighted basket of widely traded raw materials. He argues that Gresham's law binds only under fixed exchange rates, doubts the gold standard can be restored, and urges that money be removed from political control and returned to the market's self-steering order.

It is really extraordinary that, as long as the discussion on money has been going on, everyone has accepted the right of government to provide us with money on an exclusive basis.

Assembled as the world economy emerged from the severest recession of the postwar period, this edited symposium gathers Haberler as framer and contributor alongside Michael Bruno, Robert Mundell, and others to debate what made the early-1980s slump so deep and how recovery might proceed. Haberler supplies the anti-catastrophic baseline: this was disinflation after the runaway 1970s, not a second Great Depression, since deposit insurance and central-bank activism made a wholesale monetary collapse unthinkable. Bruno presses the oil shocks and real-wage resistance; Mundell and other reformers warn of an unstable dollar and the absence of professional consensus. Against calls for coordinated intervention and fixed rates, Haberler defends floating as an imperfect but durable second-best in a world of divergent national policies.

The world economy is sinking, yet the profession is unable to reach any consensus on what should be done.

When flight delays snarled American airports in 1984, the press told a tidy story of wise government-business cooperation reining in airlines that had over-scheduled peak hours. Rothbard reverses the causation. The congestion, he argues, was not a failure of deregulation but the reappearance of cartel policy: after the Civil Aeronautics Board was abolished, the FAA picked up its restrictive function, imposing flight ceilings in the name of scarce controllers left short by the PATCO firings. That incumbents like Eastern Airlines, facing People's Express at Newark, welcomed the quotas gives the piece its public-choice edge. A persistent shortage, Rothbard reminds the reader, signals a price held below the market-clearing level, here because airports are government-owned. His remedy is market-clearing slot fees, privatized airports, and privatized air-traffic control.

Whenever economists see a shortage, they are trained to look immediately for the maximum price control below the free-market price.

The plain-paper copier grew so familiar that its maker's name nearly became a verb, yet the Xerox 914 began, Rothbard reminds us, as a long-shot gamble no giant would take. Eastman Kodak, IBM, and government laboratories all passed on Chester Carlson's process; the lone patent attorney ran his first experiments in an apartment kitchen in 1938, and it was Haloid, a firm with under seven million dollars in sales, that spent twenty million over twelve years to bring the machine to market. Rothbard refuses a heroic tale, though: the challenger becomes the giant, then the pressured incumbent as Japanese rivals erode its share, before its Marathon copiers claw back ground. Competition, on this telling, is a process no firm ever escapes.

Small business can outcompete, and outinnovate, the giants.

That devaluing a currency must worsen a country's terms of trade was, in 1952, an assumption widely taken for granted, and this compact theoretical note, reprinted here, sets out to dismantle it. Haberler's thesis is deliberately asymmetrical: in the normal case, where depreciation improves the balance of payments, the terms of trade may move either way and cannot be predicted a priori; only in the perverse case, where the balance of payments worsens, must they deteriorate. Working through demand and supply curves priced in dollars, he shows that a depreciation lowers both export and import prices measured in dollars, so one cannot pair dearer imports with cheaper exports and infer a loss. Against Joan Robinson's presumption that supply elasticities generally exceed demand elasticities, he denies that any broad generalization holds.

We have, then, the result that export and import prices move in the same direction.

Call a tax deduction a subsidy and you have already conceded that the government owns your income; that buried premise is what Rothbard drags into the light in this brief attack on the Reagan administration's plan to end the deductibility of state and local taxes from federal returns. A subsidy, he insists on its plain meaning, is Peter taxed to fund Paul; allowing a taxpayer to surrender less of his own earnings is nothing of the kind. Behind the tax-expenditure vocabulary and the talk of fair shares he sees a device that turns taxpayers against one another, policing each other's alleged privileges instead of uniting against extraction itself. The real objective, he argues, is not revenue-neutral symmetry but lowering the coerced burden for everyone.

How can allowing you to keep more of your own money be called a “subsidy?”

The 'arrogance of reason', the conceit that prosperity and civilization were consciously designed rather than inherited, gives this lecture its title and its target. Hayek denies that morality is a rational construction: like reason itself, it emerged through an evolutionary process, and the groups that adopted private property and the family could sustain denser populations and a deeper division of labour, displacing rivals who did not. Capitalism and socialism, on this account, are not positions within a shared morality but a clash between rival moral traditions, and he singles out Jacques Monod's claim that science has dissolved inherited ethics, along with Keynes's hostility to saving, as symptoms of a scientistic overreach. Science cannot invent a replacement ethics, he concludes, because a complex order draws on more knowledge than any planner, and he links Adam Smith's invisible hand to cybernetics and biology.

Die klassische moralische Tradition hat eine freie Gesellschaft geschaffen, indem sie den Menschen überredet hat, gewisse primitive Instinkte zu unterdrücken.

English translation: “The classical moral tradition created a free society by persuading men to suppress certain primitive instincts.”

Capitalism appears here not as a machine for allocating known resources but as an open-ended process in which entrepreneurs notice what no one had seen before. Across seven essays Kirzner binds Mises's entrepreneurial market, Hayek's dispersed knowledge, and his own concept of alertness into a single account of the economy as coordinated learning through profit-seeking. He traces how the entrepreneur vanished from neoclassical theory as disequilibrium noise, recasts uncertainty and discovery as two faces of one phenomenon, and turns the argument on policy: taxing pure profit may suppress discoveries that never become visible, and regulation is perilous less because it distorts equilibrium than because it stifles the discovery process and breeds a wholly superfluous ingenuity of evasion. The Lange-Dickinson response to Mises and Hayek, he insists, mistook administered prices for the entrepreneurial function they can never replicate.

The process of creative discovery is never completed, nor is it ever arrested.

A 1984-85 high-school debate resolution proposing federal employment for every employable poor citizen gives Sennholz his foil, and his answer inverts its premise: government is not the cure for unemployment but a leading cause. He first contests the category of American poverty, arguing that an income-threshold definition confuses relative inequality with destitution and points to homeownership, savings, appliances, and cars among households counted poor. Employment, he then insists, is a price-and-cost phenomenon: taxes, mandates, union privileges, minimum wages, and Federal Reserve boom-bust cycles raise the cost of hiring until workers whose output cannot cover it are priced out. Business, not the state, is the genuine source of jobs, since government has no productive fund of its own and must finance make-work through taxation, borrowing, or inflation. To hand that state the role of employer of last resort, he warns, only expands dependency while eroding the production that funds it.

To make government their employer of last resort is to put the culprit in charge and urge him to continue his transgressions.