{"id":28770,"date":"2017-12-12T07:34:59","date_gmt":"2017-12-12T12:34:59","guid":{"rendered":"http:\/\/olduvai.ca\/?p=28770"},"modified":"2017-12-12T07:34:59","modified_gmt":"2017-12-12T12:34:59","slug":"are-economic-crises-inherent-to-market-economies","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=28770","title":{"rendered":"Are Economic Crises Inherent to Market Economies?"},"content":{"rendered":"<header class=\"wrapper entry-header page-header\">\n<div class=\"title-with-sep single-title\">\n<h3 class=\"entry-title\"><a href=\"http:\/\/www.cobdencentre.org\/2017\/12\/are-economic-crises-inherent-to-market-economies\/\">ARE ECONOMIC CRISES INHERENT TO MARKET ECONOMIES?<\/a><\/h3>\n<\/div>\n<\/header>\n<div class=\"wrapper\">\n<div class=\"grids\">\n<div class=\"grid-8 column-1\">\n<div class=\"single-box clearfix entry-content\">\n<p>It is interesting to note that Marx, in his analysis of the capitalist economic system, basically concentrates on the study of the imbalances and maladjustments which occur in the market.<\/p>\n<p>This accounts for the fact that Marxist theory is primarily a theory of market disequilibrium and that occasionally it even coincides remarkably with the dynamic analysis of market processes which was developed by economists of the Austrian School, and particularly by Mises and Hayek themselves. One of the more curious points on which a certain agreement exists relates precisely to the theory of the crises and recessions which systematically ravage the capitalist system. Thus it is interesting to observe that certain authors of the Marxist tradition, such as the Ukrainian Mijail Ivanovich Tugan-Baranovsky (1865\u20131919), reached the conclusion that economic crises originate from a tendency toward a lack of proportion among the different branches of production, a lack Tugan-Baranovsky believed inherent in the capitalist system.<a id=\"footnoteref1_5s1g79x\" class=\"see-footnote\" title=\"Tugan-Baranovsky, Industrial Crises in England. Spanish translation included in Lecturas de econom\u00eda pol\u00edtica, Francisco Cabrillo, ed. (Madrid: Minerva Ediciones, 1991), pp. 190\u2013210. See also chapter 7, footnote 87.\" href=\"https:\/\/mises.org\/wire\/are-economic-crises-inherent-market-economies#footnote1_5s1g79x\">1<\/a>\u00a0According to Baranovsky, crises occur because<\/p>\n<blockquote><p>the distribution of production ceases to be proportional: the machines, tools, tiles and wood used in construction are requested less than before, given that new companies are less numerous. However the producers of the means of production cannot withdraw their capital from their companies, and in addition, the importance of the capital involved in the form of buildings, machines, etc., obliges producers to continue producing (if not, the idle capital would not bear interest). Thus there is excessive production of the means of production.<a id=\"footnoteref2_dise86f\" class=\"see-footnote\" title=\"Excerpt translated from Spanish edition. Ibid., p. 205; italics added\" href=\"https:\/\/mises.org\/wire\/are-economic-crises-inherent-market-economies#footnote2_dise86f\">2<\/a><\/p><\/blockquote>\n<p>Clearly part of the underlying economic reasoning behind this analysis bears a strong resemblance to that behind the Austrian theory of the business cycle. In fact Hayek himself mentions Tugan-Baranovsky as one of the forerunners of the theory of the cycle he presents in\u00a0<em>Prices and Production<\/em>.<a id=\"footnoteref3_lgfywx6\" class=\"see-footnote\" title=\"In the German literature similar ideas were introduced mainly by the writings of Karl Marx. It is on Marx that M.V. Tougan-Baranovsky\u2019s work is based which in turn provided the starting point for the later work of Professor Spiethoff and Professor Cassel. The extent to which the theory developed in these lectures corresponds with that of the two last-named authors, particularly with that of Professor Spiethoff, need hardly be emphasised. (Hayek, Prices and Production, p. 103)\u00a0See also Hayek, The Pure Theory of Capital, p. 426. On Tugan-Baranovsky and the content of his doctoral thesis, The Industrial Crises in England, see the biographical article on this author by Alec Nove, published in The New Palgrave: A Dictionary of Economics, John Eatwell, Murray Milgate, and Peter Newman, eds. (London: Macmillan, 1987), vol. 4, pp. 705\u201306. The error in all of these doctrines of a \u201clack of proportion\u201d lies in the fact that they disregard the monetary and interventionist origin (in the form of the privileged operation of the banking system) of such a lack, they fail to recognize the entrepreneurial tendency to detect and correct maladjustments (in the absence of state intervention) and they naively assume that government economic authorities possess a deeper knowledge of these effects than the network of entrepreneurs which act freely in the market. See Mises, Human Action, pp. 582\u201383.\" href=\"https:\/\/mises.org\/wire\/are-economic-crises-inherent-market-economies#footnote3_lgfywx6\">3<\/a><\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>ARE ECONOMIC CRISES INHERENT TO MARKET ECONOMIES? It is interesting to note that Marx, in his analysis of the capitalist economic system, basically concentrates on the study of the imbalances and maladjustments which occur in the market. This accounts for the fact that Marxist theory is primarily a theory of market disequilibrium and that occasionally [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15801,111,7380,239,11147,4008,5139,6058],"class_list":["post-28770","post","type-post","status-publish","format-standard","hentry","category-economics","tag-austrian-school-of-economics","tag-capitalism","tag-cobden-centre","tag-economic-crisis","tag-hayek","tag-market-economy","tag-marx","tag-mises"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28770","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28770"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28770\/revisions"}],"predecessor-version":[{"id":28771,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/28770\/revisions\/28771"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}