The Value of MoneyAnderson, Benjamin M. (Benjamin McAlester)
General
The Value of Money
Anderson, Benjamin M. (Benjamin McAlester)
Money
(7) Such an equilibrium picture leaves untouched the vital question
which any theory must answer which means to be of practical use in
concrete situations: what are the real _variables_ in the situation, and
what factors are constant? What causes are _likely_ to produce changes
in market prices? The individual-utility curves, which in Austrian
theory are commonly treated as the only variables, except quantities of
goods,--in the strict static picture there are no variables at all!--are
really, when conceived of as individual, as growing out of the mental
processes of each individual separately, the most _constant_ factor in
the situation. For, on the principle of the inertia of large numbers,
each unit of which is moved by its own peculiar causes, changes in the
utility-curves of one man will be offset by opposite changes in the
utility-curves of another, and so the general system will remain much
where it was. Of course, if a rich man changes his curve, a poor man's
change will not offset it in the market, but this is to emphasize the
_distribution of wealth_ rather than the utility-curves. It is only when
you get changes of a sort that the individualistic psychology, and the
"pure economic" explanation factors, of the Austrians find no place for,
that you can predict a change in the general price-system. It is only
changes in fashion or mode, in general business confidence,[86] in moral
attitude toward this or the other sort of consumption or production, in
the distribution of wealth, changes in taxes and other laws--causes of a
general social character--that you can count on to produce important
changes in values. Of course, changes in the adequacies of supplies
would be taken account of on either interpretation.
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