Ludwig Von Mises's Approach to Capital as a Bridge between Austrian and Institutional Economics

Braun, Eduard; Lewin, Peter; Cachanosky, Nicolás

doi:10.2139/ssrn.2748937

Cited by 10 publications

(12 citation statements)

References 17 publications

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“…Recent work (Braun, Lewin, & Cachanosky, ; Lewin & Cachanosky, , ) has drawn attention to Mises's distinctive view of capital as a value construct. For Mises capital, as distinct from capital goods (production goods), is a money value.…”

Section: Capital Subjectivism and The Entrepreneurmentioning

confidence: 99%

Entrepreneurship in a theory of capital and finance—Illustrating the use of subjective quantification

Lewin

Cachanosky

2020

Manage Decis Econ

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In order to identify an entrepreneurial opportunity, calculation is required. The entrepreneur must do more than simply perceive an opportunity to do something new to create value in the marketplace. Insofar as alternative possible actions exist, the entrepreneur must choose between them. And even as the chosen opportunity is pursued, he must choose between alternative modes of production and organization in the ongoing combination of resources. The details of the kind of calculation required have been left mostly implicit in the literature. This article borrows from the finance literature to suggest a general and universal framework for such calculation and to offer one possible more specific method for using that framework for ongoing entrepreneurial judgment calls. We describe the familiar context in which entrepreneurial decisions occur and reiterate the importance of understanding the nature of capital in such a context of subjective value, uncertainty, and entrepreneurial imagination. We describe the familiar universal present value arithmetic and how it applies to entrepreneurial calculation. Finally, we take a deeper look at this framework, providing an example of one method of analysis used in financial management.

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Section: Capital Subjectivism and The Entrepreneurmentioning

confidence: 99%

Entrepreneurship in a theory of capital and finance—Illustrating the use of subjective quantification

Lewin

Cachanosky

2020

Manage Decis Econ

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“…8 "Attention to the time element in the process of production and, more specifically, the incorporation of an intertemporal capital structure," Garrison (1991, p. 303) writes, "are what characterize Austrian macroeconomics and set it apart from the more widely accepted formulations of macroeconomic relationships." Indeed, recent efforts to revise Austrian capital theory continue to assert that the temporal dimension is key (Braun, Lewin, and Cachanosky 2016;Lewin and Cachanosky 2016, forthcoming a, b).…”

Section: Capital Specificity and The Potential For Malinvestmentmentioning

confidence: 99%

Austrian Macroeconomics in Search of Its Uniqueness

Luther

McElyea

2018

SSRN Journal

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We consider the essential features of an Austrian macroeconomic model and then ask whether these features are unique. We argue that the temporal aspect of the structure of production is not an essential feature. Malinvestments in any dimension (e.g., time, geography, type, etc.) can generate the predicted boom-bust cycle so long as there are costs to reallocation. However, the view that nominal shocks have long-term consequences because costs are incurred to remedy past mistakes is not uniquely Austrian. In particular, we note similarities with the New Keynesian notion of hysteresis.

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“…There have been several slightly successful attempts at contributing to a mutual understanding of Austrian and institutional economics (Samuels, 1989; Wynarczyk, 1992). In my own work (Braun, 2017; Braun et al ., 2016), I have tried to show that capital theory could well serve as a bridge between Austrian and institutional economics. To those who are well-read in both traditions, it will sound odd that, of all things, capital theory should be able to serve as a link between them.…”

Section: Editorial Introductionmentioning

confidence: 99%

“…Hodgson (2008) pointed out that Frank Fetter's work could be considered a synthesis of institutional and Austrian views because his subjectivist approach to value theory did not prevent him from recognizing the historically specific aspects of economic phenomena, in particular, capital. Furthermore, and it may come as a surprise to many, Ludwig von Mises (1949), the most vocal advocate of the Austrian concept of a universal and a historical theory of human action, deviated from other Austrian economists and stuck to the historically specific business concept of capital, as endorsed by institutional economists (Braun et al ., 2016).…”

Section: Editorial Introductionmentioning

confidence: 99%