Abstract
In order to explain the emergence of barter nothing more than the assumption of a narrowly defined self-interest is required. If and insofar as man prefers more choices and goods to fewer, he will choose barter and division of labor over self-sufficiency.
This chapter is reprinted with permission of the publisher from the forthcoming book, Money and the Nation State. © Copyright 1991, The Independent Institute, 134 Ninety-Eighth Avenue, Oakland, California 94603.
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References
references>2 On the free market development of money, see C. Menger, Principles of Economics (New York: New York University Press, 1976), pp. 257–285; “Geld” in: C. Menger, Gesammelte Werke, Vol. IV. (Tübingen: Mohr, 1970).
On the gold standard, see L. Rockwell (ed.), The Gold Standard: An Austrian Perspective (Lexington: D. C. Heath, 1985 ); R. Paul/L. Lehrman, The Case for Gold ( San Francisco: Cato Institute, 1983 ).
On banking and in particular the different function of loan and deposit banking, see M. N. Rothbard, The Mystery of Banking ( New York: Richardson and Snyder, 1983 ).
SSee M. N. Rothbard, The Case for a 100 Percent Gold Dollar ( Meriden: Cobden Press, 1984 ) pp. 32–34.
highly prominent example for this misconception is F. A. Hayek, Denationalization of Money (London: Institute of Economic Affairs, 1976); for a critique see M. N. Rothbard, “Hayek’s Denationalized Money,” Libertarian Forum, XV, 5–6 (August 1981- January 1982 ).
On the counterfeiting process, see M. N. Rothbard, The Mystery of Banking, ch. IV; also E. Groseclose, Money: The Human Conflict (Norman: University of Oklahoma Press, 1934), pp. 178 and 273.
On the Austrian business cycle theory, see L. v. Mises, Theory of Money and Credit (Irvington: Foundation for Economic Education, 1971); Human Action (Chicago: Regnery, 1966), ch. XX; F. A. Hayek, Monetary Theory and the Trade Cycle (New York: A. M. Kelley, 1975); Prices and Production (New York: A. M. Kelley, 1967); R. v. Strigl, Kapital und Produktion (Vienna: J. Springer, 1934); M. N. Rothbard, Man, Economy and State (Los Angeles: Nash, 1970) Vol. 2, ch. 12.
What about cartels? Could not the competing banks form a cartel and agree on a joint venture in counterfeiting? Again, under free banking this is most unlikely, because a system of free banking is characterized by the complete absence of any economic incentive for cartelization. With no restrictions of entry in existence, any such bank cartel would have to be classified as voluntary and would suffer from the same problems as any voluntary cartel: Faced with the threat of non-cartelists and/or new entrants, and recognizing that like all cartel agreements, a banking cartel would favor the less efficient cartel members at the expense of the more efficient ones, there is simply no economic basis for successful action, and any attempt to cartelize would quickly break down as economically inefficient. Moreover, insofar as the counterfeit money would be employed to expand credit, banks acting in concert would set off a full scale boom-bust cycle. This, too, would deter cartelization. See on the theory of free banking L. v. Mises, Human Action, pp. 434–448; M. N. Rothbard, The Mystery of Banking, ch. VIII.
Contrary to the claim of the public choice school, states and private firms are not doing essentially the same sort of business, but instead are engaged in categorically different types of operations. Both types of institutions are the outcome of different, antagonistic interests. The “political” interest in exploitation and expropriation underlying
On the following theory of the state, see M. N. Rothbard, For a New Liberty (New York: Macmillan, 1978); The Ethics of Liberty (Atlantic Highlands: Humanities Press, 1982); H. H. Hoppe, Eigentum, Anarchie and Staat (Opladen: Westdeutscher Verlag, 1987); A Theory of Socialism and Capitalism (Boston: Kluwer, 1989 ); A. d. Jasay, The State ( Oxford: Blackwell, 1985 ).
On the semantic confusion spread through the term “conceptual agreement” in particular by J. Buchanan, see H. H. Hoppe, “The Fallacies of the Public Goods Theory and the Production of Security,” Journal of Libertarian Studies, Vol. IX, 1, 1989; supra ch.l.
See H. H. Hoppe, Eigentum, Anarchie und Staat, ch. 5.3; A Theory of Socialism and Capitalism, ch. 8.
n democratization as a means of expanding state power, see B. de Jouvenel, On Power ( New York: Viking Press, 1949 ), pp. 9–10.
On the state’s inherent tendency toward achieving an unrestricted counterfeiting monopoly, see M. N. Rothbard, The Mystery of Banking; What Has Government Done to Our Money ( San Rafael: Libertarian Publishers, 1985 ).
On the impossibility of money originating as a fiat paper money, see the regression theorem: L. v. Mises, Theory of Money and Credit, pp. 97–123; Human Action, pp. 408410; M. N. Rothbard, Man, Economy and State, Vol. 1, pp. 231–237.
On the enthusiastic participation of the banking elite in the creation of the Federal Reserve System, see M. N. Rothbard, Mystery of Banking, chs. XV, X VI.
On the formation of the state-banking-business coalition, see G. Kolko, The Triumph of Conservatism (Chicago: Free Press, 1967); Railroads and Regulations (Princeton: Princeton University Press, 1965 ); J. Weinstein, The Corporate Ideal in the Liberal State
In the Marxist tradition this stage of social development is termed “monopoly capitalism,” “finance capitalism” or “state monopoly capitalism.” The descriptive part of Marxist analyses is generally valuable. In unearthing the close personal and financial links between state and business, they usually paint a much more realistic picture of the present economic order than do the mostly starry-eyed “bourgeois” economists. Analytically, however, they getlmost everything wrong and turn the truth upside down.
For representative Marxist studies, see R. Hilferding, Finance Capital (London: Routledge and Kegan Paul, 1981); V. Lenin, Imperialism Last Stage of Capitalism (Moscow: Foreign Languages Publishing House, 1947); P. M. Sweezy, The Theory of Capitalist Development (New York: Monthly Review Press, 1942); P. A. Baran/P. M. Sweezy, Monopoly Capital (New York: Monthly Review Press, 1966); E. Mandel, Marxist Economic Theory (London: Merlin, 1962); Late Capitalism (London: New Left Books, 1975); H. Meissner (ed.), Bürgerliche Ökonomie ohne Perspektive (East Berlin:
On the intimate relationship between state and war, see the important study by E. Krippendorff, Staat und Krieg (Frankfurt/M.: Suhrkamp, 1985); also C. Tilly, “War Making and State Making as Organized Crime,” in: P. Evans, Bringing the State Back In (Cambridge: Cambridge University Press, 1985 ); R. Higgs, Crisis and Leviathan ( New York: Oxford University Press, 1987 ).
The term “liberal” is here and the following used in its traditional European sense and not in the present day U. S. sense as a synonym for “socialist” or “social-democratic”!
A highly characteristic example of this connection between a policy of internal deregulation and increased external aggressiveness is provided by the Reagan administration.
On the following see also H. H. Hoppe, “The Economics and Sociology of Taxation” in Journal des Economistes et des Etudes Humaines, Vol.1, no.2, 1990; supra ch.2
On the importance of “political anarchy” for the origin of capitalism, see J. Baechler, The Origins of Capitalism (New York: St. Martin’s, 1976), ch. 7.
On British imperialism, see L. E. Davis/R. A. Huttenback, Mammon and the Pursuit of Empire: The Political Economy of British Imperialism 1860–1912 ( Cambridge: Cambridge University Press, 1986 ).
See the table in E. Krippendorff
Die amerikanische Strategie (Frankfurt/M.: Suhrkamp, 1970), pp. 43ff.
On 20th century U. S. foreign policy, see L. P. Liggio, “American Foreign Policy and National Security Management” in: R. Radosh/M. N. Rothbard, A New History of Leviathan; M. N. Rothbard, For a New Liberty, ch. 14.
See on this M. N. Rothbard, Mystery of Banking, pp. 230–247; on the role of the Morgans in pushing the Wilson administration into war, in particular see Ch. Tansill, America Goes to War (Boston: Little, Brown and Co., 1938), chs. 11-IV.
On the purchasing power parity theorem, see L. v. Mises, Human Action, pp. 452458; M. N. Rothbard, Man, Economy and State, pp. 715–722.
On the dollar standard established with the Bretton Woods system, see H. Hazlitt, From Bretton Woods to World Inflation ( Chicago: Regnery, 1984 ).
Since 1971, at which time the gold standard was finally suspended, more money has been created than had previously been accumulated by all nations of the world since the beginning of time.
On the imperialist nature of these institutions, see also G. Kolko, The Politics of War, the World and United States Foreign Policy 1943–1945 ( New York: Random House, 1968 ), pp. 242–340 ).
See P. A. Baran, Political Economy of Growth (New York: Monthly Review Press, 1957), chs. V-VI.
See. The Contribtions of Menger andmisest to he Foundations of
Mises Institued had an important influence on my understanding of the dynamics of owm.
See on this also J. Tucker, “The Contributions of Menger and Mises to the Foundations of Austrian Monetary Theory Together With One Modern Application,” Ms., 1988, presented at the 13th annual conference of The Association for Private Enterprise Education
Jeffrey Tucker of the Ludwig von Mises Institute had an important influence on my understanding of the dynamics of the international monetary system — through frequent discussions as well as through granting me access to his own related research. Needless to say, all shortcomings are entirely my own.
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Hoppe, HH. (1993). Banking, Nation States and International Politics. A Sociological Reconstruction of the Present Economic Order. In: The Economics and Ethics of Private Property. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-8155-4_3
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