Book Reviews by Richard Salsman
The Independent Review, 2017
The Ontology and Function of Money is a terrific source for scholars wishing to delve more deeply... more The Ontology and Function of Money is a terrific source for scholars wishing to delve more deeply into the history of the philosophy of money and to consider how influential philosophies may be shaping present-day monetary institutions, including central banks and their increasingly esoteric policies. The book is a rarity because there hasn’t been a professional work on this topic since Two Philosophies of Money (1978) by S. Herbert Frankel and before that Philosophy of Money (1900) by Georg Simmel. Those books were much less comprehensive.
Papers by Richard Salsman
Routledge eBooks, Apr 25, 2023
The Political Economy of Public Debt
There is no widely-established, non-trivial conception of self-interest in the social sciences; w... more There is no widely-established, non-trivial conception of self-interest in the social sciences; worse, this crucial motive is burdened by caricature – that it’s automatic, myopic, atomistic, materialistic, hedonistic, antagonistic, and/or sadistic. I assess the use of such caricature in economic and political theory. I further suggest its source: the assumption that persons, whether in the economic or political realm, are substantively non-rational. I next relate my taxonomy to a specific case: the Public Choice paradigm. To its credit, Public Choice provides a unified conception of self-interest, insisting that it’s the key motive driving economic and political actors alike; but here too, caricature is common. Akin to “straw man” arguments, caricature is not a scientific method. A realistic conception of selfinterest is needed in the social sciences generally and in Public Choice theory specifically. It could allow for the modeling of political leaders as principled (yet egoistic) ...
Prevailing economic folklore has it that the Great Depression was a failure of free markets, espe... more Prevailing economic folklore has it that the Great Depression was a failure of free markets, especially its foremost feature, the gold standard. Keynesians and monetarists alike share a distaste for gold money and say it played a key role in triggering and deepening the depression. While Keynesians declare gold a "barbarous relic" that impedes economic growth, monetarists say it is like any other commodity, but too costly and cumbersome to serve as money. Both defend central banking and insist that governments can manage our affairs best when free of the golden albatross. If this notion is correct, we should never again have gold money or free markets, for they will only wreak havoc yet again. If it is myth, however, it should be exposed as such. A recent book by Berkeley professor Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (New York: Oxford University Press, 1992), helps us decide which is the case. The book analyzes the conne...
This dissertation critically examines predominant political-economic theories of public credit an... more This dissertation critically examines predominant political-economic theories of public credit and public debt in light of the origins, development, and recent record expansion in such debt. Using a "history of thought" approach, I focus on those aspects of theory, from three main schools of thought-Classical, Keynesian, and Public Choice-which seek to explain the evolution of public debt, its political-economic causes and effects, the meaning of sustainability in public debt burdens, and the conditions under which governments are likely to monetize or repudiate their debts. For empirical context, I also provide three centuries of data on public debt for major nations, relative to their national income, and government bond-yield data for more recent decades. There is value in classifying the major political economists who have examined public credit and public debt since 1700 as "pessimists," "optimists" or "realists." Public debt pessimists argue that government provides no truly productive services, that its taxing and borrowing detract from the private economy, while unfairly burdening future generations, and that high and rising public leverage ratios are unsustainable and will likely cause national insolvency and long-term economic ruin. When public debts become excessive or un-payable, pessimists advise explicit default or deliberate repudiation. Public debt pessimists also believe financiers in general and public bondholders in particular are unproductive. Pessimists usually endorse smallerv sized governments and free markets. With few exceptions, most public debt pessimists appear in the Classical or Public Choice schools of thought. Among prominent public debt pessimists, the most representative are David Hume and Adam Smith. Public debt optimists believe that government provides not only productive services, such as infrastructure and social insurance, but means to mitigate what they perceived to be "market failures," including savings gluts, economic depressions, inflation, and secular stagnation. Optimists contend that deficit-spending and public debt accumulation can stimulate or sustain economy activity and ensure full employment, without burdening present or future generation. To the extent public debts become excessive or un-payable, optimists tend to advise implicit default, by official and deliberate debasement of the national currency (inflation). As do pessimists, public debt optimists view financiers and bondholders as essentially unproductive. Optimists also defend a relatively larger economic role for the state. Almost without exception, optimists reside in the Keynesian school of political-economic thought. Among the leading optimists, the most representative are Alvin Hansen and Abba Lerner. Public debt realists contend that government can and should provide certain productive services, mainly national defense, police protection, courts of justice, and basic infrastructure, but that social and redistributive schemes tend to undermine national prosperity. Realists say public debt should fund only services and projects that help a free economy maximize its potential, and that analysis must be contextualizedvi i.e., related to a nation's credit capacity, productivity, and taxable capacity. According to realists, public leverage is neither inevitably harmful, as pessimists say, nor infinite, as optimists say. Realists view financiers as productive and insist that sovereigns redeem their public debts in full, on time, and in sound money. Realists favor constitutionallylimited yet energetic governments that help promote robust markets. They appear mainly in the Classical era of political-economic thought. The most representative and renowned of the public debt realists are Sir James Steuart and Alexander Hamilton. My main thesis is that public debt realists provide the most persuasive theories of public credit and public debt, and thus the most plausible interpretations of the long, fascinating history of public debt. Moreover, certain puzzles and paradoxes arising in contemporary public debt experience, among developed nations-including the recent, multi-decade trend of simultaneously rising public-leverage ratios and declining public debt yields-is explicable primarily in realist terms. In contrast, public debt pessimists and optimists alike offer unbalanced, inadequate accounts of public debt experience. Whereas pessimists are too often confused or mistaken in foreseeing an alleged "inevitable" ruin from public debt, optimists more often than not are confused and mistaken about the alleged "stimulus" attainable by large-scale deficit-spending and debt build-ups. Looking ahead, the realist perspective is likely to provide superior guideposts for maximally-accurate interpretations of public debt policies and trends. vii Dedication To Lisa Lynn Principe, for showing me genuine love, and to the late John David Lewis, for showing me that ex-businessmen too can become serious scholars.
Aimr Conference Proceedings, 1997
MERICAN Institute for Economic Research, founded in 1933, is an independent scientific and educat... more MERICAN Institute for Economic Research, founded in 1933, is an independent scientific and educational organization. The Institute's research is planned to help individuals protect their personal interests and those of the Nation. The industrious and thrifty, those who pay most of the Nation's taxes, must be the principal guardians of American civilization. By publishing the results of scientific inquiry, carried on with diligence, independence, and integrity, American Institute for Economic Researc:h hopes to help those citizens preserve the best of the Nation's heritage and choose wisely the policies that will determine the Nation's future.
W e would commit a disservice to capitalists (investors)-and an injustice to political economy-we... more W e would commit a disservice to capitalists (investors)-and an injustice to political economy-were we to allow 2003 to pass without commemorating and celebrating the bicentennial of the greatest economics book ever written: A Treatise on Political Economy (1803). The book was authored by the man who we consider (not coincidentally) to be history's greatest political economist: Jean-Baptiste Say (1767-1832). In coining "Saysian economics" we capture the essence of Say's doctrines: the sanctity of private property, the primacy of production, the creative entrepreneur, the virtue of saving, the benefits of capital formation, the need for gold-based money, the gains from unilateral free trade and the case for laissez-faire capitalism. These are the causes of prosperity and investmentportfolio gains. Departures from these principles bring poverty and portfolio losses. Saysian economics is the foundation of IFI's forecasting system and the precise opposite of Keynesian economics, which governs most other forecasting systems today. 1 Investors can benefit enormously from a proper economics-and from a quantitative forecasting system built upon it. Absent a consistent, "big picture" view of the context in which business and investment performance occurs, strategists and portfolio managers can't know for sure whether a period of prosperity is genuine or not, whether it's sustainable or not and how government policies are likely to affect the outcome. Saysian economics is essentially freemarket economics-but of the purest kind. As such it's well-equipped to explain the conditions that are likely to boost prosperity and those likely to undermine it. Together with modern portfolio theory and techniques, Saysian economics is an invaluable tool for investors. Originator. In the history of economic thought Say is often unfairly characterized as a mere "popularizer" of Adam Smith and his doctrines. He wasn't. Although Say admired Smith, he did not mimic him. Say was a more consistent defender of free-markets than was Smith and he perpetuated none of Smith's errors. 2 In fact, Say actively refuted them, while originating many doctrines that later were attributed (improperly) to subsequent economists. Say 1) rejected the labor theory of value (that economic value reflects manual labor), 2) explained INTERMARKET FORECASTING, INC.
A MERICAN Institute for Economic Research, founded in 1933, is an independent scientific and educ... more A MERICAN Institute for Economic Research, founded in 1933, is an independent scientific and educational organization. The Institute's research is planned to help individuals protect their personal interests and those of the Nation. Tìie industrious and thrifty, those who pay most of the Nation's taxes, must be the principal guardians of American civilization. By publishing the results of scientific inquiry, carried on with diligence, independence, and integrity, American Institute for Economic Research hopes to help those citizens preserve the best of the Nation's heritage and choose wisely the policies that will determine the Nation's future. The Institute represents no fund, concentration of wealth, or other special interests. Advertising is not accepted in its publications. Financial support for the Institute is provided primarily by the small annual fees from several thousand sustaining members, by receipts from sales of its publications, by tax-deductible contributions, and by the earnings of its wholly owned investment advisory organization, American Investment Services, Inc. Experience suggests that information and advice on economic subjects are most useful when they come from a source that is independent of special interests, either commercial or political. The provisions of the charter and bylaws ensure that neither the Institute itself nor members of its staff may derive profit from organizations or businesses that happen to benefit from the results of Institute research. Institute financial accounts are available for public inspection during normal working hours of the Institute. You can receive ABER's twice monthly Research Reports and monthly Economic Education Bulletin by entering a Sustaining Membership for only $16 quarterly or $59 annually. If you wish to receive only the Economic Education Bulletin, you may enter an Education Membership for $25 annually. ECONOMIC EDUCATION BULLETIN Vol. XXXIII No.
Http Dx Doi Org 10 1146 Annurev Economics 061109 080320, Aug 5, 2011
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Book Reviews by Richard Salsman
Papers by Richard Salsman