There is an excellent post on the Volitional Science (a creation of Galambos in the 1960s) group over at Yahoo. I think it worth consideration by those here who've been discussing these ideas:

Quote:

Posted by: "Brian J. Gladish" {email address removed} Tue Jan 6, 2009 5:44 pm (PST) Von Mises did not "complain" about "evil government policies" - he demonstrated that they did not achieve the goals intended and discovered the reasons that they did not (socialism does not support economic calculation, below-market interest rates send false price signals that create the business cycle, etc.). Austrian economics is value-free. Rothbard, who also happened to be an Austrian economist, created an absolute value system based on natural rights (anathema to von Mises) and promulgated it as the basis for a stateless society. To conflate the two is a huge mistake, although it is an easy one to make. Von Mises did advocate free markets as the means by which more people could achieve their values. Planned economies attempt to achieve the values of the planners (generally at expense of others' values). Hayek believed that markets are evolutionary and that new knowledge comes to light through the competitive process. That would include knowledge of how to "regulate" markets without a state. If one contrasts a state bureaucracy, let's say the FDIC, with an hypothetical private counterpart it is east to see how much more a private firm would tend to "regulate" the market. An insurer of banks would be constantly concerned about the capital ratio of its policy holders and charge premiums that reflected the level of perceived risks (BTW, Rothbard and his followers believe that anything but 100% reserve banking is fraudulent and, therefore, immoral). It is certainly possible that an insurer would make a mistake and there could be surprise bank failures, but the incentives would be to learn from these mistakes and guard against them, just as we learn from other catastrophes. The failure would be contained and lessons could be learned. I am quite confident that no "new economic theory" is on the horizon, and that no advance is forthcoming unless it incorporates the Austrian view as Einstein incorporated Newton. Brian

- NonE

I think that one of the biggest arguments against full reserve banking is that all you have to do is pay a premium to the account holder to delay their withdrawal for a given period of time, and to charge them a penalty for early withdrawal. This is known today as a certificate of deposit, among other things. There are also accounts that bear interest so long as the balance continues to stay above a set level. These are market based ways to insure that there is sufficient liquidity to cover day-to-day cash transaction needs while still allowing the issue of bank credit as some multiplicative of reserves. I suspect the leveraged ratio would be much, much lower than under the current government bailout regime, though.

Thanks for the heads up, NonE, I'm going to check out that group. But, to be honest, I am spending much, much more time online researching self-sufficiency and survival these days. I am trying to reduce my calorie intake and increase my physical health and endurance, and I am also trying to acquire the resources I need in the face of the coming depression, and store them safely and securely. I don't have as much time for economics anymore, especially since one can see that whatever we may come to understand about these matters, our leaders are determined to stay the current disastrous course, sendding us down with the ship while they hop in their platinum life raft and sail for Cheyenne Mountain.

NonE, can you tell me what you liked about this post so much? The distinction between Mises and Rothbard re value-free and natural rights?

I don't quite see what is original or especially enlightening about the post and it seems a bit rambling. (though I agree with his criticism of Rothbard's ideas on natural rights)

I liked the fairly clear distinction between the moralistic view of one side versus the utilitarian (if that is the best word) view of the other. I thought that distinction was made in a very clear and succinct fashion.

And since there's been a very good discussion here on the question of whether or not morality even exists, I found it a good summary from at least the economic spectrum.

- NonE