A Reply to Aguilar
Robert P. Murphy
Part II: The Legacy of Ludwig von Mises
Section X: The Severity and Recalcitrance of Depressions Explained
Here Aguilar contrasts Mises' focus on malinvestment with Hayek's apparent focus only on capital rearrangement:
| |
There is nothing in Hayek's triangle about the quality of investments, only about the relative quantity allocated to the several different stages. Hayek and his followers focus on the lengthening and shortening of the period of production and on talking around the fact that they do not know how to measure it. (p. 30)
|
|
Although Hayek's Prices and Production and the Pure Theory of Capital were quite difficult reading, and could understandably lead the reader to miss the big picture, the same cannot be said of Garrison (whom Aguilar classifies as a follower of Hayek in this context). In his Time and Money and Power Point demonstration (available on his website), Garrison explicitly discusses a Hayekian triangle that is "unsustainable" (it is two overlapping triangles where a dashed line near the fulcrum point shows the crisis area).
