ECON: Lyle's Laws

Eric Watt Forste (
Mon, 06 Jan 1997 14:01:15 -0800

Peter McCluskey writes:
> Capitalism has checks and balances which work almost perfectly in
>the presence of perfect information, fail almost completely under
>conditions of total ignorance. We operate under conditions which
>are far from those extremes.

This is a rather un-Austrian way of putting it. For me, at least, the
most interesting thing about the economic paradigm developed by the
Austrian school is that it sees the market as an information-generating
process, not as a process that works well only when information is
automatically supplied to it (from where?).

I'm also surprised that I haven't seen mention of Selgin's THEORY OF
FREE BANKING in this discussion of business cycles, since that book is
the first one I know of that proposes a system of banking institutions
that would allow the supply of money to respond directly to changes in
demand (also called "velocity" when we are speaking of money and not of
some non-monetary good). I haven't the skills to form my own judgement
as to whether or not Selgin's theory is correct, but his explanation
sounds plausible to me and I'd like to see it tried someday.

A review of Selgin's book is available in back issues of Extropy
magazine and also on the Web at

(Yes, I'm tooting my own horn... but I also chose to review the book in
the first place because I think it is both important and neglected.)

Eric Watt Forste ++ ++