F.A. Hayek and his rational choice of monetary arrangements
This paper addresses the perspective of Hayek’s doctrine on monetary arrangements in the economy and his favorable argument for an international central bank over national central bank. I also discussed Hayek’s view on free banking (i.e. for the free issue of bank notes) that would enable the banks to provide more and cheaper credit. Furthermore, Hayek comes up with an intellectual debate on “rational choice” of monetary arrangements whether the commercial banks should have the right to issue bank notes (demand for free banking) which can be redeemable in the established national gold or silver currency or an international central bank. This paper focuses on Hayek’s overall philosophy on international money mechanism and his intellectual debate of rational choice between the two arrangements – free banking or an international central bank and his concerned over unstable arrangements in money mechanism,which, he believes, profoundly affects economic and social conditions of people and government. Therefore, to reach the conclusion, I outlined Hayek’s perspectives on central bank and government, then international gold standard, and finally, his choice between free banking and an international central banking which is central theme of this paper.
|Date of creation:||02 May 2012|
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- White, Lawrence H, 1999. "Hayek's Monetary Theory and Policy: A Critical Reconstruction," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 31(1), pages 109-120, February.
- Fabio Masini, 2012. "Designing the institutions of international liberalism: some contributions from the interwar period," Constitutional Political Economy, Springer, vol. 23(1), pages 45-65, March.
- Lawrence H. White, 1999. "Why Didn't Hayek Favor Laissez Faire in Banking?," History of Political Economy, Duke University Press, vol. 31(4), pages 753-769, Winter.
- Lawrence H. White, 2011. "A Gold Standard with Free Banking Would Have Restrained the Boom and Bust," Cato Journal, Cato Journal, Cato Institute, vol. 31(3), pages 497-504, Fall.
- Glasner,David, 2005. "Free Banking and Monetary Reform," Cambridge Books, Cambridge University Press, number 9780521022514, October.
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