A Retrospective Look at “The Hayek Story”

Roundaboutness, Sticky Consumption, and Sequestered Capital

Bibliographic Data

ID21634840
AuthorsJames E Mcclure (0000-0002-3961-3491, University of Jammu), David Chandler Thomas (0000-0002-8655-1238, University of Jammu), Lee Spector (0000-0001-5299-4797, University of Jammu), Lee C Spector
Year2021
Volume43
Issue1
Pages83-102
Publication date2021-03-01
Open AccessYes
TypeARTICLE
VenueJournal of the History of Economic Thought (JOURNAL)
Journal identifiersISSN: 1053-8372 • E-ISSN: 1469-9656
PublisherCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/s105383722000005x
OpenAlexW3130325607
LanguageEN
References cited23

Friedrich Hayek’s business cycle theory withered throughout the 1930s as he admitted that its underlying model of Böhm-Bawerkian roundaboutness was incomplete and inadequate . In 1934, Hayek started a two-volume book on capital theory, completing only one volume in 1941. Curiously, Hayek ([1941] 2009) cites John Hicks’s (1939) Value and Capital but not the financial measure of roundaboutness that Hicks suggested as a substitute for Böhm-Bawerkian roundaboutness. In 1967, in “The Hayek Story,” Hicks criticized the inexplicable lags. Hayek maintained his view that consumption was sticky and responded to Hicks with a mound-of-honey analogy. Nevertheless, Hayek maintained that his business cycle theory was fundamentally correct and continued to hope that others might someday discover a capital structure theory to undergird it. Toward fulfilling Hayek’s hope, we suggest augmenting the canonical stages of production with a sequestered-capital stage where products are invented, productized, and inventoried prior to launch, uncoordinated by observable prices

Analogy · Business cycle · Economics · Epistemology · Keynesian economics · Neoclassical economics · Positive economics · Economic Theory and Institutions · Economic Theory and Policy · History · Mathematics · Philosophy · Political Economy and Marxism

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