Fritz Machlup · 1933
Fritz Machlup’s review warmly recommends Zolotas’s exposition of the gold standard while rejecting its advocacy of price stabilization. Its opening establishes a criterion of scholarly value beyond originality: economics needs reliable, accessible explanations for readers without specialist training.
Die Nationalökonomie ist aber eine Wissenschaft, die sich oft an ein breiteres Publikum ohne tiefere Fachkenntnis zu wenden hat, und es ist daher von großer Wichtigkeit, daß solide Fachleute ohne Originalitätssucht Bücher zur richtigen Information der interessierten Leser herausbringen.
English translation: Economics, however, is a science which often has to address a broader public without deeper specialist knowledge, and it is therefore of great importance that sound specialists free of the craving for originality bring out books for the correct information of interested readers.
Machlup presents Zolotas’s book as fulfilling this public educational function. He outlines its distinction between complete and partial gold circulation, the gold bullion standard, and the gold exchange standard. These arrangements are compared through their institutional features, domestic purchasing power, external currency value, and the relationship between monetary and gold values. The review then turns to the balance-of-payments mechanism under capital movements, reparations, and trade restrictions.
Here Machlup’s approval becomes polemical. He endorses Zolotas’s argument that import restrictions disrupt exports and attacks the belief that importers threaten currency security. The central point is that restrictions imposed in the name of monetary protection aggravate the disturbances they purport to remedy.
Daß durch die Beschränkungen des internationalen Handels- und Zahlungsverkehrs die monetären Störungen nur verstärkt werden, wird wieder sehr instruktiv von Professor Zolotas dargelegt.
English translation: That the monetary disturbances are only intensified by the restrictions upon international trade and payments is again set forth very instructively by Professor Zolotas.
The final paragraph marks a clear separation between this endorsement and Machlup’s disagreement with Zolotas’s stabilization programme, which he associates with Cassel, Fisher, and Keynes. Proposed instruments include regulating gold production, cooperation among central banks, index-guided discount-rate changes, and an international bank with note-issuing powers. Their intended result is simultaneous stability of exchange rates and prices.
Machlup does not offer a detailed rebuttal of each instrument. Instead, he questions the programme’s purpose: Zolotas acknowledges that price stabilization would not eliminate business cycles, yet invokes broad support without adequately explaining what stabilization would accomplish. Machlup’s decisive conceptual move is to distinguish agreement over a policy target from proof that attaining it would deliver the desired economic outcome.
Sonderbar ist nur, daß man sich nicht darüber Rechenschaft gibt, ob das, was man mit der Preisstabilisierung erreichen kann, sich mit dem deckt, was man erreichen will.
English translation: It is only strange that one does not render account to oneself whether that which can be attained by price stabilisation coincides with that which one wishes to attain.
The review thus combines praise for monetary education and opposition to trade restrictions with a methodological challenge to stabilization policy: choosing instruments requires first clarifying whether the measurable target corresponds to the ultimate objective.
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