The archive.

Hidden taxation, coerced redistribution, a levy no legislature dares to vote—Sennholz treats inflation as the welfare state's quiet means of financing promises it cannot openly tax into being. He grounds the argument in Austrian theory: sound money restrains government by forcing spending to face public consent, so officials turn instead to deficits and central-bank credit. He overturns the comforting notion that inflation merely punishes rich creditors and rewards debtors, showing how it devours the savings, pensions, and insurance of prudent, salaried, and retired citizens. Keynesian remedies for unemployment, he charges, all reduce to one word: inflation. The 1965 essay then follows the wreckage into the business cycle, progressive tax brackets, vanishing silver coinage, and the strained gold-dollar standard—a quiet thief that builds dependence even as it steals.

Few policies are more calculated to destroy the existing basis of a free society than the debauchery of its currency.

European governments in the mid-1960s complained that the international monetary system compelled them to lend to America, piling up dollars they never wished to hold; de Gaulle charged that the dollar-exchange standard let the United States run up foreign debt almost for free. These two Wicksell Lectures test that grievance. In the first, Machlup weighs eight hypotheses for the persistent U.S. payments deficit—rejecting relative price inflation outright, crediting European devaluations and America's outsized transfer commitments—while insisting that a deficit is never a bare fact but an artifact of accounting convention. The second reconceives the holding of any foreign reserve, gold included, as an interest-free loan to the rest of the world without maturity, and compares fiduciary reserves, gold, and no reserves at all under freely flexible rates.

Receiving foreign currency implies foreign lending regardless of whether or not the recipient is conscious of his making a loan.

When general terms like 'planning,' 'social,' and 'positive' are narrowed into political slogans, the same fate threatens 'rationalism' itself, and it is that word Hayek sets out to rescue in this 1965 lecture, delivered in Japan and reprinted here. His quarrel is not with reason but with what he names rationalist constructivism: the Cartesian conceit, running from Bacon and Hobbes through Descartes to Rousseau, Hegel, and Marx, that useful institutions must be deliberately invented and remade from explicit premises. From this hubris, he argues, all modern socialism, planning, and totalitarianism derive. Against it he sets a modest, critical tradition of Hume, Smith, Menger, and Popper, in which reason is itself a product of evolved civilization, transmitted through language and unarticulated rules, and freedom under law becomes an instrument for using knowledge no single mind commands.

Reason is like a dangerous explosive which, handled cautiously, will be most beneficial, but if handled incautiously may blow up a civilization.

Persistent payments deficits do not prove that trade has failed; they prove, Rueff contends, that the monetary mechanism which should correct them has been switched off. Marshalling the French indemnity payments of 1871, German reparations, and the postwar dollar shortage, he argues that trade balances adjust through relative prices and cash-balance movements to offset every other international payment—reviving his 1929 duel with Keynes over transfer capacity and the alleged 'natural level of exports.' The American deficit endures, on his account, only because the gold-exchange standard returns dollars to New York, so the debtor never feels the loss. Equilibrium is too improbable by chance for its long survival to be accidental; the remedy is restored convertibility and a corrected discount rate, not administrative restraint on foreign spending.

Le principal caractère d'une balance des paiements équilibrée, c'est son extrême improbabilité.

English translation: “The principal characteristic of a balanced balance of payments is its extreme improbability.”

Liberty belongs on the revolutionary Left, not with conservatism—this is the wager that organizes Rothbard's sweeping reconstruction of the political spectrum. Classical liberalism, he argues, was originally radical, anti-feudal, and internationalist, the force that overthrew the Old Order of caste, theocracy, and militarism; it decayed only when natural rights gave way to utilitarian compromise. Socialism enters as a confused heir, chasing liberal ends through the conservative means of state power. Following Gabriel Kolko, Rothbard reads American Progressivism and the New Deal not as socialist ruptures but as state monopoly capitalism, in which business secured through regulation the privilege it could not win in competition. Mid-century libertarians erred by mistaking conservatives for allies; the corrective, he insists, is a movement that recovers its antiwar, anti-privilege inheritance and trades short-run despair for long-run confidence.

It was, and still is, middle-of-the-road because it tries to achieve liberal ends by the use of conservative means.

Could the New Left’s demand for participatory democracy lead toward free markets rather than centralized planning? In this 1965 essay, Murray N. Rothbard finds potential allies among civil rights organizers, antiwar students, and rebels against bureaucratic universities. His interest lies in what they do: organize Freedom Schools, resist conscription, and build institutions outside established channels of authority. Against both the Old Left’s reliance on government and the Right’s support for militarism, he reads these experiments as forms of libertarian resistance. Yet his sympathy is also an attempt at persuasion: the market society he proposes is his destination, not an agreed New Left objective. The essay exposes both the practical grounds for cooperation and the unresolved economic disagreements within this proposed alliance.

With De Gaulle challenging the dollar, Rueff calling for a return to gold at double its price, and sterling under siege in 1964, Haberler enters the Bretton Woods debate to attack two opposite errors: treating gold as monetary discipline and treating reserve creation as a substitute for adjustment. Money, he insists, is machinery for coordinating exchange, not a sacred parity; international arrangements earn their keep by preserving trade, convertibility, and price stability. The heart of the argument shifts the quarrel from liquidity to adjustment, showing how downward wage rigidity gives fixed exchange rates an inflationary bias and how the adjustable peg invites one-way speculation. His prescription is limited exchange-rate flexibility and conditional, ad hoc cooperation rather than automatic reserve creation.

As the 1963 BIS report remarked, liquidity must not only be sufficient but must also be capable of running out, because the ultimate sanction, a liquidity crisis, may be needed to bring governments to their senses.

When anticapitalism gave up Marx's prophecy of ever-deepening proletarian misery, it fell back on a newer charge: that free competition inevitably breeds cartels that fleece the masses. Mises answers by prising monopoly apart from monopoly price, since mere exclusivity, whether a patent or a unique resource, yields no profit unless demand permits it, and then locating the real source of durable monopoly pricing in state action, in the tariffs that wall off national markets, the subsidies, and the enforced production quotas. His central exhibit is American farm policy, a public cartel for food and cotton that still founders on the question of quotas, while antitrust law becomes a covert substitute for general price control. The international coffee agreement, he argues, is conspiracy renamed diplomacy once governments assign the shares.

Die angeblich unaufhaltsame Tendenz zur Verdrängung der Wettbewerbspreise des freien Marktes durch Monopolpreise gibt es nicht.

English translation: “The supposedly irresistible tendency for monopoly prices to supplant the competitive prices of the free market does not exist.”

More exact calculation need not make economic decisions less personal—or markets less subject to private power. In this 1965 article, Hans Bayer examines how electronic data processing enables firms not merely to adapt to competition but to shape its conditions. His distinctive concern is organizational: better coordination can extend the manageable size of enterprises, while the costs of computing and specialist personnel favor firms already large enough to afford them. Yet Bayer also sees shared optimization as an opportunity for smaller businesses. Cooperation among them, he argues, may preserve economic freedom more effectively than isolated rivalry. The article offers a concrete account of how computational capacity can redistribute economic agency, without mistaking improved forecasts for certainty or calculated alternatives for decisions that no longer require judgment.

Two words—adjustment and financing—have been used in so many senses that the confusion hides genuine disagreement over what governments facing a payments imbalance should actually do. Machlup imposes order by carving out a third category. Real adjustment is narrowed to the classical mechanism of relative costs, prices, incomes, and resource allocation; financing is confined to short-term funds that tide over an imbalance; and between them sits what he names compensatory corrections—measures such as tariffs, subsidies, and lasting capital-flow shifts that reduce the need for adjustment without being either. The taxonomy carries a policy sting: because real adjustment is painful and financing a mere stopgap, authorities reach for corrective measures that so often fail through retaliation, offsetting trade effects, and induced import demand.

Rationing a scarce supply of foreign exchange under direct controls does not reduce the demand, but merely leaves part of it unsatisfied.

Strip away the civic pieties and the State stands revealed, in this 1965 essay, as something other than society organized for the common good. Rothbard opposes the comfortable equation of government with "we the people," insisting that taxation, conscription, and imprisonment are impositions by one organized group upon another. Borrowing Franz Oppenheimer's distinction between the "economic means" of production and exchange and the "political means" of seizure, he casts the State as the institutionalized political means—born of conquest and tribute, not social contract. Because rulers are always a minority, they enlist intellectuals to manufacture legitimacy; because constitutions are interpreted by the very power they would bind, limits become licenses. War, feared alongside revolution, is the great engine of expansion. History itself becomes a race between social power and State power, cooperation against predation.

It forbids private murder, but itself organizes murder on a colossal scale.

Recall the old "cloakroom theory" of banking, in which a bank merely stores money and hands it back like a coat checked at the door—a fiction long since exploded for commercial banks, which plainly manufacture deposits by lending. Machlup's essay asks why the same superstition still binds international institutions, keeping the IMF a warehouse of member currencies rather than a creator of reserve money. He recounts how the United States rejected Keynes's Clearing Union at Bretton Woods for fear that international money creation would siphon real resources from creditor nations to overspenders, then presses the question reserve creation cannot escape: whoever spends newly created money first commands real goods at others' expense. Costless reserve deposits, unlike gold mined at great cost, could hand that saving to developing countries—if the world will decide who ought to benefit.

In the opinion of an increasing number of experts, the required reform or necessary evolution will take the form of extending the functions of the IMF and, especially, of allowing its liabilities to become reserve assets for national monetary authorities.