The archive.

Output rising, unemployment and inflation falling, stock prices soaring, politicians claiming credit—the late-1990s expansion had economists reaching for superlatives. Sennholz reads it instead as a credit-driven bubble in the lineage of the 1920s United States, 1980s Japan, and the 1997 Asian crisis, its danger masked precisely because consumer prices stayed stable. Conventional aggregates like M1 and M2, he contends, miss the real fuel: bank credit expansion, loan securitization, derivatives, offshore banking, the yen carry trade, and foreign central banks recycling current-account dollars into U.S. Treasuries. Rising equity values signal mergers and buybacks, not capital formation. Written in December 1997, the essay anticipates later debates over asset inflation and global imbalances, and predicts that when the bubble bursts officials will blame speculators and foreigners rather than the monetary order.

All these symptoms do not make a “new era economy” but rather a highly vulnerable “bubble economy.”

Kirzner presents his fullest single statement of a modern Austrian microeconomics, one built not on equilibrium but on the process that might produce it. Mainstream theory, he objects, treats the relevant knowledge as already given, so that Walrasian models cannot explain how mutually compatible plans ever emerge — a gap Arrow exposed in 1959, since if every agent takes prices as given, none is left to adjust them. His alternative fuses Mises's uncertainty-bearing entrepreneur to Hayek's knowledge problem: markets coordinate through alertness to profit opportunities left by earlier error, and 'sheer' ignorance is reduced not by costly search but by surprise. The framework recasts antitrust, distributive justice, welfare economics, and the Lange-Lerner socialism debate. Yet Kirzner keeps the conclusion guarded — the market tends toward coordination without guaranteeing it, so the case is against obstructing discovery rather than a proof of laissez faire.

The mathematical description of various states of equilibrium is mere play. The problem is the analysis of the market process.

Rome, the Hapsburg monarchy, the Soviet collapse—Sennholz ranges across empires to argue that ethnic and racial diversity is not inherently destabilizing. Plurality turns dangerous, he contends, only when political institutions abandon equal liberty for group favoritism, redistribution, or cultural fragmentation. Rome flourished through toleration, citizenship, and law until military centralization made it a garrison state; the Hapsburg polyglot dynasty endured through impartial reform until nationalism dissolved it. Lacking common ancestry, Americans depend instead on a shared system—Judeo-Christian values, equality before the law, individual freedom, economic opportunity—and it is this framework, he warns, that multiculturalism and the public schools erode when they teach citizens to understand themselves through separate group grievances rather than the principles that unite them.

Diversity in freedom makes for social peace, economic productivity, and great prosperity.

Europe's malaise, on Sennholz's February 1997 diagnosis, is self-inflicted—the predictable yield of welfare-state transfers, high mandated fringe benefits, and rigid labor rules dressed up as social progress. His argument is marginalist: labor costs do not cause unemployment until law and policy push total compensation above a worker's productive contribution, at which point the least productive are priced out of work. Comparing labor costs across Germany, France, Italy, Britain, and Spain, he traces stagnation and deficits to the benefit burdens heaped on business in the 1970s and '80s, then dismantles the rival explanations—computer technology as neo-Luddism, cheap foreign labor and immigrants as scapegoating, job-sharing as the fallacy that work is a fixed stock. Europe, he closes, is a warning the United States would be foolish to ignore.

Yet, no matter how high the labor costs may be, they do not cause unemployment provided they do not exceed labor productivity.

Mainstream economics can describe equilibrium; it cannot explain how uncoordinated agents ever reach it, leaving Adam Smith's invisible hand an analytical black box. Written for a general and policy-minded readership as a Hobart Paper, this study builds the missing account: a positive theory of entrepreneurial discovery drawn from Mises and Hayek, in which pure profit signals prior error and competition means freedom of entry rather than a crowd of price-takers. Textbook price theory, Kirzner charges, merely assumes the perfect knowledge it should explain. He then turns the theory loose on advertising, antitrust, welfare economics, and the socialist-calculation debate, reinterpreting the entrepreneur's profit as created gain brought into social existence by discovery, not a slice carved from a fixed pie.

The systematic character of the market process stems from the human propensity to sense (without deliberate search) where to find pure gain.

Perfect competition describes a world already purged of the uncertainty and mutual ignorance that make markets worth studying: everyone knows the prices, so no one has reason to bid differently, notice a gap, or learn from disappointment. Such a model, Kirzner argues, cannot explain price formation at all — it assumes the very outcome it should illuminate. Recovering the Austrian view, he treats competition as a discovery procedure, universal wherever exchange is not institutionally blocked, and present even in monopolized markets. Monopoly proper, following Mises, means sole ownership of a scarce essential resource; the resulting gain is a rent, not entrepreneurial profit, and even the monopolist must still discover his demand. On that distinction Kirzner defends Mises against Gerald O'Driscoll's charge of neoclassicism, and locates the market's driving force in the alertness that keeps prices, opportunities, and errors in perpetual motion.

Competitive activity is the activity which constitutes the market process.

Historically exhausted, bound up with class conflict, taxation, debt, and monetary debasement, the welfare state may linger a while, Sennholz declares, but not for long. Written after the 1996 federal welfare act, this essay reads that law's devolution to the states, work requirements, and time limits as a partial retreat rather than a genuine reform. Its central move is to shift attention from recipients' incentives to the labor market's legal architecture: even without benefits that discourage work, statutory barriers would still keep the unskilled from being hired. Chief among them is the minimum wage compounded by mandated employment costs, alongside the Davis-Bacon Act, ERISA, and EEOC liability. The result is a self-defeating contradiction, reformers ordering people into jobs while maintaining the laws that price them out. True reform, he concludes, must first dismantle the state's own barriers to work.

The welfare reformers are laboring to roll the welfare stone up the mountain to the barriers they themselves erected.

After aggregate wealth, interpersonal utility sums, and the fiction of a single social maximizer had lost their authority, could economics still say anything objective about good and bad policy? Kirzner's answer is coordination — a value-free property of social interaction that independent moral reasoning may then judge desirable. Borrowing Whately's analogy between studying wealth and studying disease, he defines a fully coordinated state as one in which each person's action correctly accounts for what others do and might do. The criterion is bounded by property rights and turned against Pigouvian and Paretian welfare economics; it recasts Mises's socialist-calculation argument as a coordination comparison and defends entrepreneurial creative destruction as coordinative rather than destructive, since the earlier calm merely masked discoordination no one had yet discovered.

That calm was a facade expressing the presence of as yet undiscovered (but very real) discoordinatedness; dynamic competition shattered that calm, replacing the earlier uncoordinated sets of activities by a better-coordinated set.

Far from being a neutral stabilizer, the International Monetary Fund is portrayed here as an internationalized extension of the very monetary interventionism that produces crises in the first place. Written in October 1998 amid the Asian financial collapse, the essay traces business cycles to political control over money and reads Bretton Woods less as a remedy than as institutionalized error. Sennholz stresses the asymmetry of a Fund supplied by a few hard-currency states and drawn upon by weak-currency debtors, and identifies its power with the United States and the dollar system. Bailouts, he argues, reward profligate governments and export welfare-statist fiscal assumptions—his Guatemala and Indonesia cases supply the evidence—while teaching borrowers and lenders to expect rescue. Against them he sets lower taxes, balanced budgets, freely adjusting interest rates, and the refusal to save failed financial managers.

In other words, only unstable high-risk debtors may apply.

Between the unhampered market and comprehensive socialism, interventionism claims to be a stable third system - and this analysis, drawn from an unpublished German manuscript of 1940 and here in English translation, sets out to show that it is not. Isolated commands laid on owners and entrepreneurs, Mises argues, never reach their announced ends: maximum prices breed shortages, minimum wages breed unemployment, and cheap credit breeds the boom whose collapse it cannot outrun. Each measure calls forth the next, until the market is either freed again or swallowed whole by planning. He works through price control, confiscation, subsidies, corporativism, syndicalism, and the war economy in turn, and reads Hitler's rise as an ideological victory won because his opponents already shared his anti-capitalist premises. What is left is not a system but a slow unravelling.

A third alternative, an interventionist compromise, is not feasible.

An exclusive supplier is not necessarily able to profit by withholding goods: buyers may turn elsewhere, and rivals may expand production. In this paper, revised in 1944 and first published in 1998, Ludwig von Mises makes that distinction the basis of his account of monopoly prices. He separates gains from restricting supply from profits earned by anticipating consumers’ demands, challenging the use of firm size, product uniqueness, or unused capacity as evidence of monopoly. Yet his defence of competition does not excuse profitable restraint: he argues that it weakens consumers’ direction of production. The resulting tension gives the work its focus—how to identify genuine monopoly pricing without mistaking competitive success for it, and why, in Mises’s view, governments often sustain the restrictions they publicly condemn.

April 15 turns depreciation schedules and deduction forms into a moral test. Sennholz's 1998 essay asks how a reflective citizen should act when private honesty is demanded by institutions he judges coercive—whether to correct an accountant's favorable error, and whether resentment at an arbitrary IRS can ever license dishonesty. His answer refuses both easy exits: two wrongs make no right, yet legality does not make plunder moral, and redistribution by majority vote remains continuous with theft. Between Kantian truth-telling and consequentialist calculation he seeks a hierarchy of duties in which truth is basic but not absolute, property essential but no idol above life. Lawful avoidance—tax-exempt investment, charitable foundations, even emigration—becomes the mediating practice. Private and civic morality, he concludes, stand or fall together.

Stealing is not defensible morally even if it is done by majority vote.