The Review of Austrian Economics, 16:1, 97–112, 2003.
2003 Kluwer Academic Publishers. Manufactured in The Netherlands.
Institutions, Emergence, and Macro Theorizing: A Review Essay on Roger Garrison’s
Time and Money.
In the mid-1930s, the approach to macro phenomena associated with Ludwig von Mises
and Friedrich Hayek ﬁgured prominently in the macro analytics of the time, as noted in
the contemporary surveys by Alec Macﬁe (1934) and Gottfried Haberler (1937). Within
two decades, however, the Mises-Hayek formulation had disappeared from the analytical
radar screens of macro theorists. This disappearance, moreover, cannot be attributed to
any kind of gross explanatory failure on the part of that framework relative to the other
frameworks that were present. The Mises-Hayek framework predicted the eventual bust of
the inﬂationary boom of the 1920s, as Murray Rothbard (1963) explains. The severity of the
Great Depression, moreover, can be generally reconciled with the Mises-Hayek framework.
Among the means for doing this are to take into account the secondary deﬂation that was set
in motion by the initial contraction and the negative supply-side shocks that were generated
by the Hoover-Roosevelt efforts to socialize or syndicalize large segments of the American
Garrison’s central claim in Time and Money is that the state of macro theorizing lost
valuable insights and sources of inﬂuence with the disappearance of the Mises-Hayek
orientation toward macro theorizing. In the 1930s, Keynes and Hayek were both major
ﬁgures on the macro-theoretical landscape. In the mid-1950s, Keynes’s ideas were still at
the forefront but Hayek’s had been replaced with the monetarism associated with Milton
Friedman. Garrison argues that macro theorizing has never recovered from the Keynesian
ascendancy and the Hayekian disappearance, and in Time and Money he seeks to promote
the professional recovery of what was lost.
Garrison approaches this act of recovery by inserting the Mises-Hayek orientation onto
the stage of macro theorizing as it existed circa 1960. In terms of dramatis personae, the
macro stage at that time was dominated by J. M. Keynes and Milton Friedman. It is on this
stage that Garrison inserts F. A. Hayek. He does this by articulating three models of macro
theorizing, with the book organized around the presentation and elaboration of these three
models. These models Garrison describes as labor-based or Keynesian macro, money-based
or monetarist macro, and capital-based or Austrian macro.
We agree with Garrison that the relegation of the Mises-Hayek orientation to side show
status was a loss for macro theorizing. Yet we do not think that Time and Money will set
in motion a rearrangement of the main stage of macro theorizing. The universe of macro
discourse circa 2000 is dramatically different than the universe that existed circa 1960 or
circa 1940. Garrison’s strategy is to restate the Mises-Hayek formulations with modest
embellishment. Garrison seeks to recover what was lost, but does not try to build anything
new. We think the market for recovered intellectual artifacts is justiﬁably thin. We do not
think there will be any return to the halcyon years of Mises and Hayek. Any Austrian return