A Tiger by the Tail: The Keynesian Legacy of Inflation



Professor James Tooley tells of his personal journey through the world of private education in the developed world

Monetary Policy

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A new edition of this Hayek classic. Available as a free download or a hardcopy
When the IEA first published A Tiger by the Tail in 1972 it made a significant impact. At a time when events were vindicating Hayek’s analysis, it reminded economists and policymakers that he had been consistently warning against Keynesianism for more than 40 years. He was awarded the Nobel Prize in Economics just two years later in 1974.

In the context of the present downturn and the widespread advocacy of fiscal stimulus as a valid policy response, it is clear that F. A. Hayek’s writings are just as pertinent today.

This edition, published jointly with the Ludwig von Mises Institute, includes a superb introduction by Joseph T. Salerno, which explains the book’s relevance to the current economic crisis.

Books and papers excerpted include:

Prices and Production (1931)
Monetary Nationalism and International Stability (1937)
The Pure Theory of Capital (1941)
‘A Commodity Reserve Currency’, Economic Journal (1943)
Studies in Philosophy, Politics and Economics (1967)
The Constitution of Liberty (1960)
‘Personal Recollections of Keynes and the “Keynesian Revolution”’, The Oriental Economist (1966)
‘Competition as a Discovery Procedure’, New Studies in Philosophy, Politics and Economics (1978)
‘Caracas Conference Remarks’, Mont Pèlerin Conference (1969)
‘Good and Bad Unemployment Policies’, Sunday Times (1944)
‘Full Employment Illusions’, Commercial & Financial Chronicle (1946)
‘Full Employment in a Free Society’, Fortune (1945)


Guide to Extracts and Articles
Introduction to the Third Edition by Joseph T. Salerno
Preface by Arthur Seldon
Preface to the Second Edition by Arthur Seldon
The Author

I. The Debate, 1931–1971: Sudha Shenoy
Challenge to Keynes
The Approach to an Incomes Policy
‘Micro’ Dimensions Acknowledged
Is There a Price ‘Level’?
Further Implications of Hayekian Analysis

II. The Misuse of Aggregates
1. Inflationism
2. No Causal Connection Between Macro Totals and Micro Decisions
3. Fallacy of ‘The’ Price Level
4. Economic Systems Overleap National Boundaries
Misleading Concepts of Prices and Incomes
5. Dangers of ‘National’ Stabilisation
Theoretical Case Not Argued
Relative Price and Cost Structures
6. Monetary Danger of Collective Bargaining

III. Neglect of Real for Monetary Aspects
7. Keynes’s Neglect of Scarcity
Investment Demand and Incomes
Final Position of Rate of Return
Mr. Keynes’s Economics of Abundance
Basic Importance of Scarcity
8. Importance of Real Factors
Signifi cance of Rate of Saving
9. Dangers of the Short Run
Betrayal of Economists’ Duty

IV. International versus National Policies
10. A Commodity Reserve Currency
An Irrational but Real Prestige
11. Keynes’s Comment on Hayek
Conditions for National Price Stability
Different National Policies Needed
12. F.D. Graham’s Criticism of Keynes.
The ‘Natural Tendency of Wages’
Gold Standard ‘Dictation’
Unanchored Medium of Exchange
The Real Problem of Unemployment
Professor Hayek’s ‘Intransigence’
13. Keynes’s Reply to Graham

V. Wage Rigidities and Inflation
14. Full Employment, Planning and Inflation
Full Employment the Main Priority
Unemployment and Inadequate Demand
Main Cause of Recurrent Unemployment
Expansion May Hinder Adjustment
15. Inflation Resulting from Downward Inflexibility of Wages
Importance of Relative Wages
Inflation — A Vicious Circle
The State of Public Opinion
16. Labour Unions and Employment
Changed Character of the Problem
Union Coercion of Fellow Workers
Wage Increases at Expense of Others
Harmful and Dangerous Activities
Acting against Members’ Interests
A Non-coercive Role
Minor Changes in the Law
Responsibility for Unemployment
Progression to Central Control
‘Unassailable’ Union Powers
17. (a) Inflation — A Short-term Expedient
Inflation Similar to Drug-taking
Accelerating Inflation
The Path of Least Resistance
17. (b) Inflation — The Deceit is Short-lived
Limited Central Bank Influence
Weak Opposition to Inflation

VI. Main Themes Restated
18. Personal Recollections of Keynes
Keynes Changes His Mind
Thinking in Aggregates
Full Employment Assumption
Wide Intellectual Interests
19. General and Relative Wages
Unpredictability and the Price System
Wage Rigidities
Importance of Relative Wages
20. Caracas Conference Remarks

VII. The Outlook for the 1970s: Open or Repressed Inflation?
Long-run Vicious Circle
Repressed Inflation a Special Evil
Central Control and ‘Politically Impossible’ Changes
Profit-sharing a Solution
Basic Causes of Infl ation

VIII. Addendum 1978
Introduction by Sudha Shenoy
Guiding Role of Individual Price Changes
21. Good and Bad Unemployment Policies
Wages and Mobility
Dangers Ahead
22. Full Employment Illusions
Money Expenditure and Employment
An Old Argument in New Form
The Shortcomings of Fiscal Policy
Cyclical Unemployment
Consumers’ Goods Demand and Investment Activity
Purchasing Power and Prosperity
Why the Slump in Capital Goods Industries?
23. Full Employment in a Free Society
Hayek’s Writings: A List for Economists

1978, ISBN 978 1 933550 40 4, 162pp, PB

See also:

The Road to Serfdom (with The Intellectuals and Socialism) by F. A. Hayek

Denationalisation of Money by F. A. Hayek

Choice in Currency: A Way to Stop Inflation by F. A. Hayek

Economic Freedom and Representative Government by F. A. Hayek.

How Markets Work by Israel M. Kirzner

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