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I'm currently translating Swedish economist Eli F. Heckscher's book Gammal och Ny Ekonomisk Liberalism, from 1921. The Swedish publisher I work with from time to time—Svensk Tidskrift—released an updated version of the book (with extra commentary etc) a few years ago, and it received some good feedback among Swedish academics and economists.
Outside of the Swedish navel-gazing economist bubble, Heckscher is only known by name for the economic theory that he and his colleague at Stockholm School of Economics, Bertil Ohlin, developed in the mid-20th century (Heckscher-Ohlin trade model) and that awarded Ohlin the Nobel Prize in 1977—Heckscher himself died before the prize was instigated (and no posthumous awards).
While the book is primarily about liberalism ("old and new"), and what constitutes a liberal worldview or how gov vs private sector ought to be constituted, there are a few segments on monetary thought in there.
Since he's commenting from the point of view of 1921, it gives Bitcoiners obsessed with WTF Happened in 1971 pause. Still, this bit is fucking unbelievably elegant (trust me, it's not my translation magic making it read so well):
It was on the basis of these—and countless similar experiences—that economic liberalism, with characteristic simplicity and frankness, set out to create a monetary system which, though very far from perfect, nevertheless made such abuses impossible for as long as it was maintained. The medium was, more or less, synonymous with the gold standard; and to it was added a system of banknote issue (mainly the English), the central task of which was to guarantee the stability of the value of money to the exclusion of almost all other considerations.
Josh Hendrickson, a mainstream economist I much respect, touches on similar things in his historical research (#854062): the extreme commitment to the value of (gold) money is, largely, what made the English so much better and stronger than their counterparts in the 19th century.
The generation that lived before the First World War was under the protective umbrella of the gold standard and absorbed its benefits with no more thought for them than for the importance of air and light. It is now almost tragicomical to go back to the pre-war figures of monetary fluctuations when the value of money fell by perhaps 1-2% a year; now that we have left the gold standard, it is an unusual and an as-yet unattainable stability to reach fluctuations as small as 1-2% a month. In the central economic sphere, we have simply been returned to the chaos that ruled before liberalism, and we will not escape it until we strive with the same simplicity and determination as the liberal statesmen did in building up what has been torn down.
I love that bit.
It's a good warning, too, that once bitcoin wins we also have to keep the values that brought us there. Without frequent real-world reminders, even the strongest and most adequate monetary system in history can fall apart.
78 sats \ 1 reply \ @telcobert 19h
That is very interesting. Since Heckscher wrote this in 2021, was he perhaps one of the "one or two very good economists in Sweden" mentioned by F.A. Hayek below?
If yes, I'd be most interested in more detail to the following episode. It is actually quite a crucial matter for the monetisation of Bitcoin.
“During World War I the great paper money inflation in all the belligerent countries brought down not only the value of paper money but also the value of gold, because paper money was in the large measure substituted for gold, and the demand for gold fell. In consequence, the value of gold fell and prices in gold rose all over the world.
That affected even the neutral countries. Particularly Sweden was greatly worried: because it had stuck to the gold standard, it was flooded by gold from all the rest of the world that moved to Sweden which had retained its gold standard; and Swedish prices rose quite as much as prices in the rest of the world.
Now, Sweden also happened to have one or two very good economists at the time, and they repeated the advice which the Austrian economists had given concerning the silver in the 1870s, “Stop the free coinage of gold and the value of your existing gold coins will rise above the value of the gold which it contains.
The Swedish government did so in 1916 and what happened was again exactly what the economists had predicted: the value of the gold coins began to float above the value of its gold content and Sweden, for the rest of the war, escaped the effects of the gold inflation.”
"A Free-Market Monetary System" (1977) Friedrich A. Hayek
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Not sure, there are plenty of candidates. Sweden used to have pretty decent and prominent economists a century ago
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59 sats \ 1 reply \ @Signal312 19h
It's amazing how relatively quickly, historically, very useful and important wisdom can be lost.
For instance - a meat-only diet was used frequently and successfully in the 1800 and early 1900's for all kinds of treatments (epilepsy, diabetes, tuberculosis).
And then it was eclipsed by drugs. Made by big pharma, which had a huge marketing budget.
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30 sats \ 0 replies \ @siggy47 19h
It's a good warning, too, that once bitcoin wins we also have to keep the values that brought us there. Without frequent real-world reminders, even the strongest and most adequate monetary system in history can fall apart.
Let's hope
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I remember learning H-O trade models. They seem so right, but reality just refused to conform to them.
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I do miss the days when eloquence was considered a valued part of the economists' repertoire. I'd love to bring back more dialectical approaches to mainstream economics. it's all just math and econometric "identification" right now.
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