Hayek’s Theory of Cultural Evolution
New Horizons in Institutional and Evolutionary Economics series
Edited by Jürgen G. Backhaus
Chapter 6: Hayek’s ‘Free Money Movement’ and the Evolution of Monetary Order in Historical Perspective
Martin T. Bohl and Jens Hölscher INTRODUCTION The role of money in society and for economic order has been a longstanding subject of academic dispute. Hayek’s work (1976, 1990) stands out in this ﬁeld as being the most provocative and at some stage politically inﬂuential contribution, which culminated in the call for a ‘Free Money Movement’ in order to abolish the state privilege of issuing banknotes. Hayek saw this as not less important than ‘a crucial reform that may decide the fate of civilisation’ (Hayek 1976, p. 110). His approach is closely related to the general idea of spontaneous evolution of civilisation, which needs protection from the state. Before Hayek’s study and its reception are inspected in detail within the next section, the aims and objectives of this study will be laid out. The motivation of this study stems from the high times of the debate of establishing the Eurozone. In the 1980s and 1990s the Thatcher government in the UK was deeply impressed by Hayek’s proposal of currency competition and the plan of a ‘parallel currency’ system rather than a single European currency was setting part of the agenda of economic policy. As this idea has vanished at least for the time being, the authors of this study wonder whether or not it might be time to say goodbye to the whole concept of ‘free banking’, as it was advocated by Hayek. In order to ﬁnd an answer to this question this study operates on two levels:...
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