Entrepreneurship, Money and Coordination

Entrepreneurship, Money and Coordination

Hayek’s Theory of Cultural Evolution

New Horizons in Institutional and Evolutionary Economics series

Edited by Jürgen G. Backhaus

Hayek’s theory of cultural evolution has always generated controversy. Interest in Hayek’s theory, and others’ analysis and criticism of it, has been rising of late. This volume urges a reconsideration of Hayeks’ theory of evolution and aims to explore the relevance of Hayek’s theory for its own sake and for evolutionary economics more generally.

Chapter 6: Hayek’s ‘Free Money Movement’ and the Evolution of Monetary Order in Historical Perspective

Martin T. Bohl and Jens Hölscher

Subjects: economics and finance, austrian economics, evolutionary economics


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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