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• Foreword
• On the Manipulation of Money and Credit Three Treatises On Trade-cycle Theory
• Stabilization of the Monetary Unit— From the Viewpoint of Theory
• Introduction *
• I: The Outcome of Inflation
• II: The Emancipation of Monetary Value From the Influence of Government
• III: The Return to Gold
• IV: The Money Relation
• V: Comments On the “balance of Payments” Doctrine
• VI: The Inflationist Argument
• VII: The New Monetary System
• VIII: The Ideological Meaning of Reform
• Appendix: Balance of Payments and Foreign Exchange Rates *
• Monetary Stabilization and Cyclical Policy
• Preface *
• Part I: Stabilization of the Purchasing Power of the Monetary Unit
• I: The Problem
• II: The Gold Standard
• III: The “manipulation” of the Gold Standard
• IV: “measuring” Changes In the Purchasing Power of the Monetary Unit
• V: Fisher’s Stabilization Plan
• VI: Goods-induced and Cash-induced Changes In the Purchasing Power of the Monetary Unit
• VII: The Goal of Monetary Policy
• Part II: Cyclical Policy to Eliminate Economic Fluctuations
• I: Stabilization of the Purchasing Power of the Monetary Unit and Elimination of the Trade Cycle
• II: Circulation Credit Theory
• III: The Reappearance of Cycles
• IV: The Crisis Policy of the Currency School
• V: Modern Cyclical Policy
• VI: Control of the Money Market
• VII: Business Forecasting For Cyclical Policy and the Businessman
• VIII: The Aims and Method of Cyclical Policy
• The Causes of the Economic Crisis an Address
• I: The Nature and Role of the Market
• II: Cyclical Changes In Business Conditions
• III: The Present Crisis
• A.: Unemployment
• B.: Price Declines and Price Supports
• C.: Tax Policy
• D.: Gold Production
• IV: Is There a Way Out?
• The Current Status of Business Cycle Research and Its Prospects For the Immediate Future
• 1.: The Acceptance of the Circulation Credit Theory of Business Cycles *
• 2.: The Popularity of Low Interest Rates
• 3.: The Popularity of Labor Union Policy
• 4.: The Effect of Lower Than Unhampered Market Interest Rates
• 5.: The Questionable Fear of Declining Prices
• The Trade Cycle and Credit Expansion: the Economic Consequences of Cheap Money
• 1.: Introductory Remarks *
• 2.: The Unpopularity of Interest
• 3.: The Two Classes of Credit
• 4.: The Function of Prices, Wage Rates and Interest Rates
• 5.: The Effects of Politically Lowered Interest Rates
• 6.: The Inevitable Ending

C.

TAX POLICY

1.

The Anti-capitalistic Mentality

The harmful influence of politics on the economy goes far beyond the consequences of the interventionist measures previously discussed.

There is no need to mention the mobilization policies of the government, the continual controversies constantly emerging from nationalistic conflicts in multi-lingual communities and the anxiety caused by saber rattling ministers and political parties. All of these things create unrest. Thus, they may indirectly aggravate the crisis situation and especially the uneasiness of the business world.

Financial policy, however, works directly.

The share of the people’s income which government exacts for its expenditures, even entirely apart from military spending, is continually rising. There is hardly a single country in Europe in which tremendous sums are not being wasted on largely misguided national and municipal economic undertakings. Everywhere, we see government continually taking over new tasks when it is hardly able to carry out satisfactorily its previous obligations. Everywhere, we see the bureaucracy swell in size. As a result, taxes are rising everywhere. At a time when the need to reduce production costs is being universally discussed, new taxes are being imposed on production. Thus the economic crisis is, at the same time, a crisis in public finance also. This crisis in public finance will not be resolved without a complete revision of government operations.

One widely held view, which easily dominates public opinion today, maintains that taxes on wealth are harmless. Thus every governmental expenditure is justified, if the funds to pay for it are not raised by taxing mass consumption or imposing income taxes on the masses. This idea, which must be held responsible for the mania toward extravagance in government expenditures, has caused those in charge of government financial policy to lose completely any feeling of a need for economy. Spending a large part of the people’s income in senseless ways—in order to carry out futile price support operations, to undertake the hopeless task of trying to support with subsidies unprofitable enterprises which could not otherwise survive, to cover the losses of unprofitable public enterprises and to finance the unemployment of millions—would not be justified, even if the funds for the purpose were collected in ways that do not aggravate the crisis. However, tax policy is aimed primarily, or even exclusively, at taxing the yield on capital and the capital itself. This leads to a slowing down of capital formation and even, in many countries, to capital consumption. However, this concerns not capitalists only, as generally assumed. The quantitatively lower the ratio of capital to workers, the lower the wage rates which develop on the free labor market. Thus, even workers are affected by this policy.

Because of tax legislation, entrepreneurs must frequently operate their businesses differently from the way reason would otherwise indicate. As a result, productivity declines and consequently so does the provision of goods for consumption. As might be expected, capitalists shy away from leaving capital in countries with the highest taxation and turn to lands where taxes are lower. It becomes more difficult, on that account, for the system of production to adjust to the changing pattern of economic demand.

Financial policy certainly did not create the crisis. However, it does contribute substantially to making it worse.