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Monetary Calculation Posted By Steve Horwitz On June 16, 2012 @
3:39 pm In Uncategorized | 14 Comments In my Freeman column
this week, I discussed the importance of monetary calculation in
enabling entrepreneurs to know both what to produce and how to
produce it. The ability to make use of money prices to formulate
a forward-looking budget and to calculate backward-looking
profits/losses is crucial to entrepreneurial planning and the
learning process of the market. In that piece I didn't have the
space to make an additional point that I'd like to note here.
For monetary calculation to be maximally effective, the monetary
system matters. Specifically, the more sound that money is, the
more reliable is monetary calculation. This is a point that
Mises made in this 1920 article about economic calculation in
the socialist commonwealth and one I developed in a HOPE paper
in 1998. In an economy subject to periodic inflation and
deflation, the reliabili