출처: F.A. Hayek (Lawrence H. White 편집), Collected Works of F.A. Hayek, vol. 12: The Pure Theory of Capital, 2007년 재판.
※ This is a reading note with excerpts taken, and personal annotations or remarks added, in trying to understand the above text. So, visit the source links above to see the original .
※ 발췌(excerpts): pp. 397~ [PDF 430 ~ ]
Differences between Interest Rates (and Rates of Profit)[ㅡ]a Monetary Problem
There is one more complex of problems which [, in a work so largely concerned with the question of the rate of interest,] must be briefly considered, [although its systematic study][though it] falls outside the scope of this book. I refer to the problem of the relationship between the various rates of interest and profit, and the causes of the differences in their height. We have of course already seen that in so far as rates of interest earned over periods of different lengths are concerned, there is [, even apart from monetary influences,] no reason why they should be the same in a non-stationary economic system [, not to mention monetary influences]. But we have so far had little to say about the way in which we should expect these various rates to differ. The main reason for this is that this problem, unlike that of the existence, and the long-run movements of the rate of profit, is very definitely a problem which belongs more to the field of monetary theory or economic dynamics generally than to the field of general equilibrium analysis to which this book has been mainly confined. We can here do little to contribute to its solution, and what attention we can give to it in this final chapter will be concerned mainly with showing what is the proper field of application of that “liquidity preference analysis” which we could not place among the primary factors that determine the height or the movement of the rate of profit or (except in the very short run) the rate of interest.
Even in the last two chapter, when we were already considering the significance of monetary influences, we disregarded the possibility that there might be a difference between the various interest rates or between the rates of interest and the marginal rates of profit on various types of investment. This procedure was justified, because we had in effect assumed that there were only two sharply divided types of assets, money on the one hand and real capital goods on the other.[:]
We have found that, under these circumstances, liquidity preference possessed little significance beyond providing an explanation as to why some assets would earn no interest (or perhaps a lower rate of interest than others), but that it certainly did not explain either the level of the rates of interest (except under most unlikely conditions) or the direction in which they would move. It appeared at most to describe one of the cost factors (i.e. of the "alternative uses" of funds) which had to be taken into account in determining the rate of return on investment. In other words, it provided an explanation of why people withheld some funds that might be invested (or invested at a higher rate of return). But it clearly did not explain even the size of the total supply of funds which at any moment would be available for investment (which depends also on the rate of saving), and it had therefore to be regarded as altogether insufficient to explain why there was a positive return on investment at all, or what its actual height would be.
We have also found that even in the short run during which liquidity preference, and changes in liquidity preference, may have a predominant influences in determining the rate of interest (and the marginal rate of profit), the latter[=the rate of interest] will be related only in an indirect manner to those price differences (the "rate of profit") which express the true scarcity of capital and regulate the proportional amount of capital that will be used in production. And the indirect influence which the monetary forces, acting on the rate of interest, will have in that way [,] will be directly opposite to that commonly supposed. A reduction of the rate of interest in consequence of changes in liquidity preference will tend to bring about an increase in price difference and the rate of profit (not the marginal rate of profit), will thus lead to a reduction in the proportional amount of investment, and vice versa.
Changes in Liquidity Preference May Cause Divergent Movements of Rate of Interest and Marginal Rate of Profit
We shall now see that if we consider the effects of changes in liquidity preference further, and if we take account of the fact that, because of differences in the liquidity of different types of assets, the marginal rate of profit and the rate of interest not only need not be identical but may actually move in opposite directions, the connection between the money rate of interest and the profitability of investment becomes even looser than we have so far assumed. It is clear that in real life there is no such sharp division between one single kind of money on the one hand, and a mass of income-bearing assets, all equally illiquid, on the other. In the first place[,] there are of course further alternatives to investment in real assets which we have not yet considered, in the shape of all the various "securities" (claims to money), some at least of which must be regarded as so highly liquid as to form very close substitutes for money, while others will be more nearly akin to the less liquid types of real assets. Ans the real assets will also differ greatly with respect to the possibility of disposing of them rapidly and without great loss, if this should become unexpectedly necessary. There is in fact a long and practically continuous range over which the various types of assets can be grouped according to the degrees of liquidity which they possess and the risk attaching to them.
The Meaning of Liquidity and Its Relations to Risk
It is not possible here to enter into any more detailed analysis of the meaning of liquidity and the problem of the relation of this concept to that risk. This is most definitely a subject belonging to economic dynamics, and little could be gained by scratching on the surface of this problem when no really systematic inquiry can be undertaken. Much work on these problems has been done in recent years and a great deal more remains to be done for the theory of the subject to be deemed satisfactory.[1] All that we shall mention here is that neither risk nor liquidity can be adequately expressed as simple, one-dimensionaly magnitudes, since they are both of the nature of probabilities which can be sufficiently described only in terms of the properties of a frequency distribution. This means that, strictly speaking, it is not possible to arrange the various assets in a simple linear order according to the liquidity or the risk attaching to them, and that some multi-dimensional arrangement would have to be used instead.
OFFLINE TEXT on p.406 (PDF on p. 439):
We cannot here further follow up the causes which make the connection between the money rate of interest and the factors which directly govern the profitability of investment even more loose and distant than we have already seen to be the case under the more favourable assumptions of the last chapter. We must be satisfied with having shown not only that the movement of money rates will be determined to a large extent by factors other than those which determine the profitability of investment, but also that the influences which changes in the money rates of interest do exert on the profitability of investment will often be the opposite from what we are led to expect if we identify these money rates with the "rate of interest" of pure theory. To give a brief summary of the main results, we may say that changes in money rates will have the effects commonly assumed only if and in so far as they correspond to real changes and serve merely to bring about changes made necessary by the real situation. If, however, interest rates are affected either by spontaneous monetary changes (changes in liquidity preference or changes in the supply of resources of different degrees of liquidity) or induced monetary changes (changes in the relative demand for assets of various liquidities due to changes in their returns, the liquidity preferences for, as well as the supplies of, these assets being given), these monetary influences on the rates of interest will set up forces which will work in a direction opposite to their immediate effect through interest rates. Thus in the short run money may prevent real changes from showing their effect, and may even cause real changes for which there is no justification in the underlying real position. In the long run, however, it will always merely accentuate the change it has at first prevented, or will bring about changes which are the opposite of the impact effects. We have already referred before to this self-reversing character of monetary changes. In the real world, of course, all changes must work through this monetary mechanism, which frequently delays adaptation and will often be the source of spontaneous disturbances. Money is of course never "neutral" in the sense of being merely an instrument or servant: it always exercises some positive influences on the course of events. It would not be difficult to show how this role of money is bound to lead to constant fluctuations of economic activity, even if we had never heard of the existence of such fluctuations. And the theory of fluctuations largely consists, of course, of a study of the interaction between the monetary and the real factors.
This, however, is outside our present task. That task has been to bring out the importance of the real factors, which in contemporary discussion are increasingly disregarded. But even without further continuing the discussion of the role money plays in this connection, we are certainly entitled to conclude from what we have already show that the extent to which we can hope to shape events at will by controlling money are much more limited, that the scope of monetary policy is much more restricted, than is to-day widely believed. We cannot, as some writers seem to think, do more or less what we please with the economic system by playing on the monetary instrument. In every situation there will in fact always be only one monetary policy which will not have a disequilibrating effect and therefore eventually reverse its short-term influence. That it will always be exceedingly difficult, if not impossible, to know exactly what this policy is does not alter the fact that we cannot hope even to approach this ideal policy unless we understand not only the monetary but also, what are even more important, the real factors that are at work. [KHNW p186-3]{{ There is little ground for believing that a system with the modern complex credit structure will ever work smoothly without some deliberate control of the monetary mechanism, since money by its very nature constitutes a kind of loose joint in the self-equilibrating apparatus of the price mechanism which is bound to impede its workingㅡthe more so the greater is the play in the loose joint. But the existence of such a loose joint is no justification for concentrating attention on that loose joint and disregarding the rest of the mechanism, and still less for making the greatest possible use of the short-lived freedom from economic necessity which the existence of this loose joint permits. On the contrary, the aim of any successful monetary policy must be to reduce as far as possible this slack in the self-correcting forces of the price mechanism, and to make adaptation more prompt so as to reduce the necessity for a later, more violent, reaction.}} For this, however, an understanding of the underlying real forces is even more important than an understanding of the monetary surface, just because this surface does not merely hide but often also disturbs the underlying mechanism in the most unexpected fashion. All this is not to deny that in the very short run the scope of monetary policy is very wide indeed. But the problem is not so much what we can do, but what we ought to do in the short run, and on this point a most harmful doctrine has gained ground in the last few years which can only be explained by a complete neglectㅡor complete lack of understandingㅡof the real forces at work. A policy had been advocated which at any moment aims at the maximum short-run effect of monetary policy, completely disregarding the fact that what is best in the short-run may be extremely detrimental in the long run, because the indirect and slower effects of the short-run policy of the present shape the conditions, and limit the freedom, of the short-run policy of to-morrow and the day after.
I cannot help regarding the increasing concentration on short-run effectsㅡwhich in this context amounts to the same thing as a concentration on purely monetary factorsㅡnot only as a serious and dangerous intellectual error, but as a betrayal of the main duty of the economist and a grave menace to our civilisation. To the understanding of the forces which determine the day-to-day changes of business, the economist has probably little to contribute { that the man of affairs does not know better. } It used, however, to be regarded as the duty and the privilege of the economist to study and to stress the long effects which are apt to be hidden to the untrained eye, and to leave the concern about the more immediate effects to the practical man, who in any event would see only the latter and nothing else. The aim and effect of two hundred years of continuous development of economic thought have essentially been to lead us away from, and "behind", the more superficial monetary mechanism and to bring out the real forces which guide long-run development. I do not wish to deny that the preoccupation with the "real" as distinguished from the monetary aspects of the problems may sometimes have gone too far. But this can be no excuse for the present tendencies which have already gone far towards taking us back to the pre-scientific stage of economics, when the whole working of the price mechanism was not yet understood, and only the problems of the impact of a varying money stream on a supply of goods and services with given prices aroused interest. It is not surprising that Mr. Keynes finds his views anticipated by the mercantilist writers and gifted amateurs: concern with the surface phenomena has always marked the first stage of the scientific approach to our subject. But it is alarming to see that after we have once gone through the process of developing a systematic account of those forces which in the long run determine prices and production, we are now called upon to scrap it, in order to replace it by the short-sighted philosophy of the business man raised to the dignity of a science. Are we not even told that, “since in the long run we are all dead”, policy should be guided entirely by short-run considerations? I fear that these believers in the principle of après nous le déluge may get what they have bargained for sooner than they wish.
- Money was implicitly assumed to be one homogeneous group of assets which possessed the attribute of liquidity to so much greater an extent than anything else that the holding of money could be regarded as practically the sole means of satisfying the desire for liquidity or for providing against uncertainty.
- All investments proper, on the other hand, whether they took the form of the lending of money or of the purchase of commodities or services to be employed for gain, were regarded as equally illiquid and risky, so that the returns expected from those various investments would tend towards equality (subject to the qualification necessary if this statement is to apply to a non-stationary equilibrium: see p. 167 above). [※ their expected returns were regarded as tending towards equality because they are illiquid and risky?? Or did he want to say (1) that their expected returns were regarded as tending towards equality and (2) that they were regarded as illiquid and risky??]
We have found that, under these circumstances, liquidity preference possessed little significance beyond providing an explanation as to why some assets would earn no interest (or perhaps a lower rate of interest than others), but that it certainly did not explain either the level of the rates of interest (except under most unlikely conditions) or the direction in which they would move. It appeared at most to describe one of the cost factors (i.e. of the "alternative uses" of funds) which had to be taken into account in determining the rate of return on investment. In other words, it provided an explanation of why people withheld some funds that might be invested (or invested at a higher rate of return). But it clearly did not explain even the size of the total supply of funds which at any moment would be available for investment (which depends also on the rate of saving), and it had therefore to be regarded as altogether insufficient to explain why there was a positive return on investment at all, or what its actual height would be.
We have also found that even in the short run during which liquidity preference, and changes in liquidity preference, may have a predominant influences in determining the rate of interest (and the marginal rate of profit), the latter[=the rate of interest] will be related only in an indirect manner to those price differences (the "rate of profit") which express the true scarcity of capital and regulate the proportional amount of capital that will be used in production. And the indirect influence which the monetary forces, acting on the rate of interest, will have in that way [,] will be directly opposite to that commonly supposed. A reduction of the rate of interest in consequence of changes in liquidity preference will tend to bring about an increase in price difference and the rate of profit (not the marginal rate of profit), will thus lead to a reduction in the proportional amount of investment, and vice versa.
Changes in Liquidity Preference May Cause Divergent Movements of Rate of Interest and Marginal Rate of Profit
We shall now see that if we consider the effects of changes in liquidity preference further, and if we take account of the fact that, because of differences in the liquidity of different types of assets, the marginal rate of profit and the rate of interest not only need not be identical but may actually move in opposite directions, the connection between the money rate of interest and the profitability of investment becomes even looser than we have so far assumed. It is clear that in real life there is no such sharp division between one single kind of money on the one hand, and a mass of income-bearing assets, all equally illiquid, on the other. In the first place[,] there are of course further alternatives to investment in real assets which we have not yet considered, in the shape of all the various "securities" (claims to money), some at least of which must be regarded as so highly liquid as to form very close substitutes for money, while others will be more nearly akin to the less liquid types of real assets. Ans the real assets will also differ greatly with respect to the possibility of disposing of them rapidly and without great loss, if this should become unexpectedly necessary. There is in fact a long and practically continuous range over which the various types of assets can be grouped according to the degrees of liquidity which they possess and the risk attaching to them.
The Meaning of Liquidity and Its Relations to Risk
It is not possible here to enter into any more detailed analysis of the meaning of liquidity and the problem of the relation of this concept to that risk. This is most definitely a subject belonging to economic dynamics, and little could be gained by scratching on the surface of this problem when no really systematic inquiry can be undertaken. Much work on these problems has been done in recent years and a great deal more remains to be done for the theory of the subject to be deemed satisfactory.[1] All that we shall mention here is that neither risk nor liquidity can be adequately expressed as simple, one-dimensionaly magnitudes, since they are both of the nature of probabilities which can be sufficiently described only in terms of the properties of a frequency distribution. This means that, strictly speaking, it is not possible to arrange the various assets in a simple linear order according to the liquidity or the risk attaching to them, and that some multi-dimensional arrangement would have to be used instead.
[1] In addition to the work of Mr. Keynes, various articles by Professor Hicks and Dr. Hawtrey, and, at an earlier date, F. Lavingstone, are of special importance in this connection.For our purpose, however, we must be satisfied with some more rough and common-sense concept of liquidity, without making an attempt at exact classification. If in this rough sense we classify the various assets according to their liquidity, we shall have, at one end of the scale, investment which promise a very high rate of return, but which require that funds to be irrevocably committed to a particular use for a long time, so that in the meantime there will be no possibility of diverting them to other purposes which in consequence of a change in conditions may then appear more attractive. At the other end of the scale we shall have pure money, which, while yielding no direct return, because of its universal acceptability puts the holder in the position of being immediately able to take advantage of any newly appearing opportunities for investment. And between these two extremes we shall have to range the great majority of assets, capital goods and securities, so that the decreasing magnitude of the return will be balanced in each case by a correspondingly greater capacity of the assets for being "liquidated" at short notice, i.e. a greater or smaller chance that, in case of an unforeseen change, it will be possible to preserve at least a high proportion of their present value by turning these assets to other uses.[1] ( ... ... ) OFFLINE TEXT on p. 401 [PDF on p. 434]
OFFLINE TEXT on p.406 (PDF on p. 439):
We cannot here further follow up the causes which make the connection between the money rate of interest and the factors which directly govern the profitability of investment even more loose and distant than we have already seen to be the case under the more favourable assumptions of the last chapter. We must be satisfied with having shown not only that the movement of money rates will be determined to a large extent by factors other than those which determine the profitability of investment, but also that the influences which changes in the money rates of interest do exert on the profitability of investment will often be the opposite from what we are led to expect if we identify these money rates with the "rate of interest" of pure theory. To give a brief summary of the main results, we may say that changes in money rates will have the effects commonly assumed only if and in so far as they correspond to real changes and serve merely to bring about changes made necessary by the real situation. If, however, interest rates are affected either by spontaneous monetary changes (changes in liquidity preference or changes in the supply of resources of different degrees of liquidity) or induced monetary changes (changes in the relative demand for assets of various liquidities due to changes in their returns, the liquidity preferences for, as well as the supplies of, these assets being given), these monetary influences on the rates of interest will set up forces which will work in a direction opposite to their immediate effect through interest rates. Thus in the short run money may prevent real changes from showing their effect, and may even cause real changes for which there is no justification in the underlying real position. In the long run, however, it will always merely accentuate the change it has at first prevented, or will bring about changes which are the opposite of the impact effects. We have already referred before to this self-reversing character of monetary changes. In the real world, of course, all changes must work through this monetary mechanism, which frequently delays adaptation and will often be the source of spontaneous disturbances. Money is of course never "neutral" in the sense of being merely an instrument or servant: it always exercises some positive influences on the course of events. It would not be difficult to show how this role of money is bound to lead to constant fluctuations of economic activity, even if we had never heard of the existence of such fluctuations. And the theory of fluctuations largely consists, of course, of a study of the interaction between the monetary and the real factors.
This, however, is outside our present task. That task has been to bring out the importance of the real factors, which in contemporary discussion are increasingly disregarded. But even without further continuing the discussion of the role money plays in this connection, we are certainly entitled to conclude from what we have already show that the extent to which we can hope to shape events at will by controlling money are much more limited, that the scope of monetary policy is much more restricted, than is to-day widely believed. We cannot, as some writers seem to think, do more or less what we please with the economic system by playing on the monetary instrument. In every situation there will in fact always be only one monetary policy which will not have a disequilibrating effect and therefore eventually reverse its short-term influence. That it will always be exceedingly difficult, if not impossible, to know exactly what this policy is does not alter the fact that we cannot hope even to approach this ideal policy unless we understand not only the monetary but also, what are even more important, the real factors that are at work. [KHNW p186-3]{{ There is little ground for believing that a system with the modern complex credit structure will ever work smoothly without some deliberate control of the monetary mechanism, since money by its very nature constitutes a kind of loose joint in the self-equilibrating apparatus of the price mechanism which is bound to impede its workingㅡthe more so the greater is the play in the loose joint. But the existence of such a loose joint is no justification for concentrating attention on that loose joint and disregarding the rest of the mechanism, and still less for making the greatest possible use of the short-lived freedom from economic necessity which the existence of this loose joint permits. On the contrary, the aim of any successful monetary policy must be to reduce as far as possible this slack in the self-correcting forces of the price mechanism, and to make adaptation more prompt so as to reduce the necessity for a later, more violent, reaction.}} For this, however, an understanding of the underlying real forces is even more important than an understanding of the monetary surface, just because this surface does not merely hide but often also disturbs the underlying mechanism in the most unexpected fashion. All this is not to deny that in the very short run the scope of monetary policy is very wide indeed. But the problem is not so much what we can do, but what we ought to do in the short run, and on this point a most harmful doctrine has gained ground in the last few years which can only be explained by a complete neglectㅡor complete lack of understandingㅡof the real forces at work. A policy had been advocated which at any moment aims at the maximum short-run effect of monetary policy, completely disregarding the fact that what is best in the short-run may be extremely detrimental in the long run, because the indirect and slower effects of the short-run policy of the present shape the conditions, and limit the freedom, of the short-run policy of to-morrow and the day after.
I cannot help regarding the increasing concentration on short-run effectsㅡwhich in this context amounts to the same thing as a concentration on purely monetary factorsㅡnot only as a serious and dangerous intellectual error, but as a betrayal of the main duty of the economist and a grave menace to our civilisation. To the understanding of the forces which determine the day-to-day changes of business, the economist has probably little to contribute { that the man of affairs does not know better. } It used, however, to be regarded as the duty and the privilege of the economist to study and to stress the long effects which are apt to be hidden to the untrained eye, and to leave the concern about the more immediate effects to the practical man, who in any event would see only the latter and nothing else. The aim and effect of two hundred years of continuous development of economic thought have essentially been to lead us away from, and "behind", the more superficial monetary mechanism and to bring out the real forces which guide long-run development. I do not wish to deny that the preoccupation with the "real" as distinguished from the monetary aspects of the problems may sometimes have gone too far. But this can be no excuse for the present tendencies which have already gone far towards taking us back to the pre-scientific stage of economics, when the whole working of the price mechanism was not yet understood, and only the problems of the impact of a varying money stream on a supply of goods and services with given prices aroused interest. It is not surprising that Mr. Keynes finds his views anticipated by the mercantilist writers and gifted amateurs: concern with the surface phenomena has always marked the first stage of the scientific approach to our subject. But it is alarming to see that after we have once gone through the process of developing a systematic account of those forces which in the long run determine prices and production, we are now called upon to scrap it, in order to replace it by the short-sighted philosophy of the business man raised to the dignity of a science. Are we not even told that, “since in the long run we are all dead”, policy should be guided entirely by short-run considerations? I fear that these believers in the principle of après nous le déluge may get what they have bargained for sooner than they wish.
*** The end of the book except its appendices (OFFLINE TEXT on p. 410 / PDF on p. 443) ***
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