출처: F.A. Hayek (Lawrence H. White 편집), Collected Works of F.A. Hayek, vol. 12: The Pure Theory of Capital, 2007년 재판.
자료: 구글도서 (cf. Mises Institute's version)
※ 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. 29 ~ [PDF 62 ~ ]
* * *
Chapter 3_ The Significance of Analysis in Real Terms
Equilibrium Analysis Is Analysis in Real Terms
The analysis of the relations between the production plans of different entrepreneurs must necessarily proceed in what is known as "real terms". If we assumeㅡas we must if we are to investigate the compatibility of the different planㅡthat the entrepreneurs make definite and detailed plans for fairly long periods, there is indeed little room for money in the picture at all, except as "mere counter" which stand for definite quantities of particular commodities. In fact, so long as we assume entrepreneurs to decide every detail in advance in the certain expectation that they will be able to adhere to all their plans, the need for holding money almost vanishes. For in the actual world money is largely held because the ^decision^ as to when to buy or to pay for something is deliberately postponed; and this is contrary to our assumptions. But even to the extent to which money would still be held under these conditions (because of the discontinuity of transactions and the cost or inconvenience of investing it for the short periods until is was needed) it would cease to play a significant role. For money would enter into the plans, not in the quasi-independent character of command over things in general (that is as something which confers on its holders the chance of taking advantage of unforeseen opportunities), but only as a transitory item representing the definite quantities of commodities for the purchase of which the particular amounts of money are held.
The Introduction of Money into Equilibrium analysis Would Cause Unnecessary and Irrelevant Complications
The existence of such a condition in which all that would be relevant to the plans made by the public would be the concrete quantities of goods which they expected to get in exchange for money, but not the quantities of money itself, is often silently assumed, usually illegitimately. On our assumptions such a condition would actually exist. We should therefore gain nothing if we were to introduce quantities of money as separate magnitudes into this type of analysis in place of the quantities of commodities for which the money would stand. Such a procedure would merely entail a very considerable and unnecessary complication of the argument. Particular money prices stand in a determinate relationship to quantities of goods which will be produced or sold at these prices only on the assumption that all other prices are given. In principle any particular money price for a commodity may correspond to the production or sale of any quantity of that commodity, according as the prices of other commodities vary. There are no such definite relationships between prices in money terms and quantity of goods, as there are between the real ratios of exchange and such quantities. The introduction of money at this stage would therefore merely have the effect of introducing an additional variable which is irrelevant for our purpose and would make it more difficult to see the relationships, between quantities of commodities and real ratios of exchange, in which we are here interested.
Defects of Traditional Attempts to "Abstract from Money"
Economists have often felt the need for some such analysis in real terms, and in fact a considerable part of classical economics, explicitly or implicitly, makes use of this idea. Its exact meaning and significance have, however, scarcely even been made clear. Recently the concept of "neutral money"[1] has been widely used in this connection. While this has at least the advantage of drawing attention to the existence of a problem, it is in itself, of course, nothing more than a new name for an old problem and does not provide us with a solution. It makes it clear that we cannot, as has often been done, treat money as non-existent so long as its value remains stable, and that it is erroneous to assume that if its value remains stable it exert no influence on the formation of prices. Neither do the special constructions which certain economists have used to meet this difficulty really solve the problem. The best known of these is Walras' "numeraire". According to definition the "numeraire", which may be any of the commodities, serves merely as a unit of account; but it is not actually used as a medium of exchange and consequently there will be no additional demand for it to hold it as money. All that the introduction of this concept does is to solve the difficulty of the mathematical economist in expressing all the different ratios of exchange in one common unit. It contributes nothing to the explanation of how the triangular and muti-angular exchange transactions, which are necessary to bring about equilibrium, can be effected without the use of one or more media of exchange which are demanded and held merely for the purpose of exchanging them against other commodities.
Real Term Analysis Is Legitimate Only within Equilibrium Construction
The Crux of the matter is that where analysis aims directly at a causal explanation of the economic process as it proceeds in time, the use of the concept of a moneyless exchange economy is misplaced. It is self-contradictory to discuss a process which admittedly could not take place without money, and at the same time to assume that money is absent or has no effect. In the case of our ideal position of equilibrium, which we construct as a guide to interpretation, and in which all parts are assumed to be perfectly matched, the case is different. Here analysis in real terms is not only in place, but is almost essential. Since at each point money is in the strictest sense only as an intermediary between definite quantities of certain goods, all the essential relations in this system are relations between goods (rates of substitution between certain quantities of goods determined by the total quantities of these goods). Or, in other words, it will be true of this systemㅡwhat has sometimes been asserted to be true in the real worldㅡthat the total supply of goods and the total demand for goods must be identical. (This so-called "Law of Market" of J.B. Say is indeed one of the first formulations of the modern concept of equilibrium.)
Analysis in Real Terms Not Useless
It would, however, be a mistake to believe that, since these relationships will exist only in a purely fictitious state of equilibrium, it is mere waste of time to work it out. The fact that in the real world relations between money prices, and not real ratios of exchange, directly determine human action, does not make these real ratios uninteresting. Relations between money prices in themselves tells us little, unless we know what prices are appropriate to the existing real structure of productive equipment, or what price relationships are required to enable people to go on with the plans they have made. Nor is it sufficient, as is sometimes supposed, to know whether the prices of finished products exceed or fall short of a given money cost of production as represented by the prices of a particular combination of productive resources. Whether this or some other combination of resources will be used in the manufacture of the product will itself depend on prices. The costs of production of a particular good do not therefore move in exact conformity with prices of any particular collection of resources, but are also affected by changes in the technique of production made profitable by changes in the relative prices of the different resources.
Usual Argument in Defence of Real Term Analysis Unsatisfactory
In the real world production is so obviously dependent in the first instance on concrete money prices that the suggestion that it "ultimately" depends on some real relationships which lie behind these money prices, is undoubtedly, as the whole history of economics shows, in sharp contrast with the conclusions that are first suggested by experience. It is therefore necessary to justify our procedure somewhat more fully than by merely repeating the mostly metaphorical phrases which are commonly used in its defence. That there are "underlying real forces which tend to reassert themselves, although they may be temporarily hidden by the monetary surface", or that the real relationships which "ultimately" determine the relations between prices show a certain resiliency and are more permanent than the temporary distortion caused by money, or that the real determinants are more fundamental or basic in the sense that they will be restored when the monetary disturbances have disappeared, is all approximately true; but it hardly proves or explains the significance of these real factors.
Instability and Self-Reversing Character of Monetary Changes
It is undeniably true that in the absence of continuous progressive monetary changes, and with given tastes and a given distribution of incomes, the relations between the prices of different commodities will be uniquely determined by the quantities of these goods in existence. But this is not the whole story, because these quantities can themselves be changed by monetary influences. The decisive fact, however, is that the effect on prices of these changes in quantities brought about by monetary influences will be in exactly the opposite direction from the direct effect on prices of these same monetary changes. We may suppose, for instance, that, at the point where a net addition to the total money stream makes its first impact on the commodity markets, there will result in an increase first of the prices and then the output of the commodities affected. The effect of this increase in output will be that, as soon as the additions to the money stream cease, the prices of these commodities will fall relatively to the prices of all other commodities and will reach a lower level than prevailed before the monetary change. Monetary changes have this effect in common with all merely temporary changes which are not recognised as such. But they have it in a particularly high degree. This is so not only because by their very nature they cannot continue indefinitely, but more especially because a change in the volume of the money stream which takes place at one point of the economic system works round and is bound to cause further changes in all other prices. Monetary changes are therefore in a peculiar sense self-reversing and the position created by them is inherently unstable. For sooner or later any deviation from the equilibrium positionㅡas determined by the real quantitiesㅡwill cause a swing of the pendulum in the opposite direction.[1]
An Illustration of the Different Effects of Real and Monetary Changes
Unfortunately the significance of these real factors cannot be fully demonstrated without a systematic analysis of the operation of the monetary factors which we propose largely to disregard in this study. But an illustration may be given by referring briefly to the main problem in connection with which this question is continually cropping up. This problem relates to the possible differences between the prospective profitability of a given investment according to whether the investor has to use real resources which he owns or borrows, or whether he can obtain those resources by borrowing ^money^ for the purpose. There can be no doubt that under certain circumstances the possibility of borrowing money will make investments profitable which would never appear attractive if the investor could only use such resources as they owned or could borrow ^in natura^. The reason for this, now very familiar, is that the amounts of money offered on the loan market are capable of changing quite independently of the supply of real resources available for investment purposes.[1]
In point of fact, monetary changes facilitate investments and cause resources to be put to use which are not in accordance with a state of equilibrium between the demand for and the supply of real resources. This does not, of course, mean to say that monetary factors may not change the composition of the real quantities in existence. On the contrary. By affecting the uses to which the available resources are put, they will inevitably bring about a change in the real structure of production. But the point is that this new, changed, material structure of production will required for its maintenance a new set of price-relationships, namely those which the initial monetary change temporarily created or led people to expect, but which this monetary change cannot perpetuate. Most additions to, or deductions from, the money stream will not stay where they have first appeared; they have the inherent tendency to reverse[2] the changes in price-relationships which they have caused. But the significance of the further changes in relative prices which will be brought about by the monetary change will have to be judged in relation to the price structure appropriate to the changed organisation of production.
Certain Conditions of Stability Can Be Stated in Real Terms and in Real Terms Only
We cannot judge the effect of any change in money prices without a knowledge of the system of prices which is appropriate to the existing structure of production. There is thus a task which is logically prior to the study of the monetary mechanism: the task of analysing the principle on which particular systems of quantities of goods and particular systems of prices (or real ratios of exchange) are coordinated. This is what the so-called analysis in real terms attempts. Like equilibrium analysis in general its aim is not to give a direct explanation of any real phenomena, but to analyse in isolation a set of relationships which are relevant for the explanation of actual events. In other words: there are conditions of stability of the economic system which not only can be described more simply if we neglect the monetary factor, but which, although they can be changed by monetary influences, exist independently of them. These conditions are at any moment determined by the technical structure of the material equipment in existence and by the tastes of the people.
Analysis in Real Terms Involves Abstraction from Lending and Borrowing of Money
In the particular case we have to study[,] the amount of abstraction involved in disregarding money is especially great. We are setting out to investigate problems of capital and at the same time the possibility of lending and borrowing money. Now this is of course a phenomenon with which the problem of capital and interest are so closely connected in real life that it may appear futile to talk about capital at all without taking money-lending into account. But that this appears so only goes to show that in our minds the terms capital and interest are so closely connected with monetary phenomena that it would perhaps have been better if they had never been used by economists in connection with the real phenomena which, though somehow connected with the monetary phenomena, would exist even in a moneyless capitalist society. It has, however, become so firmly established a usage to apply the same terms to the underlying real phenomena as were first applied to their monetary manifestations that it would be difficult, at this stage, to introduce new terms for them.
Use of the Term "Rate of Interest" in This Study
In one respect, indeed, this tradition has recently been seriously challenged. In his last work[1] Mr. Keynes has placed very strong emphasis on the desirability of confining the term "rate of interest" to the rate at which money can be borrowed.
In what sense and to what extent it is justified under the assumptions made here to speak of one uniform rate of return can be shown only as the investigation proceed. But in order that the term ^rate of interest^ which we propose to use in this connection should not mislead, it is necessary at this stage to explain at least a little more fully what will be designated by this term. It has already been mentioned that the rate of interest in these conditions is not a price of any particular thing. It is an element in the relations between the various prices of different commodities, a ratio between the prices of the factors of production and the expected prices of their products, which stands in a certain relationship to the time interval between the purchase of the factors and the sale of the product. The problem of the rate of interest in the sense in which it will be discussed in this book is therefore the problem why there is such a difference between the prices of the factors and the prices of the products and what determines the size of this difference. It would perhaps be more correct if we referred to this difference between cost and prices as profits rather than interest. But as it has become customaryㅡparticularly since Bohm-Bawerk, to whom this particular statement of the problem of interest is dueㅡto refer to this difference in equilibrium analysis as the rate of interest, and as the term rate of profit is now generally reserved for such 'abnormal" differences as wil arise only under dynamic conditions, it will probably cause less confusion if in equilibrium analysis we retain this established although somewhat unfortunate term.
(... ...)
Defects of Traditional Attempts to "Abstract from Money"
Economists have often felt the need for some such analysis in real terms, and in fact a considerable part of classical economics, explicitly or implicitly, makes use of this idea. Its exact meaning and significance have, however, scarcely even been made clear. Recently the concept of "neutral money"[1] has been widely used in this connection. While this has at least the advantage of drawing attention to the existence of a problem, it is in itself, of course, nothing more than a new name for an old problem and does not provide us with a solution. It makes it clear that we cannot, as has often been done, treat money as non-existent so long as its value remains stable, and that it is erroneous to assume that if its value remains stable it exert no influence on the formation of prices. Neither do the special constructions which certain economists have used to meet this difficulty really solve the problem. The best known of these is Walras' "numeraire". According to definition the "numeraire", which may be any of the commodities, serves merely as a unit of account; but it is not actually used as a medium of exchange and consequently there will be no additional demand for it to hold it as money. All that the introduction of this concept does is to solve the difficulty of the mathematical economist in expressing all the different ratios of exchange in one common unit. It contributes nothing to the explanation of how the triangular and muti-angular exchange transactions, which are necessary to bring about equilibrium, can be effected without the use of one or more media of exchange which are demanded and held merely for the purpose of exchanging them against other commodities.
[1] The present author must plead guilty of some responsibility for the popularity of this concept and even for the incautious way in which attempts have occasionally been made to use it as a practical ideal of monetary policy. But while for this second purpose it is clearly not of much help, it still appears to me as a useful concept to describe a real theoretical problem: the conditions under which it would be conceivable that in a monetary economy prices would behave as they are supposed to behave in equilibrium analysis.
Real Term Analysis Is Legitimate Only within Equilibrium Construction
The Crux of the matter is that where analysis aims directly at a causal explanation of the economic process as it proceeds in time, the use of the concept of a moneyless exchange economy is misplaced. It is self-contradictory to discuss a process which admittedly could not take place without money, and at the same time to assume that money is absent or has no effect. In the case of our ideal position of equilibrium, which we construct as a guide to interpretation, and in which all parts are assumed to be perfectly matched, the case is different. Here analysis in real terms is not only in place, but is almost essential. Since at each point money is in the strictest sense only as an intermediary between definite quantities of certain goods, all the essential relations in this system are relations between goods (rates of substitution between certain quantities of goods determined by the total quantities of these goods). Or, in other words, it will be true of this systemㅡwhat has sometimes been asserted to be true in the real worldㅡthat the total supply of goods and the total demand for goods must be identical. (This so-called "Law of Market" of J.B. Say is indeed one of the first formulations of the modern concept of equilibrium.)
Analysis in Real Terms Not Useless
It would, however, be a mistake to believe that, since these relationships will exist only in a purely fictitious state of equilibrium, it is mere waste of time to work it out. The fact that in the real world relations between money prices, and not real ratios of exchange, directly determine human action, does not make these real ratios uninteresting. Relations between money prices in themselves tells us little, unless we know what prices are appropriate to the existing real structure of productive equipment, or what price relationships are required to enable people to go on with the plans they have made. Nor is it sufficient, as is sometimes supposed, to know whether the prices of finished products exceed or fall short of a given money cost of production as represented by the prices of a particular combination of productive resources. Whether this or some other combination of resources will be used in the manufacture of the product will itself depend on prices. The costs of production of a particular good do not therefore move in exact conformity with prices of any particular collection of resources, but are also affected by changes in the technique of production made profitable by changes in the relative prices of the different resources.
Usual Argument in Defence of Real Term Analysis Unsatisfactory
In the real world production is so obviously dependent in the first instance on concrete money prices that the suggestion that it "ultimately" depends on some real relationships which lie behind these money prices, is undoubtedly, as the whole history of economics shows, in sharp contrast with the conclusions that are first suggested by experience. It is therefore necessary to justify our procedure somewhat more fully than by merely repeating the mostly metaphorical phrases which are commonly used in its defence. That there are "underlying real forces which tend to reassert themselves, although they may be temporarily hidden by the monetary surface", or that the real relationships which "ultimately" determine the relations between prices show a certain resiliency and are more permanent than the temporary distortion caused by money, or that the real determinants are more fundamental or basic in the sense that they will be restored when the monetary disturbances have disappeared, is all approximately true; but it hardly proves or explains the significance of these real factors.
Instability and Self-Reversing Character of Monetary Changes
It is undeniably true that in the absence of continuous progressive monetary changes, and with given tastes and a given distribution of incomes, the relations between the prices of different commodities will be uniquely determined by the quantities of these goods in existence. But this is not the whole story, because these quantities can themselves be changed by monetary influences. The decisive fact, however, is that the effect on prices of these changes in quantities brought about by monetary influences will be in exactly the opposite direction from the direct effect on prices of these same monetary changes. We may suppose, for instance, that, at the point where a net addition to the total money stream makes its first impact on the commodity markets, there will result in an increase first of the prices and then the output of the commodities affected. The effect of this increase in output will be that, as soon as the additions to the money stream cease, the prices of these commodities will fall relatively to the prices of all other commodities and will reach a lower level than prevailed before the monetary change. Monetary changes have this effect in common with all merely temporary changes which are not recognised as such. But they have it in a particularly high degree. This is so not only because by their very nature they cannot continue indefinitely, but more especially because a change in the volume of the money stream which takes place at one point of the economic system works round and is bound to cause further changes in all other prices. Monetary changes are therefore in a peculiar sense self-reversing and the position created by them is inherently unstable. For sooner or later any deviation from the equilibrium positionㅡas determined by the real quantitiesㅡwill cause a swing of the pendulum in the opposite direction.[1]
An Illustration of the Different Effects of Real and Monetary Changes
Unfortunately the significance of these real factors cannot be fully demonstrated without a systematic analysis of the operation of the monetary factors which we propose largely to disregard in this study. But an illustration may be given by referring briefly to the main problem in connection with which this question is continually cropping up. This problem relates to the possible differences between the prospective profitability of a given investment according to whether the investor has to use real resources which he owns or borrows, or whether he can obtain those resources by borrowing ^money^ for the purpose. There can be no doubt that under certain circumstances the possibility of borrowing money will make investments profitable which would never appear attractive if the investor could only use such resources as they owned or could borrow ^in natura^. The reason for this, now very familiar, is that the amounts of money offered on the loan market are capable of changing quite independently of the supply of real resources available for investment purposes.[1]
In point of fact, monetary changes facilitate investments and cause resources to be put to use which are not in accordance with a state of equilibrium between the demand for and the supply of real resources. This does not, of course, mean to say that monetary factors may not change the composition of the real quantities in existence. On the contrary. By affecting the uses to which the available resources are put, they will inevitably bring about a change in the real structure of production. But the point is that this new, changed, material structure of production will required for its maintenance a new set of price-relationships, namely those which the initial monetary change temporarily created or led people to expect, but which this monetary change cannot perpetuate. Most additions to, or deductions from, the money stream will not stay where they have first appeared; they have the inherent tendency to reverse[2] the changes in price-relationships which they have caused. But the significance of the further changes in relative prices which will be brought about by the monetary change will have to be judged in relation to the price structure appropriate to the changed organisation of production.
Certain Conditions of Stability Can Be Stated in Real Terms and in Real Terms Only
We cannot judge the effect of any change in money prices without a knowledge of the system of prices which is appropriate to the existing structure of production. There is thus a task which is logically prior to the study of the monetary mechanism: the task of analysing the principle on which particular systems of quantities of goods and particular systems of prices (or real ratios of exchange) are coordinated. This is what the so-called analysis in real terms attempts. Like equilibrium analysis in general its aim is not to give a direct explanation of any real phenomena, but to analyse in isolation a set of relationships which are relevant for the explanation of actual events. In other words: there are conditions of stability of the economic system which not only can be described more simply if we neglect the monetary factor, but which, although they can be changed by monetary influences, exist independently of them. These conditions are at any moment determined by the technical structure of the material equipment in existence and by the tastes of the people.
Analysis in Real Terms Involves Abstraction from Lending and Borrowing of Money
In the particular case we have to study[,] the amount of abstraction involved in disregarding money is especially great. We are setting out to investigate problems of capital and at the same time the possibility of lending and borrowing money. Now this is of course a phenomenon with which the problem of capital and interest are so closely connected in real life that it may appear futile to talk about capital at all without taking money-lending into account. But that this appears so only goes to show that in our minds the terms capital and interest are so closely connected with monetary phenomena that it would perhaps have been better if they had never been used by economists in connection with the real phenomena which, though somehow connected with the monetary phenomena, would exist even in a moneyless capitalist society. It has, however, become so firmly established a usage to apply the same terms to the underlying real phenomena as were first applied to their monetary manifestations that it would be difficult, at this stage, to introduce new terms for them.
Use of the Term "Rate of Interest" in This Study
In one respect, indeed, this tradition has recently been seriously challenged. In his last work[1] Mr. Keynes has placed very strong emphasis on the desirability of confining the term "rate of interest" to the rate at which money can be borrowed.
- And quite apart from the fact that his use of the term would be more in conformity with its meaning in ordinary life, there can be no doubt that it is only in this form that interest appears as a price actually quoted in the market and directly entering into the calculations of entrepreneurs.
- The real or commodity rates of interest, which have played such a prominent role in traditional economic theory, are in comparison merely secondary or constructed magnitudes which, besides, vary according to the commodity in terms of which we compute them.
- These considerations probably make it advisable, in all investigations dealing with monetary phenomena, to restrict the term interest, as Mr. Keynes suggests, to the money rate, and to introduce some other term for the "real rates".
In what sense and to what extent it is justified under the assumptions made here to speak of one uniform rate of return can be shown only as the investigation proceed. But in order that the term ^rate of interest^ which we propose to use in this connection should not mislead, it is necessary at this stage to explain at least a little more fully what will be designated by this term. It has already been mentioned that the rate of interest in these conditions is not a price of any particular thing. It is an element in the relations between the various prices of different commodities, a ratio between the prices of the factors of production and the expected prices of their products, which stands in a certain relationship to the time interval between the purchase of the factors and the sale of the product. The problem of the rate of interest in the sense in which it will be discussed in this book is therefore the problem why there is such a difference between the prices of the factors and the prices of the products and what determines the size of this difference. It would perhaps be more correct if we referred to this difference between cost and prices as profits rather than interest. But as it has become customaryㅡparticularly since Bohm-Bawerk, to whom this particular statement of the problem of interest is dueㅡto refer to this difference in equilibrium analysis as the rate of interest, and as the term rate of profit is now generally reserved for such 'abnormal" differences as wil arise only under dynamic conditions, it will probably cause less confusion if in equilibrium analysis we retain this established although somewhat unfortunate term.
(... ...)
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