The Hayekian Triangle and Austrian Business Cycle Theory

Dear J: I have published a fair bit (see below) on Austrian Business Cycle Theory (ABCT).

But I am most proud of this publication of mine:

Barnett, William II and Walter E. Block. 2006. “On Hayekian Triangles.” Procesos De Mercado: Revista Europea De Economia Politica; Vol. III, No. 2, Fall, pp. 39-141;;;

When it appeared in print, I honestly thought it would make quite a stir, at least amongst Austrian macroeconomists, if not in the general profession. I thought this article so good, so devastating to the Hayekian triangle, that ABCT would have to be rerouted in an entirely different direction, taught in a very different way. None of this remotely occurred. So, as with all of my “babies,” I tried to get people interested in it. I sent it to quite a few Austrian macroeconomists, asking them to react to it. In the event, I failed. Dismally. No one, no one at all, has ever commented on it, to the best of my knowledge. It is now twelve years old, and no rejoinder to it has ever been published. It has fallen down the “memory hole.”

So, as I’m sure you can appreciate, I am delighted with this letter of yours, and astounded by the very generous offer you make. I can’t speak for my co-author Bill Barnett, but I expect he would also be delighted to join me in the venue you suggest. I don’t need a penny to do so. If I have to get on a plane to give a speech, or make a presentation, I charge big bucks, since that means 2-3 days of lost productivity. But, a skype of one hour costs me only, wait for it, one hour. I would vastly prefer that someone, anyone, would publish a response to this article. Speaking about it on a radio show would not be as good, since this paper involves very technical issues in praxeology. But your suggestion is immensely better than nothing at all. I expect that Tom Woods reads LRC every day. But I shall indeed send this to him, just in case.

Hi Dr. Block, I attempted to contact/write to Tom Woods in October 2017 via his website with a request to sponsor a “Tom Woods Show” episode about your paper on Hayekian Triangles for $1,000. I have no idea whether or not he read and considered my offer, but at this point I wanted to forward the same idea to you, and if it was one you wished to pursue, allow you to do so. What I wrote to Tom is below should you have any desire to forward it to him. Regards, J

Dear Tom, I would like to make a request/offer for a guest and show topic for the Tom Woods show. The subject is something I personally want to see exhibited to a wider audience, and I’d be willing to make a monetary contribution of $1,000 to see it happen. Specifically, Walter Block and Bill Barnett published a paper in 2006 called “On Hayekian Triangles,” which raised 14 objections to the triangle. When I first read this paper while in college, I was completely convinced by it. I had previously read both Man Economy and State, as well as Huerta De Soto’s explanation of the structure of production, and despite significant mental effort, I could not quite get home on those explanations. This paper solidified my reservations and pointed out the logical inconsistencies of it. In particular, it made me question the fundamental assumption of economic growth implying greater “roundaboutness” i.e. levels of production. I wrote to Mr. Block in 2016 to see if there was any further discussion or papers on the subject matter (the answer was no), and he ultimately posted the exchange here:

If Barnett and Block are correct in their objections, it means ABCT needs to be structurally (pun intended) recrafted from the now standard text-book explanation. For me, the biggest motivator is that I don’t see that the triangle can actually be applied to the real world, and I genuinely believe it hinders ABCT growth and acceptance until it is fixed/abandoned/replaced. I don’t know what it should be replaced with (if anything), and the subject matter has been gnawing at me off and on for the past eight years. I’m puzzled by the fact that no one else is thinking/writing about the matter, and the only explanation I can come up with is that Block and Barnett’s objections are not a well-known enough, and thus the reason for my email. I guess just to reiterate, if you are in fact willing/interested in doing the show I’m requesting, I’m genuinely willing to pay the $1,000, as I realize you (and/or Walter’s) time and efforts are limited and of immense value.

Final unrelated item (if you’ve made it this far in my email): Thank you for all you do, Tom. I’ve been following your work, reading your books, and watching your speeches since my introduction to Austrian Economics about eight years ago. I think you’re advancing the cause of Austrian Economics and libertarianism about as much as any one person possibly could. Very Sincerely, J

J, as promised, here are my publications on ABCT:

Barnett, William II and Walter E. Block. 2005. “Professor Tullock on Austrian Business Cycle Theory,” Advances in Austrian Economics, Vol. 8, pp. 431-443

Barnett, William II and Walter E. Block. 2006. “On Gallaway and Vedder on Stabilization Policy” Quarterly Journal of Austrian Economics. Vol. 9, No. 1, spring, pp. 57-81;

Barnett, William II and Walter E. Block. 2006A. “Tyler Cowen on Austrian Business Cycle Theory: A Critique.” New Perspectives on Political Economy, Vol. 2, No. 2, pp. 26-84;;

Barnett, William II and Walter E. Block. 2006B. “On Hayekian Triangles.” Procesos De Mercado: Revista Europea De Economia Politica; Vol. III, No. 2, Fall, pp. 39-141;;;

Barnett, William II and Walter E. Block. 2007. “Saving and Investment: A Praxeological Approach.” New Perspectives on Political Economy, Vol. 3, No. 2, pp. 129 – 138;;;
no future goods (fn 16)

Barnett, William II and Walter E. Block. 2008. “On Hummel on Austrian Business Cycle Theory.” Reason Papers Vol. 30, Fall, pp. 59-90;

Block, Walter E. 2001. “Yes, We Have No Chaff: A Reply to Wagner’s “Austrian Business Cycle Theory: Saving the Wheat While Discarding the Chaff,” Quarterly Journal of Austrian Economics, Vol. 4, No. 1, Spring, pp. 63-73. //

Block, Walter E. and William Barnett, II. 2007. “On Laidler on Austrian Business Cycle Theory.” Review of Austrian Economics, Vol. 20, No. 1, March, pp. 43-61;;;

Block, Walter E. and William Barnett II. 2007. “The Austrian Tent? A Rejoinder to Gallaway and Vedder” Corporate Ownership & Control, Vol. 4, No. 3, p. 233-234;;

Block, Walter E., William Barnett II and Joseph Salerno. 2006. “Relationship between wealth or income and time preference is empirical, not apodictic: critique of Rothbard and Hoppe,” Review of Austrian Economics, Vol. 19, No. 2, pp. 69-80;;


4:32 pm on January 6, 2018