Money, cycles and capital formation: Von Mises the 'Austrian' vs. Robertson the 'Dynamist'

A 'disequilibrium' between saving and investment decisions determines a maladjustment in production, the disruption of capital, and a downturn in economic activity, according to the 'Austrian' approach. By contrast, the 'Dynamists' argue that it may lead to economic growth, as disequilibrium may well be instrumental to capital accumulation. What explains these different predictions in otherwise similar models? The key is in the interplay between the analytical features and the ideological options underlying each of these approaches: alternative lines of thought, entirely compatible with their analytical models, were abandoned by some of these authors when they conflicted with their pre-analytical views. This paper illustrates the argument by exploring the models of two 'fathers', von Mises and Robertson. © The Author 2005. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.