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World Depression and the Crisis of Economic Theory

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  • Francesco Vito

Abstract

The article is based on Johan Akerman’s monograph Some Lessons of the World Depression (Stockholm 1931), and maintains that in order to understand the crisis, it is essential to use the framework of the Austrian school as refined by K. Wicksell. The crisis derives from the lack of an equilibrating factor, which should be the interest rate intended as the cost of capital, in the production process. Akerman does not manage to demonstrate why entrepreneurs continue expanding their enterprises – facing an increase in the loan interest rate – in the hope of higher profits. Vito wonders why entrepreneurs do not correct this mistake and offers an original response to the question.

Suggested Citation

  • Francesco Vito, 2011. "World Depression and the Crisis of Economic Theory," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 119(3/4), pages 349-356.
    • Handle: RePEc:vep:journl:y:2011:v:119:i:3/4:p:349-356
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    Citations

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    Cited by:

    1. Campiglio, Luigi Pierfranco, 2014. "Unbundling the Great European Recession (2009-2013): Unemployment, Consumption, Investment, Inflation and Current Account," MPRA Paper 53002, University Library of Munich, Germany.

    More about this item

    Keywords

    J. Akerman; economic theories and world depression; Wicksell; Hayek; Fanno; Sraffa; Robertson; Papi; fixed costs and variable costs ratio in enterprises;
    All these keywords.

    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • D2 - Microeconomics - - Production and Organizations

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