John Wheatley’s Contribution to Monetary Thought - From Strict Monetary Neutrality to Real Effects of Monetary Policy and the Role of the Payment System

This paper reassesses John Wheatley’s contribution to the development of monetary doctrine at the beginning of the nineteenth century. His contribution is still underrated, despite an advanced methodological approach and his radical refinement of bullionist arguments. His contributions to theoretical monetary policy and international monetary economics deserve more attention as his often harsh criticism of fellow bullionists demonstrates his uncompromising adherence to methodological principles, his independence and his originality. However, he was willing to reassess his own conclusions in the light of contradicting evidence. Based on his “An Essay on the Theory of Money and Principles of Commerce” (1807) historians of economic thought portray him as a proponent of strict monetary neutrality. But his less popular pamphlets of 1816 and 1819 elucidate a more differentiated position. There, he highlights the role of the payment system in the propagation of monetary shocks to the real economy. In the light of the crises of 1814-16 he emphasises the pronounced real effects a reduction of the quantity of money can have due to a disruption of the payment system.John Wheatley, monetary doctrine, bullionist controversy

Carl Menger’s “Money” and the Current Neoclassical Models of Money

The paper analyzes three neoclassical models of money with emphasis on the equilibrium concepts employed. It is argued that the neoclassical theories fail to analyze the emergence of the social institution of money. Instead, they focus on the consistency of individual decisions regarding the rational acceptability of intrinsically worthless objects given the social institution of money and the Pareto superiority of the allocations in monetary vis-à-vis barter economies. The equilibrium concepts employed by neoclassical theories are not suitable for the study of the emergence of new electronic payment systems. Instead, a theory of the emergence of social institutions, of institutional change is required: the Mengerian method of institutional analysis.Electronic money, monetary theory, Menger

Uncertainty in the Austrian Theory of Capital

This paper is based on the traditional Austrian Theory of Capital which deals with expected values of future returns of investments over various periods of time. The longer the time period that elapses between the beginning of a production process and its end, the higher the (expected) productivity must be due to positive time preferences of individuals. This paper focuses on the uncertainty of future returns and on uncertainty preferences, instead. Based on the Hayekian idea of the dispersion of knowledge in society, it will be shown that there is a systematic relationship between the structure of capital and uncertainty. This result will be derived for a production process characterized by complete vertical integration and one which is not completely vertically integrated. The distinction between these two settings is crucial, if one accepts the distinction between an individual and a social period of production and the planning horizon which are introduced in this paper.Austrian Economics, Uncertainty, Capital Theory

The Effects of E-commerce on the Structure of Intermediation

The paper questions the notion that the diffusion of electronic commerce will lead to disintermediation. Rather than interpreting intermediation as a single service it is pointed out that intermediaries can provide a number of services. The analysis based on the New Institutional Economics, Market Microstructure Theory, and Information Economics shows that the three intermediation services studied are, generally, not under threat by the diffusion of electronic commerce. The overall effects on intermediation depend on the relevance of these services relative to others (e.g. order processing) which are supposed to become obsolete.B2C eCommerce, intermediation, new institutional economics

The Institutional Character of Electronic Money Schemes: Redeemability and the Unit of Account

A number of commentators have argued that technological innovation is about to change the institutional structure of the retail payments system. Through the potential private issue of currency via new electronic payments systems – electronic money – individuals will create currencies based on units of account different from the dominant unit of account in the respective market. Thereby, the efficiency of the retail payments system would be enhanced. The following paper, however, denies the desirability of the parallel use of multiple units of account and the feasibility of competition in fiat-type currencies. The recent literature and Menger’s views on the subject are surveyed. Furthermore, the question is analyzed from an evolutionary point of view based on the interpretation of new electronic payments systems as networks The strategic incentives for issuers and users of currency to switch from the existing dominant unit of account to an alternative one are discussed. It is concluded that new electronic payments systems will provide redeemability on demand and that they will not diminish the role the national currencies as the dominant unit of account without specific regulation interfering in the their evolution.Electronic money, Carl Menger, Origin of Money, Austrian Economics

B2C eCommerce Strategy and Market Structure: The Survey Based Approach

This paper follows two objectives: (i) It demonstrates the merits of the survey based approach to B2C eCommerce characteristics and company strategy, and (ii) it presents empirical evidence of the crucial importance of size and marketing investment in B2C eCommerce markets. It presents econometric estimates of the effects of company characteristics and company strategies on the performance of Viennese B2C eCommerce companies in 2001. We provide econometric analysis of three dependent variables in turn: (i) number of B2C eCommerce customers in 2000, (ii) number of B2C eCommerce employees in January 2001 and (iii) revenue growth rate in 2001. The models do explain the data quite well: Size as well as endogenous sunk costs emerge as the main success factors. Furthermore, the results of nonparametric tests are presented. They mostly confirm the econometric evidence. We also show that the quantitative results are consistent with the qualitative results of the surveys. Finally, we argue that the survey based approach to B2C eCommerce is a method that provides reliable and consistent data, and that it complements the approach based on prices and consumer behavior commonly applied.B2C eCommerce, empirical evidence, success factors, endogenous sunk costs, market structure

B2C eCommerce Strategy and Market Structure: The Survey Based Approach

This paper follows two objectives: (i) It demonstrates the merits of the survey based approach to B2C eCommerce characteristics and company strategy, and (ii) it presents empirical evidence of the crucial importance of size and marketing investment in B2C eCommerce markets. It presents econometric estimates of the effects of company characteristics and company strategies on the performance of Viennese B2C eCommerce companies in 2001. We provide econometric analysis of three dependent variables in turn: (i) number of B2C eCommerce customers in 2000, (ii) number of B2C eCommerce employees in January 2001 and (iii) revenue growth rate in 2001. The models do explain the data quite well: Size as well as endogenous sunk costs emerge as the main success factors. Furthermore, the results of nonparametric tests are presented. They mostly confirm the econometric evidence. We also show that the quantitative results are consistent with the qualitative results of the surveys. Finally, we argue that the survey based approach to B2C eCommerce is a method that provides reliable and consistent data, and that it complements the approach based on prices and consumer behavior commonly applied.B2C eCommerce, empirical evidence, success factors, endogenous sunk costs

The Governance of Occupational Pension Funds and the Politico- Economic Implications: The Case of Austria

This paper analyses the efficacy of the governance structure of occupational pension funds (Pensionskassen – PKs) in Austria. Based on the results of the analysis, it further investigates the politico- economic implications for the political and legislative process regarding recent changes to the relevant Act (Pensionskassengesetz – PKG). The first section explains the exclusion of the beneficiaries’ interests from the institutional interest of the PKs’ association, i.e. the distribution of power, by the underlying governance structure of PKs. This section focuses on the structural conflict of interest PKs face, namely between their beneficiaries and their shareholders (almost exclusively large Austrian banks and insurance companies). The institutional interests of PKs are determined by the governance structure at the micro and meso levels and the interests of the stakeholders, in particular those of the shareholders, while the governance structure is treated as given. The second section focuses on the empirical investigation of the politico-economic impact of the findings in the first section. It analyses the role of the PKs and in particular the PK association (Fachverband der Pensionskassen) in the political process in a case study. It argues that the repercussions of the governance structure at the micro and meso levels on the political level can result in a vicious circle for beneficiaries and that the political risks associated with long-term guarantees for beneficiaries of occupational pension funds are substantial and aggravated by the governance structure at the micro and meso level. It employs an actor- centred institutionalism.Pension Funds, Governance,Positive Analysis of Policy-Making and Implementation, Law and Economics