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Monday, 3 February 2014

A French Predecessor of the “Austrian” Theory of the Business Cycle – Marcel Labordère on the American Crisis of 1907

By Eduard Braun

Abstract: The history of economic thought has not been generous with Marcel Labordère. Either he has been neglected or he has been treated as a rather insignificant representative of the overinvestment theory of the business cycle. Yet, it can be argued that he anticipated the main components of the Austrian Theory of the Business Cycle. Four years before Ludwig von Mises he applied Knut Wicksell’s distinction between the money rate of interest and the natural rate of interest to an explanation of the malinvestments (not overinvestments) that emerge in the production structure during the boom phase. The main problem of his theory is that Labordère chose a rather confusing manner of representation. The present paper therefore arranges his arguments and works out his valuable contribution.

Read the full article in the Journal of Prices & Markets here.