The financial crisis has led to new interest in the ethics of financial markets. In this article, we further the debate on the nature of banking contracts by showing that the fundamental subjective purposes of loan and deposit contracts are irreconcilable. Any resultant mixture of the two contracts is a legal aberration. We consider a mutual fund as an important and legitimate alternative to the common demand deposit to provide high liquidity and some yield without offering full availability of a (...) nominal sum. Besides being a close substitute for how many deposit accounts function today, the mutual fund has the additional benefit of satisfying all legal and ethical requirements. Loan and investment contracts allow for the “bank” to make use of their clients’ funds while the intents of money owners are clearly classified without running into legal or ethical problems. (shrink)

Depositors have perceived banks as acting unethically during the most recent recession. One area of consternation is the ambiguity of the legal obligations entailed by the deposit contract when it is backed with only fractional reserves. In this article, we apply an existing analysis of the legitimacy and ethicality of banking practices to a wider range of financial transactions, including insurance policies, securities lending, perpetual bonds, and callable loans. Securities lending in particular creates rights violations analogous to those in fractional-reserve (...) banking. Both callable loans and perpetual bonds have clear legal obligations which are not inherently problematic, though we herein clarify what these obligations are. Finally, we apply our ethical framework to demonstrate that insurance products are distinct from banking deposit contracts, and that perceived parallels between the two products underestimate these differences. (shrink)

How well is Austrian business cycle theory corroborated by empirical evidence? This question is addressed by examining the contraction of 1990–1991 and the expansion leading up to it. An overview of the Austrian theory of the business cycle permits the identification of several empirical propositions implied by the theory. Empirical data for several economic variables are examined for consistency with the patterns suggested by the theory. The evidence suggests a muted Austrian cyclical process at work in conjunction with other factors (...) during the time period studied. (shrink)

In the pages of this journal, a fruitful debate has evolved on the ethical legitimacy of fractional-reserve banking. In this article, we respond to the new arguments raised by Evans as we clarify our position on the unethical and illegitimate nature of fractional-reserve banking. Fractional-reserve banking is not a recent financial innovation but represents a long-standing legal aberration. The co-mingling of two mutually exclusive financial contracts, deposit and loan, confounds the contracting parties’ purposes, intents, rights, and obligations. As a result, (...) it creates unsolvable legal difficulties and ethical dilemmas. While these problems are most evident in the case of a bank run, they also arise when trying to answer the simple question of “who owns a deposit?”. (shrink)

This article investigates the status assigned to Max Weber’s The Protestant Ethic and the Spirit of Capitalism as a case study on the development of the concept of theory in twentieth century sociology. I trace this development in the interplay between scholars in the United States and Germany and distinguish three waves of meaning given to the text. The transitions between these phases were brought about by an initial process of mystification of the text in the 1930s and a dynamic (...) of de- and re-mystification beginning in the 1980s. Following this process of (re)interpretation over time, I show that at the beginning of the century the work was perceived as an empirical inquiry, while at the end of the century it was treated as pure theory. Based on the example of the peculiarities of the Weberian expert communities in the United States and Germany, I analyze how the invention of a concept of theory as independent from empirical evidence helped to stabilize the value of scholarly expertise on Weber in the face of otherwise declining resonance of the text. The analysis of this paradigmatic case adds to our understanding of the development, uses, and meaning of theory in contemporary sociology. (shrink)

Journal of Social Philosophy, EarlyView.

Salim Rashid purports to have established some facts about Adam Smith's scholarship, significant among which are Smith's plagiarism, the poor quality of Smith's arguments or ideas compared with those of his predecessors or contemporaries, and Smith's inconsistent arguments regarding laissez faire. Alas, Rashid's case is faulty, as well as often misleading and vexatious. This comment is an attempt to draw the requisite evidence from Rashid, if he indeed has such evidence, to back up his case, and to advance the scholarship (...) on Smith in general. (shrink)

Tobey Scharding claims that Bitcoin’s lack of a central regulator makes it open to price fluctuations. I argue that a currency not having a central regulator does not necessitate it being more volatile than centrally regulated currencies. First, I argue that Scharding’s reason for suggesting that Bitcoin is open to price fluctuations – its potential to face legal restrictions – is also faced by centrally regulated currencies. Second, I use silver in London as an example of a non-centrally regulated currency (...) with relatively low price volatility when compared to other centrally regulated currencies showing that non-centrally regulated currencies are not necessarily more volatile. (shrink)

There are significant parallels between the Roaring Twenties and the Bullish Eighties. Both decades were characterized by a policy‐induced artificial boom that ended with an inevitable bust. The Federal Reserve had a hand in both episodes, keeping the interest rate artificially low in the first one and keeping Treasury bills artificially risk‐free in the second. Comparing the two episodes in terms of Federal Reserve policy, federal government borrowing, and the regulatory environment faced by the banking community accounts for both similarities (...) and differences between the economic realities of the 1990s and those of the 1930s. (shrink)

Under one understanding of marketing, this discipline focuses on the creation of customer value. Although nobody doubts today that value is subjective and it emerges from consumer judgment, the causality is less clear. Do producers bring about value, or do consumers receive ‘raw’ products that only attain value in their estimation? Or, do producers and consumers co-create value as much of contemporary marketing theory assumes? Recent works on value creation, the building of customer relationships, and the service-dominant logic are related (...) to insights derived from both Austrian schools of value theory. The emphasis on value as a ratio between perceived benefits and perceived costs may be seen as a continuation of Menger’s and Wieser’s work. The focus on relations as a category distinct from goods goes back to Böhm-Bawerk. And the service-dominant logic reflects insights developed both by Menger and by philosophers of the Brentano School. The direct influence of Austrian economics on business studies is small and is restricted to very few scholars. But the potential is great for a fruitful development of current approaches in marketing by drawing on insights from Austrian economics and, perhaps even more so, from Austrian philosophy. This paper defines the relations between the thought from economists and philosophers and presents examples for how cutting-edge marketing thinking may profit from both Austrian schools of value. (shrink)