Banking and the State, It Will End in Hyperinflation
By: Thorsten Polleit
Feb 03, 2013
he Starting Point: Civilization Begins
The founder of the Medici banking dynasty, Giovanni di Bicci de’ Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.” His words raise the question, “How much do bankers know about the truth of modern money and banking?”
To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.
Civilization denotes the development through which man substitutes the state of the division of labor and specialization (that is, peaceful and productive cooperation) for the state of subsistence (that is, a violent hand-to-mouth existence).
In his magnum opus Human Action (1949), Ludwig von Mises (1881–1973) put forward a praxeological explanation of the process of civilization, which helps us understand the course of its evolution.
To Mises, two factors are at the heart of the process of civilization: (1) There must be an inequality of wants and skills among people. This is a necessary condition for people to want to seek cooperation.
(2) Man must recognize that higher productivity is possible through a division of labor. Mises thus assumes – as a necessary condition – a minimum intelligence among human beings and a willingness to use this intelligence in practical life.
Money Emerges – Carl Menger’s Theory of the Origin of Money