Mr. John Tamny has kindly taken notice of my review of Money by Steve Forbes and Elizabeth Ames. (Tamny’s comments are here.) In my review, I questioned the claim of Forbes and Ames that money is a measure of value. In doing so, Tamny thinks, I disagreed with Mises. Unlike me, Mises did not deny the obvious truth that money is a measure of value.
Is that so? Here is what Mises says about this exact point in The Theory of Money and Credit:
On the Measurement of Value
1 The Immeasurability of Subjective Use-Values
Although it is usual to speak of money as a measure of value and
prices, the notion is entirely fallacious. So long as the subjective
theory of value is accepted, this question of measurement cannot arise.
In the older political economy, the search for a principle governing the
measurement of value was to a certain extent justifiable. If, in
accordance with an objective theory of value, the possibility of an
objective concept of commodity values is accepted, and exchange is
regarded as the reciprocal surrender of equivalent goods, then the
conclusion necessarily follows that exchange transactions must be
preceded by measurement of the quantity of value contained in each of
the objects that are to be exchanged. And it is then an obvious step to
regard money as the measure of value.
In the plan of Forbes and Ames, the government would aim to keep the dollar price of gold constant. Doing this would require the government to issue or withdraw dollars, from time to time. Amazingly, Tamny says, “Von Mises seemed to agree. As he wrote in The Theory of Money & Credit, ‘No individual and no nation need fear at any time to have less money than it needs.’” In other words, Forbes and Ames, seconded by Tamny, think that, depending on the dollar price of gold, a nation may have less money than it needs. The government should issue or withdraw enough dollars to restore the dollar price of gold which these authors want to maintain as a constant. A quotation by Mises that denies that a nation need fear having less money than it needs is taken by Tamny to support Forbes and Ames’s contrary opinion.
Evidently, in Tamny’s lexicon, “seems to agree” means “directly contradicts.” This is not the only unusual entry to be found there: “credit” means, as he uses the word, “real resources.” Some remarks from Through the Looking-Glass come to mind:
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master—that’s all.”