Mises, Keynes, and Darwin: An Hypothesis on Interest Rates
25 Pages Posted: 16 Jun 2020
Date Written: January 19, 2020
One of the most overlooked and least analyzed elements of Mises’ economic theory is his concept of originary interest. This is distinct from the theory of the natural rate of interest proposed by Wicksell and developed by subsequent economists. The latter concept is determined endogenously by market processes and tends to manifest itself under hypothetical equilibrium conditions. For Mises, the concept of originary interest is exogenous to the economy. Neither does it result from government intervention. It determines economic conditions, rather than being determined by them. Its provenance is never completely clear from Mises’ work, although Mises seems to think that it has an innate quality. It is suggested in this paper that the basis of originary interest is in an evolutionary adaptation of the human species. There is a discussion as to why this might arise and the role originary interest might play in aiding evolutionary development. Comparison is then made between Mises’ concept of originary interest and Keynes’ theory of liquidity preference with which it shares many similarities. Finally, the theoretical structure presented is utilized to suggest approaches to the problem of consilience of economics and the social sciences in general with other disciplines.
Keywords: originary interest, liquidity preference, neutral rate of interest, evolution, consilience, Austrian economics, Mises, Keynes
JEL Classification: E43, E51, B25, E12, E14
Suggested Citation: Suggested Citation