viernes, 31 de mayo de 2013

31 Gráficos que te Devolverán la Fé en la Humanidad


*Nota: Esta es una traducción propia de este excelente artículo de Rob Wile en Business Insider.

Últimamente parece como si las noticias estuvieran dominadas por tragedias: desastres naturales, gente malvada y a veces simplemente indiferencia.

Pero sería un error volverse un cínico.

Hemos puesto juntos 31 gráficos que creemos ayudaran a devolver tu fe en la humanidad.

1) Hemos dejado de pelear los unos con los otros. 

Systemic Peace
  
2) Democracias adentro. Autocracias afuera.


Systemic Peace

3) La esclavitud esta desapareciendo.


It's Getting Better All The Time / Stephen Moore & Julian Simon

4) Todo el mundo esta trabajando menos.


"The Improving State of the World" (c) Cato Institute 2007. Used with permission

5) Tenemos mas dinero para gastar en ocio.

It's Getting Better All The Time / Stephen Moore & Julian Simon

6) El analfabetismo en USA ha sido borrado.

It's Getting Better All The Time / Stephen Moore & Julian Simon

7) La gente solia morir a los 47. Ahora viven hasta los 77. 

It's Getting Better All The Time / Stephen Moore & Julian Simon

8) Las enfermedades prevenibles estan bajo control. 

Reddit

9) La gente con cancer vive mas. 

It's Getting Better All The Time / Stephen Moore & Julian Simon

10) Menos y menos gente muere por armas de fuego.

Pew
11) Y nos estamos disparando menos.

Pew

12) La pobreza mundial esta declinando.

"The Improving State of the World" (c) Cato Institute 2007. Used with permission

13) En USA las madres han dejado de morir cuando dan a luz.

It's Getting Better All The Time / Stephen Moore & Julian Simon

14) La gente que fuma ha disminuido.

It's Getting Better All The Time / Stephen Moore & Julian Simon

15) La mortalidad infantil esta colapsando.

It's Getting Better All The Time / Stephen Moore & Julian Simon

16) La Malaria desaparece a medida que aumenta el gasto de investigacion.


Economist

17) Las enfermedades infecciosas casi han desaparecido en USA.


It's Getting Better All The Time / Stephen Moore & Julian Simon

18) La gente ahora se baña todo el tiempo.

It's Getting Better All The Time / Stephen Moore & Julian Simon

19) Y se lavan los dientes.

It's Getting Better All The Time / Stephen Moore & Julian Simon

20) Todas las casas de USA se electrificaron a medida que bajo el costo.

It's Getting Better All The Time / Stephen Moore & Julian Simon

21) Fuentes de energia mas eficiente o mas amigables con el ambiente continuan ganando terreno.

Citi

22) Pittsburgh ya no es una chimenea gigante.

It's Getting Better All The Time / Stephen Moore & Julian Simon

23) Todos permanecen mas tiempo en la escuela.

"The Improving State of the World" (c) Cato Institute 2007. Used with permission

24) La educacion de las mujeres nos ha mas que alcanzado.

It's Getting Better All The Time / Stephen Moore & Julian Simon

25) Las mujeres ya no estan encerradas en casa.

It's Getting Better All The Time / Stephen Moore & Julian Simon

26) Los dispositivos sin los que no podrias vivir ahora son mas baratos.


FCC

27) Las computadoras se estan volviendo increiblemente rapidas.


Wikimedia

28) Nunca ha sido tan barato volar.

It's Getting Better All The Time / Stephen Moore & Julian Simon

29) Ni tan seguro.


It's Getting Better All The Time / Stephen Moore & Julian Simon

30) Llegas mucho mas lejos con un galon de gasolina.

Securing America's Future Energy

Bonus: Toma cada vez menos tiempo comprar cosas. Comprar una bicicleta en 1895 costaba 260 horas de trabajo. En 1997 solo costaba 7.2.


Jefferies
(Gracias especialmente al "Improving State of the World" del Cato Institute por algunos de estos graficos)










martes, 21 de mayo de 2013

Old Inflated Inflationary Fallacies (I)


Here in Argentina we are facing an extremely high inflation in comparison to the rest of the world. In 2012 the annual rate was (at least) 25.6%, according to the Congress of this country. You need to understand this first: In this country, the ultra-interventionist government is so arbitrary that in 2007 (actually several months before that year) intervened the INDEC (the argentine equivalent to BLS) so it can manipulate the CPI at will. As result, “official” inflation is less than half than what is reported by any other estimation. The manipulation was so obvious that government persecuted any other economist who dare to defy what government says is the “real” inflation. No layman in this country believe in government statistics, only government-paid Goebbellian propagandists and government “economists” think they are real. Not surprisingly, Argentina’s money supply increases at an annual rate around 20-30%, part of it is to finance public sector deficit.

Now in order to not take the blame, the government and its minions have revived a lot of old fallacious explanations about inflation. Only one of them is the “blame big-business” fallacy. According to government, there are “price formers” that abuse workers and consumers by rising prices. That is just an unscientific and ridicule denomination for a most “serious” theory that tries to explain inflation without recurring to money supply. That is the fallacious theory called “administered price” or “control over price”. According to Hazlitt and Sawyer, this term was invented by Gardiner C. Means in 1935. However it has already been refuted.[1]

This theory says that a big company has an unrivaled power to raise price, it can even defy the Law of supply and demand. The theory implies that only by setting a selling price is enough to realize that “manipulated” price in market. So if price level goes up it is possible that this firms are charging “too high prices” and creating inflation. It is not a surprise that some of its supporters use it to deny the existence of demand-supply price determination. Now this theory has so many problems that it is amazing it can be taken seriously.

In the real world free market there is no such thing as a “control over price”. However somebody will say...

-“They control us!”

No they don’t. In a voluntary exchange nobody “controls” price. The main reason why a price emerges is because there is another part, it’s a mutual phenomenon, Robinson Crusoe alone in his island cannot exchange with anyone. In a free exchange, each part has no control over the other part. If seller cannot control the buyer then all he can do is to induce him to buy. If buyer cannot control the seller, all he can do is to induce to sell him the good or service. Now in order to induce each other in a nonviolent way, both parties can a) try to hypnotize the other part b) try to convince the other part to give away the good c) offer something in exchange. In any case there must be a common factor that is a necessary and sufficient condition for exchange to exist: both parts must win.[2]

Option c) will be chosen in the great majority of cases because is the least expense and the most efficient. If this happen, then in order for the buyer to ensure he will get the good, he will have to give a quantity of another thing he can offer. If the quantity (price) he offers (or the one the seller ask) satisfy his subjective valuations (i. e. is valued less than the goods he expect to receive) and at the same time the quantity asked by the seller (or offered by buyer) satisfies him, then the exchange will be fulfilled.[3]

Assume you want to sell your old car. You can ask one jillion dollars for it if you want. But if nobody buys it, then you can lower the price or not sell the car at all. It is possible that, in an incredible coincidence, your old car was Marilyn Monroe’s first car and someone actually pays that money. It could happen, as well as there are people that ask a ridicule high price because they are not desperate to sell. 

All this demonstrate that in an exchange there is no control over price, an exchange is voluntary and the price emerges as mutual valuations interact each other. The seller can raise the price as much as he wants and the buyer can lower it as much as he wants, but as long as one part cannot control the other part, he cannot get the maximum or minimum price he would desire. 

-“Yeah yeah, voluntarism sounds good. But what about the big ones!” 

This argument states: Look at Ford, Microsoft, Walmart, General Motors, they are so big! How can you compare them with a farmer, a little kiosk or retailer, or some small business? They are price takers! They have to face a given price while Ford can control price. It is big, it has scale, it has a branches and a name. Even if they don’t have an absolute monopoly, they have a degree of monopoly power.

Sounds convincing, but guess what? Both the big and the ultra-small business can actually have absolute control over the quantity they are willing to produce and the price they ask. Both groups of sellers can ask hyper-higher prices and restrict their production. But none of them can control how much buyers are willing to pay. Could Ford have asked one million dollars for each Ford T he made? Yes he could, he probably could have produced 5 cars a year. Can the farmer ask five times the market price? Yes he can. Are there people willing to pay that knowing that they can obtain the same good at lower price from another farmer? Hardly. But you may say: “Don’t be a fool. You are comparing a competitive atomized market like wheat with an evil big monopoly corporation like Ford, you have no alternative to buy another car, only Ford’s. In wheat market however you have millions of farmers selling the same good” Of course you have alternatives even assuming that car’s price is “administered” too high! You can ride a bicycle, a horse or a bus. In general when you buy a car you are buying individual transportation, the reason you buy it is because you expect the benefits of using your own car surpass the costs of purchase and the costs of other alternatives. If its price is too high, you can use the individual transportation you have been using like your bicycle or your own legs. Or you can use a public bus or subway. The good you are looking for is, in general[4], transportation, not the car itself. The car is just a form of transportation, so it is not true that “you have no other alternative than buying Ford’s cars to transporting yourself”. It is not crazy at all to compare an “atomistic-competitive market” and Ford. In both cases they can ask extremely higher prices and in both cases you are not forced at all to pay them.

A seller cannot control buyer’s willingness to buy and (mutastis mutandi) viceversa! All that both can control is the price they ask, but they cannot control that the other part pays what they want (maybe the Hypnotoad can, but nobody else!).

The ultimate fact that confirms this is that every single one of us (including big business men, presidents, scholars, professionals, wage earners, everyone!) would like to sell our goods or services (wages, salaries, rents, interest, price of goods, etc.) at a higher price. What prevent that to happen? The fact that our buyers will not pay those prices (and the fact that the “control over price” is totally false!)

-"Have you ever gone to Walmart? The prices are there! Walmart determined them!"

Yes! When you go to Walmart the prices are there “fixed”. But the one who set the price is not determining the price. A big enterprise can set the price, but the ones that corroborate that price are the consumers. The ones that determine prices are the consumers. It is a totally irrelevant technological question how or how often prices are set. Whether you are in an auction, in a supermarket, eBay, etc.; it is always subjective valuations what determine price. Institutional arrangement does not at all alter the fact that prices are determined by value scales of suppliers and demanders. What would happen if Walmart set a 40” Full HD LCD price at U$S1? I think you know the answer: a lot of people will run to Walmart to buy one. When the avalanche of people arrives and Wal-Mart sell the first 100 TVs, it will have to a) restrict the quantity of TVs to sold unless they want to confront an imminent shortage or b) raise the price in order to stop the avalanche. Obviously option b) is the most convenient, Walmart want to earn more knowing that it can sell all existence at a higher price rather to sell less at the same hyper-lower price. Actually it is even possible that customers themselves will offer a higher price, everyone knows that even offering to pay $20, instead of $1, it is still a great deal to buy a 40” LCD. There you have it: The great super big transnational oligo/monopolist Walmart having no choice but to adjust itself to the Law of supply and demand.

Another example is offered by Salerno here (around minute 40:00): the first week in which a movie is released, you see people lining up in cinema. In this first week the cinemas could raise price and dispense the line. Why don’t they do that? Because they will lose “good will” that is worth more than the money they can earn that week by raising price. Despite the fact that cinema can raise price and make profit from it, it will not do that because business men know that people will think: “Do these guys think I’m going to pay more today to see a movie that I can see next week cheaper? Besides, why I should pay a higher price today? This people are trying to exploit my need to see that movie.” Moreover a line is very useful to the cinema because draw attention, is a form of advertising. But you must note that the cinema cannot control the price without violating consumers sovereignty. Raising price to deal with the great demand from the first week of the movie has a cost: the cinema loses “good will”. It will lose clients acting by that way. So it must adapt itself to what consumers want. There is a hidden non-monetary cost which is the subjective valuation of the cinema's owner who estimates that he will lose clients by raising prices the first week of a premier. We still see perfectly well how subjective valuations of sellers and buyers determine cinema ticket price. There is no “administered price” here, not even in this example of an apparent non-maximizing monetary profit behaviour of the firm which could have earned more by raising price. Even here we see consumers approving or not firm’s “fixed price”, even here we see consumers approving or not business price.

As Shostak correctly explains:
“Producers set the price, but consumers, by buying or abstaining from buying, are the final decision-makers as to whether the price set will lead to a profit. Producers in this regard are at the total mercy of consumers.”
And as Greaves explains and refutes:
“Businessmen experiment with various prices on a trial and error basis. Experience and market studies furnish some clues, but the best they can do is to select a tentative price for their good or service on the basis of their best estimate of what consumers will pay per unit. This becomes their "asking price." This "asking price" may appear to be "fixed" or "administered." They may print this "asking price" on their product's label, list it in advertisements and even instruct their salesmen to quote this price to potential buyers on a take-it-or-leave-it basis. However, this "asking price" is actually just the first step in trying to bring about a trade that will be mutually satisfactory. If a businessman wants to sell his entire stock eventually, if he wants supply and demand to come out more or less even, his "asking price" cannot be considered as permanent or "fixed." Nor can he "administer" prices. If he does not enjoy a specially privileged position, protected by government from competitors, it is the businessman's potential customers who can say "take it or leave it," refuse to buy from him and look for substitute goods and services. Thus if the businessman wants to sell, he must remain flexible and willing to raise or lower his "asking price" according to the wishes and whims of consumers, as they express them on the market.  
Whether the would-be seller of a product is a large corporation, be it General Foods or General Motors, or a peddler in a Middle East bazaar, he is always at the mercy of consumers on a free market.”

-"But I mean that Ford is so large that his actions affect great part of the market, so he can control the price."

This only means accepting the fallacious doctrine of monopolistic competition.

-"Come on! Have you seen how prices are determined in a company? They are cost-determined prices."

The theory that establishes “costs determine prices” has been refuted many times, as well as the myth of “cost-push inflation”. Böhm-Bawerk specially deals with the problem that our daily experience apparently sees that any business set the price by just making a summation of all costs and adds a margin. However, and this is a very fundamental thing, a business man have been willing to incur in costs today because he expect to sell the product at a future price that covers his costs and give him a margin. It is the (expected future) price what determined his (past incurred) costs, costs do not and cannot determine prices. A producer of a good has spent $450 only because he expected to sell the good in future at a price of, say, $500 or more. If he expected to sell it at a price of $400 he would not have incurred in costs, the expected price determined his spending (or not spending) in costs. He estimated that price according to his anticipations about subjective valuations of his potential demanders. He is estimating how much his customers would pay; but he is not making them pay. According to his estimation of future prices, entrepreneurs spend today (or not) in costs. Actually they are willing to incur in costs only up to the price they expect to obtain, the expected price is the limit. As Bawerk says: “It runs, in the clearest possible way, in an unbroken chain from value and price of products to value and price of costs—from iron wares to raw iron, and not conversely.”

What we observe in some business is the rule of thumb of adding costs and putting a mark-up, so they apparently “fix price” the good. But that is not controlling price! You can put the price you want, but until a guy comes along and put the dollar to pay what you ask, there is no price that is worth. It is totally irrelevant the price that the firm fix. If after 3 weeks he have not sold the product, either because consumers buy it cheaper in other place or decided to not buy at that high price, he cannot remain obstinate and he will have a decision to make: either he reduces the price until people come to buy or he goes bankruptcy. Big companies do not “fix prices”, they usually have price departments that are continually alert about how stocks moves (which product have been bought a lot and which have not), and change prices (up or down) accordingly. By “trial and error” they are permanently estimating the price which is in accordance to the subjective valuations of marginal pairs. What superficial observers see as “controlling or fixing” price is actually a method to estimate a price determined by subjective valuations of “marginal pairs”.[5] Not only is this process in completely agreement with consumer sovereignty, this “society of one-price” is an institution created to avoid the enormous costs of negotiation in an isolated exchange, it saves time that could have been used in negotiating each price. Big business introduced this “ask price” system in the beginning of century and was such a success that it has become a daily reality. This institution facilitates to find the market price determined by subjective valuations of marginal pairs. Only a very superficial observation can make someone to think that it is business which fixes prices.

But even a very little quota of common sense can demonstrate the wrongness of the “administered price” doctrine. If world were so easy that any company just have to make a cost + profit (mark up) = price equation and just sell, then all of us (workers, landlords, etc.) would be big business men. I myself would start a company that produces pencils and fix myself a $10.000.000 (or 100.000.000! why not?) monthly wage. I would contract all my friends and people I like and I would pay them $200.000 to work with me, and of course I would hire this secretary at a wage of $4.000.000 monthly. Notice that, with this “structure” of costs, the pencil I would sell should have to have an extremelly expensive price (especially because I would add a 500% rate of profit to the costs, why not?) and I doubt all my friends are good enough at the tasks that the production of a pencil would require. So despite the extreme price, the quality of the pencil would not be so good. Now, does anyone think that the above scenario is feasible or probable? Is someone going to buy the pencils? Of course not! All I did was to use the cost + profit = selling price formula to do business. The fact that everyone agrees that the above example is ridicule is the best prove that entrepreneurial activity is not just about passing cost + profits value to consumers. It does not matter how many costs you add to produce a good, if people does not pay for it, you do not control its price. Contrary to this theory, it is consumers' willingness to buy what decides that the price set will lead to profits or not. In adjusting price to this, the producer must adjust his costs to make a profit.





Old Inflated Inflationary Fallacies (II)


In the first part we saw some fallacies about the “administered price” theory. The task is not over yet, so here is a second part. It is not at all a convincing theory, we will see that it still has numerous theoretical and empirical problems. Rejection is the only alternative I found for this theory; its numerous flaws make it untenable.

-"Wait a moment. Are you saying that there are no “price formers” in the market economy?"

Yes. In the real world free market all firms are “price takers”. There is no firm that can suspend the Law of supply and demand, no company can avoid in having a surplus if the price is too higher or have excessive orders and earn less than the maximum profits by setting a too low price. Sooner or later the firm will tend to set a “market clearing” price, the price that actually clears its supply and give it the maximum profit. In the real world the firm must make a “trial and error” process to “target” this market price[1]. As you read it, in our real world all firms, either big or small, are “price takers”. All are subject to consumer’s desires.

-"Aha! I knew it! You are just relaying on the neoclassical-mainstream theory of perfect competition! And you Austrians call yourselves a heterodox school?"

Of course Austrians do not rely on that. There is a very fundamental difference between real world firms and “perfect competition” firms as Shapiro notes: “Thus real-world firms are "price-takers" no less than firms in pure competition, the only difference being this: PC firms "take" their P from the market right from the start (they have perfect knowledge!), whereas real firms "take" their P only after trial-and-error search in the market. Irony of ironies: real firms are, in an ultimate sense, price-takers, too!

-"So, are you denying any control over price in the real world non-hampered market economy?"

In the real world every firm can set the price they want or not sell at the current market price. The firms can restrict their supply in order to try to obtain a higher price, but all that firms can do is that. Restricting supply is not forcing buyers to pay the higher price; the buyer is free to not pay. All that firms can do is to set the price they want, that’s all, the second half of the action (the purchase of the buyer) is totally out of their control.

-"Ok, can you please give me a summary?"

Shapiro can do it much better than I could do: “Thus we see that so long as the firm: (a) must seek the market-clearing price in order to avoid overpricing or underpricing its product and to maximize its profits, and (b) does not have the power to force buyers to pay its asking price, then so long must the firm—even the ugly "giant" oligopolist—be viewed as a price-taker rather than a price-controller. So long as the market demand can upset any price posted by the firm, we must conclude that it is market demand and not the firm that ultimately determines selling prices. In the absence of perfect knowledge, real-world price-takers have to grope and search for their profit-maximizing price instead of getting it automatically and instantaneously as in the unreal world of pure competition. In the real world, there is no way for the firm to avoid subservience to the market as the ultimate determiner of its selling price. Hence, since all real-world firms are necessarily price-takers, the PC model no longer has a monopoly on price-takers!”

The main problem, the core fallacy, with the “administered” price doctrine is superficiality. Its supporters see someone on some particular market setting a price and people buying the good, and they think that the seller “determined” the price. Consumers don’t feel they are being “administered” when they go to Walmart. Just imagine your daily life if you should bargain the price of every good and service you buy. Imagine yourself haggling every day the gas price of your car every time you need it, haggling a chewing gum price, a movie ticket price, the bread price, the renting price, the pizza price, etc. Just imagine a romantic dinner with your girlfriend and having to bargain the price of meal, the drink price and even bargain with the valet parking guy! It would be an isolated exchange in every exchange! You would end exhausted every day having to negotiate every price, it would be extremely costly. But it is not only a problem of costs. The real world (unhampered) market is, in great majority of cases, a two-sided competition, this guaranties a market price and not having to bargain every price. This process of two-side competition protects the weakest people (those who do not have great bargain abilities). Market process of price formation protects the weak people from others with a much better developed negotiation skills.  

Actually the evolution from the oriental bazar to this “one-price” system is actually a manifestation of consumer’s desires. It evolved to satisfy their demands for a time-saving and easy way to acquire the goods and services they need. The great irony: the system that the “administered” theorists see as a “oligo/monopolist” domain, is actually a manifestation of “consumers sovereignty” and obeys the same fundamental Laws.

-"Yeah yeah, that sounds great “in theory”. But what about the empirics?"

There is no conclusive evidence of the "administered price" thesis at all, all we can say is that there is a lot of conflicting evidence. Its own theoretical problems makes it very difficult to “test” empirically. A good summary is here and you will see the great problems with the empirical test of that. If you come with 100 papers “demonstrating” its existence I could also bring 100 papers denying it. The own inexactitude, arbitrary and superficial nature of the theory allows that.

-"So you are saying that “money matters”?

Yes (but not in the monetarist-positivist way). What we call “inflation” today (the sustained rise in price level in a determined period) is consequence of monetary manipulation. As Haberler explains:
“the so-called “administrative inflation" could never develop without an expansion of monetary demand. But all I wish to show here is how, without the assumption of arbitrary administrative discretion in price fixing, the price behavior sketched by Gardiner Means can be explained.”

-"Are you certain of this?"

Prices that are "administered" are not prices of our uncertain world. An entrepreneur produces a good only because he anticipates a margin between today costs and the expected future price, if this is not expected to happen he will not launch the project. Those future prices are not “equilibrium” prices in neoclassical sense, but the prices that the producer expects the consumers of his product will be willing to pay. Notice that the time difference between these two magnitudes (today costs and future selling price to be asked) gives the margin for uncertainty, a lot of things can happen between these moments. It could be the case that a) product price is approximately the same he expected, so he obtains the expected profit or b) it can be that the price is higher so he earns more than he expected or c) the price is lower so he earns nothing but at least he is able to cover some of the costs or d) the price is so low he cannot even cover costs and he lose money. But not even costs are rigidly determined in present; they also are to some extent uncertain. Remember that in Austrian theory not only the ends are subjective, but also the means. Uncertainty is a fundamental element and its impossible for human action to exists without it; the axiom of human action implies uncertainty. Is there any uncertainty when you can “administer” the price of your product? If you have “control over price” then you are certain of that price, you control it! This theory assumes away any trace of uncertainty in this issue. Not only it assumes that your company or industry certainly controls the price, it also assumes you are certain that buyers will pay that prices. You are not anticipating future prices or costs; you are assuming that the entrepreneurs are certain about future price and that that certainty will be fulfilled (does this sounds to you like “perfect knowledge-equilibrium” as much as it sounds to me?). I must say this because the school of thought that uses administered price as a “price theory” claims that uncertainty is very important.

Conclusion

This theory is not even a theory of price determination. All that can do is to describe a particular institution (like one-price markets, mark ups rules of thumb, etc),  but it does not tell us anything about the real ultimate causes of price formation. The problem with it is its superficiality, it is the main problem about methodological nominalism: it cannot reach the essence.

It should not be a mystery that this "heterodox" post keynesian-friendly guy is destroying Argentina's economy.



sábado, 11 de mayo de 2013

Golden Axe


And I don’t mean this Golden Axe. 

Nathan Lewis has a very bad news for inflationists and other monetary interventionists. Here is a beautiful ranking of Industrial Production growth for the US in different periods. And the results are striking…


  1. Gold Standard (1870-1912): 682%
  2. "Golden Age" of Keynesianism (1946-1970): 209%
  3. "Golden Age" of Monetarism (1970-2012): 159%

Now that we know this and that we also know that the “Long Depression” was a myth, maybe the mainstream must rethink some very bad misconceptions about late 19th century.

lunes, 6 de mayo de 2013

Sraffallacies: An Abridgment



Hi guys! I have seen my post about Mises-Sraffa have been seen a lot of times and given that it is sooo long, I have decided to put a condensed version of the original post. If you want to see the full story with all footnotes, references and details just click here. If you are a Post-keynesian and you want to criticize me, please read the full story, not just this post.

Introduction 

One of the most repeated anti-Austrian cliché of the internet blogosphere is the one that says basically: “Sraffa destroyed Hayek and Austrian Business Cycle Theory (ABCT)”. After that, I started to read ABCT’s original developer and creator, a guy called Ludwig von Mises, and all I found was that the reports of this death have been greatly exaggerated.
  
1. Misesian fully developed “natural rate of interest” was not a “barter-rate” 
 
Misesian ABCT is not about a monetary “natural rate of interest” deviating from barter rate of interest because of this:

a) In a barter non-monetary economy there is no space for monetary economic calculation. Without people’s monetary calculation which can be falsified, there cannot be any cluster of malinvestments and without malinvestments there is no crisis and depression.

b) In an economy without money and monetary economic calculation there is no way to even insulate interest (the value difference between present and future goods) in a unitary rate.

c) A barter economy is just a “fictitious concept”. Mises and today’s Austrians know perfectly well that you cannot calculate a barter rate.

d) An economy with money is totally different from an economy without money, because money is not just a veil (as Mises demonstrated from his very first book). You cannot compare or use one as a benchmark for the other.

e) To determine a barter rate, we need the aggregative concept of “real capital”. A concept totally rejected and criticized by Mises, so it is useless to “determine” a barter rate.

f) In his “barter wheat” example, Sraffa demonstrated that he did not grasp the essence of the theory he was trying to criticize in the first place. 


2. Misesian ABCT did not use a “unique rate”


Mises explicitly rejected the idea that in a changing economy (in a non-long-run equilibrium economy) there could be a uniform-unique-equilibrium rate of interest:

a) Originary interest is determined by (temporal) valuations of humans, as well as the price of any other good is determined by valuations interacting. As valuations are different in one determined moment and fluctuates along successive moments, also interest does (the discount of future goods). It varies as varies any other price in a changing economy.

b) The gross market rate of interest, which includes other things that are not interest, is also non-uniform in a changing economy. Actually in a changing economy we can “observe” only gross rates, we cannot “see” the pure originary rate.

c) In dealing with credit expansion we must know that it is not an equilibrium that is broken, but it is a process that is disturbed. It is the process what is perturbed, the appearance of new fiduciary media (credit expansion) makes the process deviates from what would have been without that perturbation.


3. Mises did never look for an “equilibrium-neutral rate” and actually there never can be a “neutral money”


Neither Mises nor Hayek were looking for a neutral money to avoid cycles, neutral money cannot exist in our world: 

a) Assuming neutral money is a (wrong and unreal) starting point of analysis, but it is not a goal to achieve. 

b) ABCT is based on a non-neutral money and its effect on different prices in different proportions at different moments. Assuming money neutrality means to assume a neutral rate of interest, no deviation can exist, and with no relative deviation of monetary rate there cannot be ABCT. The reason why market rate can be affected first and in a great proportion is the non-neutrality of money. In assuming neutral money, you assume away any possibility of ABCT. 

c) In order for money to be neutral, you need an unchanging economy. Non-neutrality is an essential feature of a changing economy, in a changing world there cannot be neutral money. 

d) Neutral money is an unreal, self-contradictory and faulty concept.
 

4. The policy for banks is NOT to target any “natural rate” 


You can forget the 3 points above if you like, because this last section is the ultimate demonstration of the failure of Sraffa’s “refutation”. Sraffa’s victorious final comment was that (Hayek’s interpretation of) ABCT recommended to the banks a policy of targeting the “natural rate”, but because he said that in a growing (changing) economy there are multiple rates of interest, then it is an impossible task. But that was not true at all:

a) Mises did not ask for a policy to target any “natural rate”.

b) Misesian “policy” was not that banks must not lower interest, but that they must not expand credit out of thin air. Banks can lower the interest if they want to or there can be as many as one jillion of different rates of interest, but as long as they do not expand fiduciary media they will not produce a cycle. The problem was not and has never been a problem of “accommodate” bank’s interest rate to “the” natural rate. Sraffa’s problem of multiple rates is totally irrelevant to Mises’ construction.

c) Understanding point 2) is so important that we can think in a situation where it is possible to initiate a boom-bust cycle even raising monetary rate. How? Only by expanding credit.

d) The reduction of the monetary interest rate that boost a boom-bust cycle is not a reduction in absolute terms, or in terms of a “barter rate”. What initiates a cycle is a reduction relative to a rate of interest that would have prevailed in a market without credit expansion. This is the reason why ABCT is compatible even with a situation in which the rate of interest is raising in absolute terms, because is raising less than it would rise in an environment without credit expansion.


Conclusion 
 
Sraffa’s critique of Hayek is totally irrelevant for the fully developed ABCT in Misesian sense. The canonical exposition of ABCT is safe from the Ricardian critique. Not only Sraffa did not refute ABCT, he even overlooked some of the most important aspects of it. This only reinforce Austrian's interpretation about that ABCT was never refuted in the 30s and after, it was simply ignored against Keynesian revolution.