Lachmann Worked on Secondary Depressions or the Process of Secondary Deflation when Research Assistant to Hayek

Austrian Economics Newsletter: After you moved to England in 1933 you became a research assistant to Hayek. What type of topics were usually of interest in the famous Hayek-Robbins seminar?

Ludwig M. Lachmann: In general, problems of the business cycle and of capital theory. I actually worked on secondary depressions. That is to say, what Hayek first used to call the process of secondary deflation, a word that had been coined by a German economist to denote that part of the process of depression which goes beyond any kind of primary maladjustment. That is to say, that kind of depression that would not be an adjustment process in the Hayekian sense. It was by then (1933) admitted that a depression of this kind could develop and I think everybody admitted that by 1933 the world was in a process of secondary depression.

—Ludwig M. Lachmann, “An Interview with Ludwig Lachmann,” Austrian Economics Newsletter 1, no. 3 (Fall 1978), https://mises.org/library/interview-ludwig-lachmann (accessed January 29, 2020).

The Key Problem with Rational Expectations Is They Assume Everyone Is an Accomplished Econometrician and a 100% Monetarist

Austrian Economics Newsletter: What do you see as the fundamental problem with the rational Expectations literature?

Gottfried von Haberler: Oh, they go much too far. They are saying, for instance, that monetary policy cannot have any effect because people immediately anticipate it; that, when they read in the paper that the money supply has gone up, everyone concludes that the price level is going up, and everyone takes immediate actions which make the effect nugatory. So they, in effect, assume that everybody is an accomplished econometrician, and a one hundred percent monetarist, which I think is simply not so.

—Gottfried von Haberler, “Between Mises and Keynes: An Interview with Gottfried von Haberler,” Austrian Economics Newsletter 20, no. 1 (Spring 2000), https://mises.org/library/between-mises-and-keynes-interview-gottfried-von-haberler (accessed January 28, 2020).