1. Skip to navigation
  2. Skip to content
  3. Skip to sidebar
Source link: http://archive.mises.org/11404/four-hundred-years-of-dynamic-efficiency/

Four Hundred Years of Dynamic Efficiency

January 8, 2010 by

Mainstream neoclassical economics developed as a copy of 19th-century mechanical physics: using the same formal method but replacing the concept of energy with that of utility. FULL ARTICLE by Jesus Huerta de Soto

{ 24 comments }

Allen Weingarten January 8, 2010 at 10:45 am

De Soto writes “the firmer and more enduring a society’s personal moral principles are, the greater its dynamic efficiency will tend to be.”

Were man to reject theft, fraud, and irresponsible behavior, this would preclude virtually all of the major economic disasters that occur. This is demonstrated by (Wertfrei) Austrian economics, but can be advanced by traditional moral precepts.

Marcus January 8, 2010 at 11:58 am

btw if you follow the link to the video you will find the speeches of the Salamanca conference :)

EconAndre January 8, 2010 at 12:28 pm

Thanks for the outstanding address. Several impressive insights in economic history, philosophy, the influence of physics (Walrus was an engineer, I believe.), the contrast between subjectivism and labor theory of value, the role of theology on dynamic efficiency. None of this is taught in the typical graduate program.

A key to the paradox mentioned at the end of the article may be found in the study of the contrast between state coersion-based individual action and desire-based voluntary action, as laid out by theologian John Piper at http://www.desiringgod.org.

Ned Netterville January 8, 2010 at 4:21 pm

I first would like to express my own plaudits for this insightful address by De Soto, but I am unable to improve on EconAndre’s comment so I’ll merely add, Hear, hear!

One point of disagreement, however. De Soto said this:

“It must be taken into account that the force of entrepreneurial creativity also manifests itself in the desire to help poor people and in the systematic search for situations in which others are in need, in order to help them. In fact, coercive state intervention, through the typical mechanisms of the so-called “welfare state” neutralizes and to a great extent blocks the entrepreneurial effort to help one’s neighbors (both close and distant) who are experiencing difficulties. And this is an idea that, for instance, Pope John Paul II stressed in Section 49 of his 1991 Encyclical, Centesimus Annus.”

But in the concluding paragraph of Section 49 of Centesimus Annus, John Paul II said this:

“Apart from the family, other intermediate communities exercise primary functions and give life to specific networks of solidarity. These develop as real communities of persons and strengthen the social fabric, preventing society from becoming an anonymous and impersonal mass, as unfortunately often happens today. It is in interrelationships on many levels that a person lives, and that society becomes more “personalized. At times it seems as though he exists only as a producer and consumer of goods, or as an object of State administration. People lose sight of the fact that life in society has neither the market nor the State as its final purpose, since life itself has a unique value which the State and the market must serve. Man remains above all a being who seeks the truth and strives to live in that truth, deepening his understanding of it through a dialogue which involves past and future generations.”

My disagreement is not with De Soto, but with John Paul, whose understanding of the market differs from mine (and, I think, De Soto’s). I see no conflict between nor dehumanizing affect upon individuals and/or/by the market. Acting Individuals are the market; the market is comprised of individuals in action. it is a place where they can express themselves, including expressions of creativity and charity (love). When John Paul says, “At times it seems as though he exists only as a producer and consumer of goods, or as an object of State administration,” I believe it only seems that way to him because he has a more limited vision of what constitutes “the market” than I have. I see the market as De Soto sees it, a place where “the force of entrepreneurial creativity also manifests itself in the desire to help poor people and in the systematic search for situations in which others are in need, in order to help them.”

John Paul and I may agree on the dehumanizing affect when individuals become “an object of State administration.” It makes no difference whether the state’s ministrations are benevolent (i.e., furnishing benefits) or malevolent (i.e., taxing others to pay for those benefits). In both cases the individual is diminished by the policies and procedures of the state. The polar difference between the market and the state, which makes it wrong for John Paul to juxtapose the individual between them, is that the former consists of humans peacefully interacting always for their mutual benefit and never resorting to force as a means to their ends, whereas the state is an institution that necessarily inaugurates the use of force in the conduct of otherwise peaceful human relations when it forcibly collects taxes upon which it utterly depends for its existence. And from that unholy contrivance arise many if not most of the troubles of mankind with which John Paul as pope was concerned.

edmund o'sullivan January 9, 2010 at 4:07 am

The teaching of John Paul II and that of Mr Soto and Ned Netterville can be reconciled by logical reasoning.
The majority of production in advanced economies (80 per cent plus in the UK) is accounted for by services. What is a service? It’s an intangible. But what is an intangible?
Economists say it is something which is not tangible: in other words it has no physical characteristics and cannot be seen, touched, heard, tasted or smelt. It is a wholly subjective category.
Marginal analysis, the basis of Austrian economics, depends on a good or product having tangible characteristics. If it has none, then it’s not just impossible to make coherent equimarginal choices with other intangibles. It’s logically impossible to tell the difference between and among them to begin with. You can make an equimarginal choice between wine and bread. But you can’t when the choice is about the intangible equivalents of wine and bread.
In these circumstances, the logic supporting the idea of individual, household and market demand and supply collapses. So in intangibles, the market not only doesn’t work. Logically, it doesn’t exist.
This conclusion flows irresistibly from the work of Von Mises, his predecessors and followers. It is the natural extension of the master’s thinking to the times we now live in.
In intangibles, there are only constructive interactions at the level of the individual. These create value that only exists in the minds of those involved in those interactions. You can call it utility if you like, but value in intangibles exists also only to the extent that it is shared. Unless the value created by interactions is not shared, there is no incentive for individuals to participate in them.
In intangibles, value is not created by human action, as it is in tangibles. It is created by human interaction. This is a synthetic a priori concept that is based on the recognition of the obvious fact that people naturally, and without the direction of the state or the business corporation, seek constructive and interactive relationships with other people. Trade is a by-product of this compulsion, not its objective.
This is precisely the ethical underpinning of the Salamanca’s school teaching and one that De Soto seems to ignore. The Jesuits and Dominicans at Salamanca had no interest in promoting ideas that were about making people rich or richer. They were seeking to apply the Catholic principles of faith and good works by promoting a brotherhood and sisterhood of all human beings — regardless of race, gender, class, status and religion. This was to be made possible by removing the barriers to constructive human interaction on a global scale. Obstacles to free trade and government monopolies were just two of them. Envy, greed and an obsession with material things were then, and still are, much larger barriers to constructive human interaction and the creation of a truly virtuous society.
That removing these barriers might also lead to an increase in material wealth is an attractive by-product of the Salamanca School’s teaching to non-Catholic, agnostic and atheist Libetarians like Rothbard and Von Mises. But the school was about helping people build up riches in the kingdom heaven, entry to which would only come with the end of the world and the final judgement. It was definitely not about putting money into bank accounts here and now.
De Soto also seems to ignore the fact that Catholic teaching conflicts with that of Calvinists and others who believe that the ownership of material wealth in this world is evidence of a Christian’s virtue. This is a heresy denounced by Catholic teaching but one that has been translated in contemporary Western society into the worship of wealthy business people purely because they are very rich.
Catholics believe you can be poor, especially by choice, and redeemed; and can be damned if you are rich, no matter how much you give to charity or how successful you are in business. But as Jesus said, it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven.
John Paul II rightly repeated that Christ and the Catholic Church has never been about private property, or its promotion. Its goal has been to encourage people to love each other as they love themselves. It’s a message that still resonates and one that has been made more relevant by the moral failures of both government and business during the credit crunch. And it is one that is absolutely appropiate to societies where intangibles are dominant.

edmund o'sulivan January 9, 2010 at 6:23 am

I regret that there are a couple of infelicities in my blog:
1 In para 6, the final sentence should read:
Unless the value created by interactions is shared, there is no incentive for individuals to participate in them.
2 In para 9, it is of course the Kingdom of Heaven.

Mea maxima culpa.

Stephen Grossman January 9, 2010 at 9:51 am

>[de Soto]Adam Smith dropped earlier contributions about subjective value, entrepreneurship and emphasis on real-world markets and pricing and replaced it all with a labour theory of value and a dominant focus on the long run “natural price” equilibrium, a world where entrepreneurship was assumed out of existence.

This discussion of the history of economic theory is an excellent supplement to de Soto’s _Money, Bank Credit & Economic Cycles_. I am improving my understanding of the absurd sterility of mainstream economics.

As for his attempt to base economics in religious morality in the context of the floating pseudo-abstractions of rationalism, all I can say is read Ayn Rand’s primacy of reason in “What is Capitalism,” in her _Capitalism: The Unknown Ideal._

Ned Netterville January 9, 2010 at 2:33 pm

edmund o’sullivan@: “Marginal analysis, the basis of Austrian economics, depends on a good or product having tangible characteristics. If it has none, then it’s not just impossible to make coherent equimarginal choices with other intangibles. It’s logically impossible to tell the difference between and among them to begin with. You can make an equimarginal choice between wine and bread. But you can’t when the choice is about the intangible equivalents of wine and bread.”

Mr. o’sullivan, I implore you to first read Ludwig von Mises’ HUMAN ACTION, and Murray Rothbard’s MAN. ECONOMY AND STATE, before criticizing Austrian economic analysis. Your above comment demonstrates that you have not read these seminal expositions of Austrian economics. In the first place, and right off the top of your comment, you egregiously err in your understanding of what Austrian economics is. The basis of Austrian economics is not marginal analysis but rather subjective analysis, which is fully competent to make coherent choices between both tangibles and intangibles. Indeed, it is the only competent means. Marginal utility is an important, supplemental, tool to aid in understanding and a teaching construct of Austrian economics.

As Murray Rothbard states in MAN, ECONOMY AND STATE (Scholar’s edition, p. 12): “It should be clear that the end of the production process—the consumers’ good—is valued because it is a direct means of satisfying man’s ends. The consumers’ good is consumed, and this act of consumption constitutes the satisfying of human wants. This consumers’ good may be a material object like bread or an immaterial one like friendship. Its important quality is not whether it is material or not, but whether it is valued by man as a means of satisfying his wants. This function of a consumers’ good is called its service in ministering to human wants. Thus, the material bread is valued not for itself, but for its service in satisfying wants; just as an immaterial thing, such as music or medical care, is obviously valued for such service. All these services are “consumed” to satisfy wants. “Economic” is by no means equivalent to “material.”

Subjective analysis, by the way, is also fully competent to analyze spiritual options as well as and as against tangible goods and intangible services. It so happens, at this stage of my own life, my deepest felt wants are often spiritual rather than material or otherwise intangible. And they fall within the scope of Austrian economic analysis, rightly understood, or perhaps more precisely, what Mises called praxeology.

I think John Paul II would have benefited from an understanding or better understanding of Austrian economics, which would have given him a truer concept of what constitutes the free market. As Mises pointed out in Human Action (p. 499): “If action is primarily directed toward the improvement of other people’s conditions and is therefore commonly called altruistic, the uneasiness the actor wants to remove is his own present dissatisfaction with the expected state of other people’s affairs in various periods of the future. In taking care of other people he aims at alleviating his own dissatisfaction.”

I would add that Mises in writing HUMAN ACTION, SOCIALISM, and in his teaching and writing other books, undoubtedly had as his primary objective the improvement of other people’s condition, just as John Paul had in writing CENTESIMUS ANNUS. And since, like John Paul II, he spent virtually his entire adult life actively engaged in that endeavor (and, it might be persuasively argued, with greater long-term impact), if his title had been pope rather than professor, he would by now have been elevated by the Catholic church to sainthood.

Mr. o’sullivan, if you will read HUMAN ACTION, CH XXVII, the section beginning on p. 724ff, entitled “Righteousness as the Ultimate Standard of the Individual’s Action,” and compare it with what John Paul said about the market in CENTESIMUS ANNUS, I think you may conclude that Ludwig von Mises had a better understanding and a more realistic approach to the creation of, as you call it, “a truly virtuous society” than had John Paul II.

I think I could refute many of the other contentions in your comment, but since your other points and arguments all depend in their logic upon your serious misapprehension of what Austrian economics is and what it can do, the effort would be superfluous. Suffice to say here that, in my opinion you just dig yourself deeper into error, and, I would add, that based on Mr. De Soto’s article and your comments, Mr. De Soto’s grasp of the teachings of the Salamanca School is perhaps better informed than yours.

Ned Netterville January 9, 2010 at 3:47 pm

edmund o’sullivan@: “Catholics believe you can be poor, especially by choice, and redeemed; and can be damned if you are rich, no matter how much you give to charity or how successful you are in business. But as Jesus said, it is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven. John Paul II rightly repeated that Christ and the Catholic Church has never been about private property, or its promotion…”

The Catholic Church, with all of its vast stores of virtually priceless material objects and its hoard of invested lucre, may, as you say, have never “been about private property,” but Jesus of Nazareth most assuredly was. As a matter of fact, based on some of his parables, it could be argued that he was the prototypical Austrian economist.

In his parable of the Good Samaritan, Jesus famously shows that the Good Samaritan, in contrast to the priest and Levite, succored the stranger left for dead on the side of the road and addressed the poor man’s continuing medical care WITH HIS OWN RESOURCES (i.e., his wealth, his private property). The Samaritan pointedly did not call for the Roman state to adopt a program of empire health-care insurance to care for the man’s injuries, for which no doubt the priest and Levite would have advocated. Jesus concluded the parable by telling his listeners to go and do as the Good Samaritan did.

The parable of the Prodigal Son was all about private property and its abuse as well as forgiveness.

In fact if you look at all of Jesus parables, (http://www.lifeofchrist.com/teachings/parables/default.asp), you will notice that the vast majority uphold the principles of private property directly or indirectly. Does that mean Jesus advocated the pursuit of wealth. Of course not, but neither, I might add, does Austrian economics, nor, as far as I can tell, have any of the leading Austrian-school economists. It would be far less misleading to argue that Jesus was a capitalist than to suggest that Austrian economic analysis is concerned with the avaricious pursuit of money. There are, I think, more discrepancies between the doctrines and practices of the Catholic church and the teachings and example set by Jesus than there are between his way of life and, for example, that of Austrian economist Ludwig von Mises. (Now when someone accuses me of going overboard in my enthusiasm for Austrian economics and comparing Mises to Jesus, I can only urge them to focus on the words “discrepancies” and “Catholic church.” Jesus said of the scribes and Pharisees that “But all their works they do for to be seen of men: they make broad their phylacteries, and enlarge the borders of their garments, And love the uppermost rooms at feasts, and the chief seats in the synagogues,” Is this not a description of the elaborate robes and behavior of popes and cardinals as opposed to that of shirt-sleeve Austrian economists?

edmund o'sullivan January 10, 2010 at 9:59 am

Ned. It may be the case that you are better at interpreting the New Testament than John Paul II was, but this is something Catholics will find hard to accept.
You might read the parables as showing that Jesus was a wannabe day trader longing for a new motor.
But that’s not what the Catholic Church has ever believed or taught (or ever will do).
On a more substantive matter, the quote from Rothbard actually demonstrates that he did not recognise the logical implications for consumers and producers of having to make decisions about things that are intangible. I shall explain why.
Consider again the issue of bread and wine. How can you tell wine is wine? It is because it looks like wine; tastes like wine, smells like wine, feels like wine and, when poured into a glass, sounds like wine should. Look through a microscope and it’s wine. Analyse it chemically: still wine. It may not actually be wine. But so far as our senses tell us, it is.
Now consider wine with no physical characteristics: no colour, shape or texture; no taste or smell. There are no molecules and no micro-organisms.
How, in these circumstances, do you know it’s wine? And more importantly, how can you coherently make a choice between intangible wine and intangible bread. You can’t. Because, as far as your senses are concerned, there’s no difference between them.
The importance of marginality to Austrian School Economics is this: as Von Mises explained, and as Hans Hermann Hoppe also explains in his brilliant essay published on this website, subjectivity on its own is insufficient to explain the world as it is. Subjectivity, our perception of the world, is connected to the real world through human action. And the motive for human action is the feeling of discontent with the world as it is or the desire to remove a source of discontent. The marginal principle is, consequently vital. It is the coherent way that people make choices that help reduce the discontent that is the source of all human action.
But how is the thinking, reasonable, rational “man (sic Von Mises)” to make of a set of choices involving things that are indistinguishable as all intangibles, by definition, must be?
The answer is that he or she makes a choice that delivers the greater amount of positive reaction from his or her counterparty. What other option does he or she have?
Hence economics where intangibles are dominant is not about HUMAN ACTION but about HUMAN INTERACTION.

Ned Netterville January 11, 2010 at 12:35 am

Edmund O’Sullivan @ “You might read the parables as showing that Jesus was a wannabe day trader longing for a new motor. But that’s not what the Catholic Church has ever believed or taught (or ever will do).”

Edmund, may we–you and I interacting–agree to fight fair, so to speak. I will do my level best not to misquote or mischaracterize your words, nor resort to ad hominem, and ask that you do the same. As you know, I did not even say anything that could be construed by an honest person to mean that I thought “Jesus was a wannabe day trader longing for a new motor.” I did say that “based on some of his parables, it could be argued that he was the prototypical Austrian economist.” And I said, “if you look at all of Jesus parables, you will notice that the vast majority uphold the principles of private property directly or indirectly. Does that mean Jesus advocated the pursuit of wealth. Of course not…” I am willing to defend these assertions, if you want to debate them, but I vociferously reject your characterization of ‘em.

Edmund, I need to correct something I said earlier. I said the basis of Austrian economic analysis is subjective analysis as opposed to marginal analysis. I should have said its basis is human action. Here is Rothbard’s statement of the matter in ME&S:

“The distinctive and crucial feature in the study of man is the concept of action. Human action is defined simply as purposeful behavior. It is therefore sharply distinguishable from those observed movements which, from the point of view of man, are not purposeful. These include all the observed movements of inorganic matter and those types of human behavior that are purely reflex, that are simply involuntary responses to certain stimuli. Human action, on the other hand, can be meaningfully interpreted by other men, for it is governed by a certain purpose that the actor has in view.[2] The purpose of a man’s act is his end; the desire to achieve this end is the man’s motive for instituting the action.

“All human beings act by virtue of their existence and their nature as human beings.[3]We could not conceive of human beings who do not act purposefully, who have no ends in view that they desire and attempt to attain. Things that did not act, that did not behave purposefully, would no longer be classified as human.

“It is this fundamental truth—this axiom of human action—that forms the key to our study. The entire realm of praxeology and its best developed subdivision, economics, is based on an analysis of the necessary logical implications of this concept.[4] The fact that men act by virtue of their being human is indisputable and incontrovertible. To assume the contrary would be an absurdity. The contrary—the absence of motivated behavior—would apply only to plants and inorganic matter.”
http://mises.org/rothbard/mes/chap1a.asp#1._The_Concept_of_Action_

So human action encompasses and requires choice, and choice is a product of subjective analysis. Here is what von Mises said on subject, which I will print because I believe it refutes your contention the Austrian economics and subjective analysis cannot evaluate intangibles.

“The general theory of choice and preference goes far beyond the horizon which encompassed the scope of economic problems as circumscribed by the economists from Cantillon, Hume, and Adam Smith down to John Stuart Mill. It is much more than merely a theory of the “economic side” of human endeavors and of man’s striving for commodities and an improvement in his material well-being. It is the science of every kind of human action. Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference. The modern theory of value widens the scientific horizon and enlarges the field of economic studies. Out of the political economy of the classical school emerges the general theory of human action, praxeology[1]. The economic or catallactic problems [2] are embedded in a more general science, and can no longer be severed from this connection. No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology.”
http://mises.org/humanaction/introsec1.asp

Given Mises statement, ” Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference.” And given Rothbard’s statement, “This consumers’ good may be a material object like bread or an immaterial one like friendship. Its important quality is not whether it is material or not, but whether it is valued by man as a means of satisfying his wants.” I truly do not see any distinction between what you describe as “intangible” and what Rothbard refers to as immaterial, nor that what you would classify as intangible is not within the ambit of Mises all encompassing arena wherein people choose. Nor does your contention (correct me if I mischaracterize) that there are things that must be shared to be realized put those things outside of the realm of choice by each, or both, or all of those involved. The category that you call intangible is exactly the same, by your own description, as what Rothbard called “immaterial” and what Mises would include in “ideal issues.” Indeed, you specifically said services were intangibles and Mises specifically said services were amenable to subjective analysis.

Edmund, you ask, “Now consider wine with no physical characteristics: no colour, shape or texture; no taste or smell. There are no molecules and no micro-organisms. How, in these circumstances, do you know it’s wine? And more importantly, how can you coherently make a choice between intangible wine and intangible bread. You can’t. Because, as far as your senses are concerned, there’s no difference between them.”

To me this siiloquy is a nonsequitur. In the first place, what does coherent have to do with it, and who are you to judge? A person is perfectly capable of valuing, and only is he or she in a position to do so. Your judgment of coherent or incoherent is completely meaningless. Furthermore, there is no such thing as intangible wine, but if there were, I would go for it over the real stuff ’cause alcohol is poison to me. Please keep in mind that Austrian economics deals with reality and what you are positing is unreal.

Edmond, you said, “But how is the thinking, reasonable, rational “man (sic Von Mises)” to make of a set of choices involving things that are indistinguishable as all intangibles, by definition, must be? The answer is that he or she makes a choice that delivers the greater amount of positive reaction from his or her counterparty. What other option does he or she have? Hence economics where intangibles are dominant is not about HUMAN ACTION but about HUMAN INTERACTION.”

This explanation makes no sense to me. How, may I ask, is it possible to make, in your words, “a choice that delivers the greater amount of positive reaction from his or her counterparty,” when, logically, one cannot make a choice that has a reaction based on that reaction? How can one know the counterparty’s reaction to one’s choice BEFORE one’s choice is made? The choice is antecedent to any reaction to it. You may have something in mind that isn’t in your explanation, for, at least to me, your explanation is incoherent.

edmund osullivan January 11, 2010 at 9:07 am

Truce agreed so long as you cease and desist from suggesting that Jesus was an Austrian in economics or anything else!!! Catholics (and the work of John Paul II was the source of this spat) derive their understanding of their faith from Holy Scripture as intepreted by learned men and women (not Von Mises who was an agnostic and lapsed Catholic!!!) and passed on through Holy Tradition. John Paul’s teachings draw on both sources, including his own understanding of the issues he spoke and wrote about. Non-Catholic views of Jesus could be valid or even right. But that’s not the issue.
I’m pleased we agree now that the basis of Austrian economics is Human Action, but you need to take into account the crucial role tangible marginality plays in Austrian economic theory. I would again refer you to Hans-Hermann Hoppe’s essay on Austrian economics on this site.
How does a man or a woman decide to do one thing rather than another? Von Mises and his followers say a rational person acts to remove a source of discomfort. This is critical in building a bridge between thoughts and feelings and the real world (which is the role in which human action serves). How then does it express itself in economics (which Von Mises would probably agree is the “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses” (Lionel Robbins, 1932))?
Austrian economists say it is expressed in choices between alternatives at the margin.
But how can you make choices between intangibles? Take this email exchange. What value has it created? It may be none. It may be a lot, but we don’t know that yet. So why do you and I participate in it? Why not just talk to ourselves?
It is because value in an intangible, like this email exchange, is created solely through INTERACTION. I write this blog in the hope that you will REACT and reply. I then REACT and reply. Neither of us knows where this is going. But we have a desire — obvious among all human beings — to INTERACT (and not only in economics), not just ACT.
Human Action is, of course, involved in Human Interaction. All the principles presented by Rothbard and Von Mises still apply. But the logic that leads to the idea of demand and supply at an individual, household/firm and market level (as a relationship between quantity and price) collapses in intangibles, where the market not only doesn’t work. It doesn’t exist.
The use of the concept of intangible wine was used to help explain why marginality, as it is taught by conventional neoclassical economists and Austrians, can’t apply in intangibles. If you would prefer, make it a choice between two conversations instead. Which one would you prefer?
What matters is not the conversation (and who is to say what one is?), but the person you are having the conversation with. And the quality of the conversation is determined by the nature of the interaction between the conversants. The value flowing from the conversation exists but is noncommensurable and unquantifiable.
These ideas apply to management consultancy, teaching, healthcare and a wide range of activities that are essentially or wholly intangible.
Once it is understood that, in intangibles, there is no market or markets but only interactions at an individual level, the question will then be asked: what role does price (or payment) for an intangible play?
The conclusion is that payments underpinning intangible interactions are in reality exchanges of gifts and obligations between the parties that reflects the value the participants attach to their relationship.
On birthdays, people present gifts. They could have given money, but gifts somehow express more richly the nature of the relationship between giver and receiver.
Once this is understood, it will be evident that economic relationships in intangibles are based on mutual obligations rather than rights.
Rothbard writes in the passage you have selected: “This consumers’ good may be a material object like bread or an immaterial one like friendship. Its important quality is not whether it is material or not, but whether it is valued by man as a means of satisfying his wants.”
Rothbard is totally wrong here. Isn’t friendship at least as well explained as being valued by man (sic) “as a means of fulfilling his obligations.”?
In fact it’s both.
It’s an INTERACTION. Not just an ACTION.

Ned Netterville January 12, 2010 at 10:18 am

Edmund, So that I can be sure that we are on the same page, can you be more explicit in reference to the article by Hoppe. There are many on AE at LvMI by him, I read one upon your first mention, but it may not have been the one to which you refer. Thanks.

Edmund O'Sullivan January 12, 2010 at 12:10 pm

Economic Science & The Austrian Method
This is mainly a philosophical tract and very enjoyable, if abstruse in places (which doesn’t mean its wrong, just that my brain couldn’t take it).

Page 64
“The law of marginal utility follows from our indisputable knowledge of the fact that every actor always prefers what satisfies him more over what satisfies him less, plus the assumption that he is faced with an increase in the supply of a good (a scarce mean) whose units he regards as of equal serviceability, by one additonal unit. From this it follows with logical necessity that this additional unit can then only be employed as a means for the removal of an uneasiness that is deemed less urgent than the least valuable goal previously satisfied by a unit of such a good.”

This article was republished by the Ludwig Von Mises Institute in 2007 with a preface by none other than Lew Rockwell himself who wrote: “In this extraordinary essay, Hans-Hermann Hoppe extends the argument of Ludwig von Mises that the methods associated with natural sciences cannot be successfully appropriated for economic theory.”

Couple of initial points:
1 Hans-Hermann Hoppe is a senior figure in the LvMI.
2 This essay has been given the highest rating by its most senior figure.

The sentences selected do not define equimarginality because there is no need to. Once you accept the argument it presents, equimarginality follows logically, but only when dealing with tangibles (as I argue in this blog).

My point is that Hoppe, Rothbard, Von Mises and others in the Austrian tradition either:
1 Ignore intangibility or,
2 Treat all goods as being effectively tangible (Professor Hoppe, I’m sorry to say, is guilty of that offence in the first sentence).

Because clever people say a rational, acting man or woman will treat a tangible and an intangible identically doesn’t mean they are right.

Rothbard, in the passage about friendship I have commented on previously gets around this issue in another way, which is also faulty.

He says friendship is a means for satisfying his (sic) wants. This suggests we go out looking for friendship and implies that someone else is out there supplying friendship as if friendship were a thing that is produced and consumed like bread.
What Rothbard has done is tangibilise in the intangible. If he had used the word “love” instead of “friendship”, the implication of what he is saying would have been more clear.
Friendship is not produced and it’s not consumed. It can’t be acquired, like a car or a pair of shoes, to satisfy a want. Friendship can’t be stored in a warehouse or traded on a stock market (though a financial derivative in many respects was presented, until recently, as proving an intangible — a promise — could somehow be turned into a thing with a price.)
Friendship is indescribable, immeasurable and intangible. It can’t be bought and it can’t be sold, though charlatans will think it can.
It only exists in the minds and hearts of the parties to that friendship and only exists in the iterative interaction between them.
To the list of “things” that fall into this category add:
love
charity
loyalty
fidelity
You can’t price these. You can’t trade these. And God help us the day when people think you can.

Edmund O'Sullivan January 12, 2010 at 12:43 pm

Ned,
An Austrian microeconomic treatment of diminishing marginal utility can be found in an article by John Egger in An Austrian Foundation for Microeconomic Principles published in the Quarterly Journal of Economics (2008) which was published online on 3 December 2008.
All examples are of tangibles.
The assumption that everything is tangible or can be treated as if it is tangible is made clear.
Page 250, second full par.
‘Value is the magnitude of the anticipation of future well-being one expects from taking a particular action…Choice consists of conceiving of one’s available alternatives, judging value of each, ranking them by value and selecting the highest value.”

Makes sense for tangibles. Not for intangibles (how can you rank something against something else if you can’t tell the difference between them?)

Ned Netterville January 12, 2010 at 3:04 pm

Edmund, I will read the articles you have mentioned, and get back to you, which may be in a day or two.

You mentioned in your first post that 80 percent of the UK’s production was intangible services and therefore not amenable to Austian-economic analysis. For the moment, a question: Am I not able, with or without knowing anything about marginal utility or analysis, to choose between a marketable service and a good, between a tangible and an intangible?

edmund osullivan January 13, 2010 at 12:44 am

We make choices all the time about everything. But the explanation for those choices provided by Austrian and conventional neoclassical economics founders when it comes to intangibles for the reasons I have presented.

In a situation where nothing could be felt, seen, tasted, smelt or heard, how would a rational acting man or woman make choices? He or she would be confronted by a world where there was no apparent cause and effect and where what was chosen is not what he or she thought it was or may have been nothing at all. The result would be a state of mind that would appear to be close to insanity.
Imagine a child kept warm, clean and fed but in long-term isolation from any human contact. His or her material needs are provided for and exclusive choices are available in food and other tangibles to emulate the real world. Would that child emerge in a state that we would regard as normal? It’s possible, though the story of Caspar Hauser suggests that bizarre behaviour might result.
How much more confusing would the world appear to that child if there were no tangibles at all?
Experience shows that, even in making and trading tangibles, the REACTION of people we deal with conditions choice.
Hey mom, look at my skateboard!
Come and look at the new car darling!
Hey jealous neighbour, check out the big boat I’ve just bought with my huge annual bonus!
REACTION is much more important in a situation where choices are being made involving intangibles. In fact, the only thing we have to go by, apart from our own REACTION to the intangible, is the REACTION of the service provider or buyer and the REACTIONS of those close to us that we trust.
Von Mises in HUMAN ACTION gives precedence to the individual over the collective, for reasons that are unclear. Placing the “I” before the “we” is a bit like arguing that the chicken definitely came before the egg.
The concept of HUMAN INTERACTION avoids pointless agonising about the relative significance of “I” and “We”. It argues that they both exist and are essential for the creation of economic value.
In intangibles, value can only be created through constructive interaction. Iterative and increasingly rewarding human interactions lead to increases in economic value, the proceeds of which can then be shared.
It is in this sense, and this sense alone, that the GOOD BOOK and Jesus provide business advice relevant to the times we live in:

Leviticus 19:18 …THOUGH SHALT LOVE THY NEIGHBOUR AS THYSELF, I am the LORD.

Matthew 19:16 …THOUGH SHALT LOVE THY NEIGHBOUR AS THYSELF.

There are 12 direct references to this idea of unselfishness and selflessness in the Bible.

Ned Netterville January 13, 2010 at 12:44 pm

Edmund, thank you for the references. Eggers article adds nothing to my understanding of the law of marginal utility and marginal analysis. I don’t think you have picked a very good representation of analysis the flows from the work of Ludwig von Mises, which remains unscathed by your efforts to denigrate its validity in the analysis of capitalist (or, if you will, market) economies. Let me give you an overview of why I find the logic of your arguments fatally flawed.

I will begin where this discussion began, with the lecture by De Soto, wherein he praised the Salmanaca school for its teachings on economics, creativity, freedom, morality and ethics, and documented his contentions with many direct quotations by Salmanca scholars. The following three paragraphs from the conclusion of his lecture fairly summarize why his praise for Salmanca:

“Up to this point, we have looked at social ethics and discussed the key principles that provide the framework that makes dynamic efficiency possible. Outside of that realm lie the most intimate principles of personal morality. The influence of principles of personal morality on dynamic efficiency has rarely been studied, and in any case, they are considered to be separate and different from social ethics. However, I believe this separation to be completely unjustified.

“In fact, there are moral principles of great importance to the dynamic efficiency of any society, which are subject to the following apparent paradox: the failure to uphold them on a personal level entails a huge cost in terms of dynamic efficiency, but the attempt to impose these moral principles using the force of the state generates even more severe inefficiencies. Hence, certain social institutions are needed to transmit and encourage the observance of these personal moral principles, which by their very nature cannot be imposed by violence and coercion but are nevertheless of great importance to the dynamic efficiency of every society.

“It is mainly through religion and the family that human beings, generation after generation, are able to internalize these principles and thus learn to keep them and transmit them to their children. The principles that relate to sexual morality, the creation and preservation of the family institution, the faithfulness between spouses and the care of children, the control of our atavistic instincts, and the overcoming and restraint of envy, are all of crucial importance to every successful social process of creativity and coordination.”

In his lecture he had pointed out that points that he was making in praise of the teaching of Salmanca had also been stressed by Pope John Paul II in his Centesimus encyclical. In other words, De Soto and John Paul are in agreement, or at least De Soto thinks so. Here is what De Soto said:

“It must be taken into account that the force of entrepreneurial creativity also manifests itself in the desire to help poor people and in the systematic search for situations in which others are in need, in order to help them. In fact, coercive state intervention, through the typical mechanisms of the so-called “welfare state” neutralizes and to a great extent blocks the entrepreneurial effort to help one’s neighbors (both close and distant) who are experiencing difficulties. And this is an idea that, for instance, Pope John Paul II stressed in Section 49 of his 1991 Encyclical, Centesimus Annus.”

Remember, it was me, not De Soto, who inserted a criticism of John Paul’s concept of what constitutes “the market.”

You entered the arena with a post that, among other things, attacked the validity of Austrian economics, the work of Ludwig von Mises, and the market itself (presumably as elaborated by von Mises), because “in intangibles, the market not only doesn’t work. Logically it doesn’t exist.” Your argument that AE and the market do not work, both in your initial post and subsequently, is founded entirely on your assertion that “The majority of production in advanced economies (80 per cent plus in the UK) is accounted for by services,” and because services are “intangible” they can’t be logically analyzed by the methods of Austrian economics, specifically marginal analysis.

You then in your initial post proceed to denigrate De Soto’s lecture because he didn’t mention some aspects of Salmanca-school teaching, which you evidently believe he should have stressed. Against the many direct quotations De Soto used in his lecture, you offer not a single one to support your contention. And you engage in a lot of disingenuous rhetoric. In criticizing De Soto, you say, for example, “The Jesuits and Dominicans at Salamanca had no interest in promoting ideas that were about making people rich or richer.” So what! De Soto never said that making people rich or richer was the purpose of the Salmanca scholars. You also say, “They were seeking to apply the Catholic principles of faith and good works by promoting a brotherhood and sisterhood of all human beings — regardless of race, gender, class, status and religion.” So what! Nothing in De Soto’s lecture denies this, and if you will read just the part of his lecture I quote, you should be able to see that De Soto is attempting to do exactly the same thing.

Edmund, what you have done here, is to create straw men to criticize and flail with your rhetoric rather than challenge what De Soto actually said. You have also done this in other posts. Here is an outrageous example: “De Soto also seems to ignore the fact that Catholic teaching conflicts with that of Calvinists and others who believe that the ownership of material wealth in this world is evidence of a Christian’s virtue.” Again, so what???
This sentence is so far removed from anything De Soto said in his lecture as to border on dishonest. So too your remarks: “worship of wealthy business people (not in De Soto’s lecture): “Catholics believe you can be poor, especially by choice, and redeemed.” (Nothing to the contrary in De Soto’s lecture.) Straw men should not be employed in honest discourse aimed at discovering the Truth that Jesus said will free us, at least I don’t think so.

Regarding your attack on Austrian economics and the work of von Mises, your arguments haven’t even nicked the master’s (viz. von Mises, as opposed to the Master, Jesus) work. You confuse and/or conflate value as employed in the market economy, which is the subject of Austrian economic analysis, with the priceless value of things, such as love, fidelity, charity, etc., which are not scarce means, and thus obviously not economic, which is what we should be talking about. Also, there is a severe disconnect in you logic that leads to this error. Love certainly may be described as an intangible, but by no means is it of the sort of intangible service measured or included in that 80% of the UK economy’s production, which you mentioned in your description as the kind of intangible that AE cannot comprehend. It can and it does comprehend all of the intangible services included in UK’s production. I will grant you one point, and one point only: Rothbard, in the statement I quoted, should not have equated friendship to a consumer good, for the latter is withing the scope of AE analysis, whereas the former may or may not be subject to praxeologycal analysis, depending on whether or not a choice or decision is involved. Love, for example, can be an emotional phenomenon, not involving human action, or it may so involve, in which case it is withing the scope of praxeology by not necessarly ecnomics. Friendship, like love, is outside the realm of economics, but if it involves choice or decision, that aspect is a praxeological phenomenon. But music lessons, a doctor’s services, and every single intangible that is included in any compilation of production in the UK, are all within the ambit of AE analysis, and, indeed, there is no other scientific analysis as capable of doing so as is AE analysis. Furthermore, those intangibles outside the realm of the economic–love, friendship, fidelilty, etc.–are within the scope of praxeology. As Mises said, and I quoted earlier: “Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another.” This is not a description of economic analysis but of praxeology, the science of human action.

You ask: “But how can you make choices between intangibles? Take this email exchange. What value has it created? It may be none. It may be a lot, but we don’t know that yet. So why do you and I participate in it? Why not just talk to ourselves?”

I answer: First, we are not about *creating* value, but our decision most assuredly involves valuing. Our decision to exchange emails is not within the ambit of economics by Lionel Robbins’ definition that you proposed, Mises would (probably) accept, and in which I concur, that economics is “the science which studies human behavior as a relationship between ends and scarce means which have alternative uses,” However, our decision is within the scope of praxeology. It may be that it is “noncommensurable and unquantifiable,” but is it may and definitely is ranked and valued. We choose (decide) to do so as against all of our other options–near infinite in number–which we have arranged according to our subjective values.

Now it seems to me that intangibles, such as love, friendship, fidelity, may not involve human action in so far as they are feeling, thoughts, beliefs, etc., but when the involve choice, decision and human action they fall within the scope of praxeology, and may or may not involve scarce means so they may or may not be within the realm of economic analysis, Austrian or any other.

In your criticism of AE, your focus on marginal utility (analysis) is not germane. Although I haven’t had the time to read or listen to Hoppe’s essay to which you refer, I really don’t need to because neither marginal utility nor equimarginality (whatever that is) are the critical elements of AE analysis that you believe they are. The important point is that intangible services like tangible products, so long as they have economic value arising from the fact that they are scarce resources, are valued subjectively by individual market participants, and everything discoverable about them is amenable to AE analysis derived from its foundation in human action. Furthermore, the distinction you try to make between action and interaction is meaningless in the context of this discussion of matters economic, for the actions of individuals buying or selling tangible products can equally as well be described as interactions, for no exchange can take place but between two people.
Your use of the term interaction, meaning as between two or more individuals, and as opposed to autonomous action, is much too nebulous for a discussion of economics.

Subjective analysis, by the way, can and is also used by individuals to evaluate intangibles involving interaction that are not economic nor scarce means, although other things (emotions, feelings, mental and spiritual impulses and religious beliefs) may and usually do also enter the equation.You are of course correct in saying that marginal analysis is not applicable to non-economic intangibles, but the point is that in Austrian economic analysis as developed by von Mises it was never meant to be. However, as the quote from Mises’ Human Action states, the broader discipline of praxeology, which encompasses economics,

Ned Netterville January 13, 2010 at 2:48 pm

Edmund, I want to respond to a few comments in your post, which begins, “We make choices…” This will be my last contribution to this thread (blog) because I cannot give more time to it, although I will be watching for any additional comments from you.

You ask, “In a situation where nothing could be felt, seen, tasted, smelt or heard, how would a rational acting man or woman make choices?”

Since you have included the category of feelings, my answer is that without any stimulus, a rational person will not have any reason or basis to choose and will not act. Without any human action, we are not, cannot be, discussing praxeology or economics.

Your examples fail to enlighten me.

You say, “REACTION is much more important in a situation where choices are being made involving intangibles. In fact, the only thing we have to go by, apart from our own REACTION to the intangible, is the REACTION of the service provider or buyer and the REACTIONS of those close to us that we trust.”

I say, logically there cannot be a REACTION except in response to a prior ACTION. Intangible or tangible, a reaction is dependent upon action. Where is the action?

You say: “Von Mises in HUMAN ACTION gives precedence to the individual over the collective, for reasons that are unclear. Placing the “I” before the “we” is a bit like arguing that the chicken definitely came before the egg.”

I say: The reason and logic are perfectly clear, even self-evident. Only individual human beings engage in purposeful action. Furthermore, when the collective is the state, which is the one that most concerned and worried Mises, his problem with the state was not unlike mine. The state, democracy or otherwise, is an institution that sanctions the use of force and violence by its agents, and legally–but never morally, which is up to God–relieves them of responsibility for their actions, up to and including murder. No doubt Jesus felt the same way about the Roman empire.

You say: “The concept of HUMAN INTERACTION avoids pointless agonising about the relative significance of “I” and “We”. It argues that they both exist and are essential for the creation of economic value.”

I say: I don’t buy it because I don’t understand what your are getting at. No doubt interaction is essential for the creation of economic value, but AE comprehends and deals comprehensively with with that fact. It seems to me that one of the important contributions to economics of the Austrian school is its stress, as De Soto stresses, the creative force of entrepreneurs gaging the REACTIONS of others to his or her cogitated actions.

You say: “In intangibles, value can only be created through constructive interaction. Iterative and increasingly rewarding human interactions lead to increases in economic value, the proceeds of which can then be shared.”

I say: Prove it! Show, as Mises would, by clear discursive reasoning why this is so. So far, you have not, at least not sufficiently to make your meaning clear to me. Perhaps I’m dumb, but I sure don’t get it.

Edmund, you say: “It is in this sense, and this sense alone, that the GOOD BOOK and Jesus provide business advice relevant to the times we live in: Leviticus 19:18 …THOUGH SHALT LOVE THY NEIGHBOUR AS THYSELF, I am the LORD. Matthew 19:16 …THOUGH SHALT LOVE THY NEIGHBOUR AS THYSELF. There are 12 direct references to this idea of unselfishness and selflessness in the Bible.”

I say, “So what? What does that have to do with Austrian economic analysis or its methodolgies? However, I do think I KNOW wherein lies the source of your antagonism towards AE. You mistakenly believe that AE doesn’t adequately address and include in its analyses such values as love. I disagree because I don’t think AE or praxeology is competent to evaluating love, nor do I think the author of so much of AE’s wisdom and precepts, LvM, ever said or even contemplated that it should or could. Love is an area that few if any Austrian economists have ever endeavored to analyze. They humbly realize that it is beyond their field of expertise, so they leave it alone and say nothing of it. Would that prelates who know little or nothing of economics, particularly Austrian-school economics, would do the same.

Edmund, you say, quoting Matthew who was quoting Jesus: THOUGH SHALT LOVE THY NEIGHBOUR AS THYSELF.

I say, like a lawyer, BUT WHO IS MY NEIGHBOR? And Jesus, being the incomparable teacher he is, answer the question as follows:

Luke 10:30-37 Jesus answered, “A certain man was going down from Jerusalem to Jericho, and he fell among robbers, who both stripped him and beat him, and departed, leaving him half dead. By chance a certain priest was going down that way. When he saw him, he passed by on the other side. In the same way a Levite also, when he came to the place, and saw him, passed by on the other side. But a certain Samaritan, as he traveled, came where he was. When he saw him, he was moved with compassion, came to him, and bound up his wounds, pouring on oil and wine. He set him on his own animal, and brought him to an inn, and took care of him. On the next day, when he departed, he took out two denarii, and gave them to the host, and said to him, ‘Take care of him. Whatever you spend beyond that, I will repay you when I return.’ Now which of these three do you think seemed to be a neighbor to him who fell among the robbers?” He said, “He who showed mercy on him.” Then Jesus said to him, “Go and do likewise.”

And I point out to you, that Jesus took pains to show exactly what it takes to truly be a neighbor to those less fortunate than oneself. He made it clear that the Good Samaritan treated the stranger as neighbor because he put him “ON HIS OWN ANIMAL, and brought him to an inn, and took care of him. On the next day, when he departed, he TOOK OUT TWO DENARII [OF HIS OWN MONEY] and gave them to the host, and said to him, ‘Take care of him. WHATEVER YOU SPEND BEYOND THAT, I WILL REPAY YOU [OUT OF MY OWN FUNDS] when I return. In some debates I have had on this topical, political issue with Christian who support public health care, I have been inclined to repeat the parable and reiterate Jesus’ command: “GO AND DO LIKEWISE.”

It seems clear to me that the priest and Levite in Jesus’ parable would support universal, publicly funded health care to succor the health of the wounded wayfarer. Jesus, however, had the Good Samaritan take care of it with his own money. I think both Jesus and von Mises would oppose having the Roman empire provide for the stranger’s medical expenses because to do so it would have to initiate the use of force in the conduct of otherwise peaceful human relations by collecting taxes to fund the empire’s public-option insurance plan. Jesus, in his Sermon on the Mount and by the example of his life, renounced the use of force–not even for such “just” purposes as the wars that Augustine sanctioned. “GO, AND DO LIKEWISE”

Edmund, I must tell you that I have thoroughly enjoyed debating you. Believe me, although you have not persuaded me to abandon my belief in the incomparable usefulness of AE analysis for understanding how the real world works, I have learned much from you, for which I am grateful and thank you.

Btw, didn’t we meet once before in a Catholic forum, wherein you indicated a preference for Keynesian economics over Chicago-school economics?

edmund o'sullivan January 14, 2010 at 1:25 am

Ned,
No. We haven’t met. I’ve never been a Keynesian.
Couple of final points:
1 Comments on De Soto. The decision to raise issues not referred to in his speech was a reaction to his own decision to refer to John Paul II. De Soto seeks to reconcile Catholicism/Christianity with Austrian economics. This is an impossible task. Religion is religion not a philosophy or a political creed, though religion may have political consequences and politics will have religious ones. The involvement of religious people in politics always has unintended consequences that can be dangerous for everyone. Look at Iran. Look at Northern Ireland. Look at Israel. De Soto’s interesting talk seemed to avoid any reference to elements of the Bible that could be interpreted as contradicting his thesis. De Soto’s not wrong. But he’s on a mission impossible and should cease and desist now.
2 Marginality. Acting man and acting woman make choices among alternatives for a reason: it is to remove a feeling of discomfort. This choice is always a marginal choice. So marginality is central. How it is presented varies between neoclassicals, who use indifference curves and preference curves and other devices, while Austrians use logic. The point of including Egger is to show how Austrians and conventional neoclassical economics concur and disagree. It was also the most recent thing quickly at hand which involved references to marginality. Hoppe says the idea of diminishing marginal utility is a fundamental proposition.
3 Our email exchange may not have created value for you. But it has for me. It has forced me to read more, think more and attempt to formulate more carefully my arguments. I couldn’t have done this on my own. It was the result of an interaction. Thank you for your contribution, though it seems not to have worked for you as it has for me.
4 The action/interaction dichotomy will never be resolved. Human’s act. That’s inconvertible. But the action might have been in reaction to another’s action. What came first? Who’s to say? Action implies reaction. Reaction implies action. Chicken implies egg. Egg implies chicken. Both exist. We should deal with both.
5 The case for and against healthcare free at point of use or for healthcare financed through social insurance rather than at an individual level is complex. It involves moral as well as technical issues. Interpreting the parable of the Good Samaritan to suggest Jesus would be against Obama’s health plan or the British NHS is pushing it a bit, but that’s enough biblical exegesis.

scott t January 14, 2010 at 2:55 am

But the action might have been in reaction….

Action implies reaction.

what garbage

edmund o'sullivan January 14, 2010 at 11:28 pm

Scott T
Why is it garbage?

Ned Netterville January 15, 2010 at 10:04 am

Edmund: Ned sed: I have learned much from you, for which I am grateful and thank you. To elaborate:
I re-read chapters in HA, MES, and Reisman’s CAPITALISM, I re-read De Soto’s article much more carefully, and re-read the referenced section of Centesimus Annus (I had read it entirely and carefully when it first came out, and while approving of most of it, I found some areas of disagreement. Don’t remember on what. (Probably something to do with John Paul–unlike Jesus as far as I can tell-tacitly if not explicitly sanctioning civil governments, viz., the Almighty State, a construct of force and violence. So too, btw, did Mises, but not Rothbard. I consulted a dictionary several times, improving my vocabulary. I also intend to listen to Hoppe’s article, which I cannot find in print on the site, only audio. All that and our discourse has great, subjective value to me.

One thing I saw in ME&S that I forgot but wanted to mention because it seems so pertinent was in a footnote: “To say that only individuals act is not to deny that they are influenced in their desires and actions by the acts of other individuals, who might be fellow members of various societies or groups. We do not at all assume, as some critics of economics have charged, that individuals are “atoms” isolated from one another.” http://mises.org/rothbard/mes/chap1a.asp#2._First_Implications_

May all your roads be downhill, Edmund, Bail ó Dhia ort.

edmund osullivan January 15, 2010 at 12:42 pm

Slainte

Comments on this entry are closed.

Previous post:

Next post: