2017-02-21
To the lay observer, the existence of money appears to be a given, and this is if they even notice money’s peculiarity. Money is a good, but unlike other goods, its primary use is as a medium of exchange. In the pre-modern era, money was typically linked to a commodity, but in the modern financial system, this is no longer true – at least not for base money. So how does money become an object of...
2017-02-10
A task of human action and organization is to reduce uncertainty to risk, an event whose outcome that can be predicted probabilistically, and to adapt in the face of uncertainty that is irreducible (Knight 1921). All action entails uncertainty. One does not know what will happen tomorrow. If we lived in a world where developments were perfectly predictable, coordination would be a simple task....
2017-02-08
Within the context of the market, entrepreneurship consists in seeking monetary profit. In the broader context, entrepreneurship consists of seeking psychic profit. As we define action as consisting of an agent’s attempt to influence the future toward a state of the world he prefers. In acting humans attempt to mold the world to their liking. Action is inherently entrepreneurial. Every actor is...
2017-02-07
Economics is the study human action in light of a budget constraint. It observes action in terms of means and ends. The agent perceives her environment and is able to imagine how she may acquire some end. We assume that the agent values any end that she seeks to realize. Traditionally, this valuation reflects utility that the agent expects to receive. By hypothesizing that the agent measures...
2017-01-18
In his Principles of Economics , Carl Menger tells us that his goal is to “reduce the complex phenomena of human economic activity to the simplest elements that can still be subjected to accurate observation, to apply to these elements the measure corresponding to their nature, and constantly adhering to this measure, to investigate the manner in which the more complex economic phenomena...
2017-01-17
Many approach macroeconomics as a combination of the study of the sum of all economic activity and of trade between persons from different and across large regions. If microeconomics is, as it is so often formulated, the study of economic decision making and economic activity at the levels of the firm and industry, then it is understandable that you may think of macroeconomics as the...
2017-01-13
How is a pencil created? This question was posited by Leonard Read in his popular story, “ I, Pencil ”. A pencil is a relatively simple product – relatively meaning, in comparison to other products. Still, it would be impossible for any one person to oversee the entire process of producing a pencil. Where does the wood for the pencil come from? How is it processed? How do the lumberjacks acquire...
2016-11-02
The move from a predominantly Keynesian paradigm in macroeconomics to the success of monetarist and the new classical macroeconomics that followed represents a shift from a general skepticism of markets within economics to a belief in market efficiency. The most extreme version of this is represented by real business cycle theorists who model the macroeconomy without using an upward sloping...
2016-10-11
Check out my latest post at Political...
2016-07-23
Articles for the coming RAE issue on New Austrian Macroeconomics are posted online. An early excerpt from Richard Wagner and Paul Lewis explain the contribution of each paper contained in the issue: In “Toward a New Austrian Macroeconomics,” Vipin P. Veetil and Lawrence H. White present a wide-ranging comparison of points of similarity and difference between their vision of a New Austrian...