Articles in English 105
December 16, 2014
Economists have always been envious of the practitioners of the natural and exact sciences. They have thought that introducing the methods of natural sciences such as a laboratory where experiments could be conducted could lead to a major breakthrough in our understanding of the world of economics. But while a laboratory is a valid way of doing things in the natural sciences, it is not so in economics. Why is that so? A laboratory is a must in physics, for there a scientist can isolate various factors relating to the object of inquiry. Although the scientist can isolate various factors he doesn't, however, know the laws that govern these factors.
Murray N. Rothbard
December 12, 2014
While Ricardo formally admitted that supply and demand determine day-to-day market pricing, he tossed that aside as of no consequence. ... Utility Ricardo brusquely disposed of as ultimately necessary to production but of no influence whatever on value or price; in the 'value paradox' he embraced exchange value and abandoned utility completely. Not only that: he frankly and boldly discarded any attempt to explain the prices of goods that are not reproducible, that could not be increased in supply by the employment of labor. Hence Ricardo simply gave up any attempt to explain the prices of such goods as paintings, which are fixed in supply and cannot be increased. In short, Ricardo abandoned any attempt at a general explanation of consumer prices. We have arrived at the full-fledged Ricardian — and Marxian — labor theory of value.
December 5, 2014
In his Financial Times article "The curse of weak global demand," Martin Wolf writes that today's most important economic illness is chronic demand deficiency syndrome. Wolf argues that despite massive monetary pumping by the central banks of the US and the EMU, and the policy of lowering interest rates to around zero, both the US and the EMU, economies have continued to struggle.
November 28, 2014
The Velvet Revolution, a victory of the people, a victory of the individual, took place on November 17, 1989 when a relatively small group of people in Czechoslovakia put events in motion that could not be stopped. They brought an end to communist rule of their lands, and by the end of the year, a dissident — Vaclav Havel — imprisoned many times by the regime would sit in Prague Castle. At the same time, a beloved reformer — Alexander Dubcek — long ago chased from power by the Soviets, and relegated literally to the backwoods of Bratislava, would be chairman of the federal legislature. Many small victories for the people continue to take place every day in the lives of millions of Slovaks and Czechs as they exert their wills freely over their own individual lives.
Moreover, in 1989, the people of Czechoslovakia took a decisive step away from the nanny state: a state that sought to control all aspects of life.
Jörg Guido Hülsmann
November 20, 2014
It may seem unusual that an economist would talk about culture. Usually, we talk about prices and production, quantities produced, employment, the structure of production, scarce resources, and entrepreneurship.
But there are certain things that economists can say about the culture, and more precisely, that economists can say about the transformation of the culture. So what is culture? Well, to put it simply, it is the way we do things. This can include the way we eat — whether or not we dine with family members on a regular basis, for example — how we sleep, and how we use automobiles or other modes of transportation. And of course, the way we produce, consume, or accumulate capital are important aspects of the culture as well.
November 15, 2014
Although his main work was dedicated to a critique of socialism, Ludwig von Mises paid much attention to the analysis of what is known as the "mixed economy," the "middle-of-the-road policy," or "interventionism." In Mises's eyes, interventionism faced two main difficulties. On the one hand, interventionists could often themselves see that the outcomes of their interventions were even worse than the problem they intended to solve. On the other hand, being convinced that intervention is necessary to fix problems in the economy, lead interventionists to believe that the government should intervene even more when their earlier attempts fail to yield their desired results.
Mises Daily: Monday, November 10, 2014 by Frank Shostak
It is generally held that for an economist to be able to assess the state of the economy, he requires macroeconomic indicators which will tell him what is going on. The question that arises is this: why is it necessary to know about the state of the overall economy? What purpose can such types of information serve?
October 29, 2014
Frenchman Jean Tirole of the University of Toulouse won the 2014 Nobel Prize in Economic Sciences for devising methods to improve regulation of industries dominated by a few large firms. According to Tirole, large firms undermine the efficient functioning of the market economy by being able to influence the prices and the quantity of products.
Robert P. Murphy
October 24, 2014
Anyone who knows him personally would attest that David Gordon is a troublemaker. He lived up to this label with a recent review of the new book by Steve Forbes and Elizabeth Ames. Gordon took them to task for referring to money as a measure of value, analogous to a ruler or clock; Gordon cited the authority of Ludwig von Mises while rejecting such a view. In a previous post here at Mises Canada, I then defended Gordon from the reply of John Tamny. Yet now I see that economist Marc Miles has jumped in the fray, also thinking that Gordon is ignorant of basic economics.
Let me be clear: Gordon (and Mises) are right; money is not a "measuring rod" of value. However, the reason Tamny and Miles are astounded by Gordon's position is that they think he is denying the (obvious) fact that people acquire money merely as a means to a further end. In the present post, let me try to clear up all of this confusion that the mischievous Gordon stirred up. As we'll see, it's precisely because people use money as a means to a further end, that it is NOT analogous to a ruler or clock or scale.
Joseph T. Salerno
October 17, 2014
There are strong indications that the remarkable run up of asset prices in the last few years is beginning to run out of steam and may be on the verge of collapse. We will leave aside the question of whether the asset inflation is symptomatic of a garden-variety inflationary boom or is a more virulent bubble phenomenon in which prices are rising today simply because buyers anticipate that they will rise tomorrow.
October 13, 2014
Recently, the Polish economy experienced its first price deflation since the 1980s, which sparked in the country deflationphobia (or, as Mark Thornton calls it, apoplithorismosphobia).
Media sources and many economists focus on price inflation and price deflation as the source of various economic ills, but, contrary to much of the rhetoric, price inflation and price deflation are always "optimal" in the economic sense. At first, such a claim may seem controversial, since virtually all economists have something negative to say about either inflation or deflation. This concerns almost all schools of economic thought, mainstream and heterodox, including the Austrians.
Yet in some very important sense, one can make a reasonable argument that price inflation and price deflation are optimal in one specific sense. If we notice that prices are formed by choices of market participants, we see that modifications to price levels are executed in order to "correct" the markets. Always.
Jörg Guido Hülsmann and Jeff Deist
October 04, 2014
Jeff Deist: Dr. Guido Hülsmann is a Mises Institute Senior Fellow and professor of economics at the University of Angers in France. He wrote the comprehensive biography of Ludwig von Mises, an enormous project that gave him unique insights into the mind, work, and life of this twentieth-century giant. Dr. Hülsmann subsequently also wrote a fascinating book about the ethics of money production, a topic inspired by Mises himself. We discussed Dr. Hülsmann's years spent writing the biography, the serendipitous discovery of the Mises papers in Moscow that made the book possible, how Mises endured and kept working as Europe burned, and how his personal sacrifices helped pave the way for Austrian academics working today. Stay tuned.
Ladies and gentlemen, welcome to another edition of Mises Weekends. I'm Jeff Deist, and I'm very happy and pleased to be joined this weekend in the studio by a guest visiting us here at the Mises Institute in Auburn, Dr. Guido Hülsmann.
September 24, 2014
Lehman Brothers filed for Chapter 11 bankruptcy protection six years ago this month. The event has become famous as the spark that ignited the global financial crisis. Since that date, millions have lost their jobs and livelihoods, and countless others have seen their futures evaporate before their eyes, sometimes permanently.
At the heart of the crisis of 2008 was a common cause acknowledged by almost all commentators. Borrowers now infamously known as "subprime" (or more politely, "non-prime") were the main reason behind the meltdown. As financial institutions extended loans to those with less than stable means to repay their debts, the foundation of the financial world was destabilized.
Six years on and these subprime debtors are largely a relic of the past. That fact notwithstanding, there is a new threat lurking in the global financial arena. This one borrower is far larger than all the previous subprime characters combined, and poses a far more dangerous hazard to the financial stability of nearly all (if not all) of the world's citizens. I am speaking, of course, of the United States government.
September 19, 2014
Mark Thornton, Mises Institute Senior Fellow, recently traveled to the United Kingdom to take part in Oxford University's Oxford Union Debates.
September 13, 2014
In the most fundamental sense we are all, with each of our actions, always and invariably profit-seeking entrepreneurs.
Whenever we act, we employ some physical means (things valued as goods) — at a minimum our body and its standing room, but in most cases also various other, "external" things — so as to divert the "natural" course of events (the course of events we expect to happen if we were to act differently) in order to reach some more highly valued anticipated future state of affairs instead. With every action we aim at substituting a more favorable future state of affairs for a less favorable one that would result if we were to act differently. In this sense, with every action we seek to increase our satisfaction and attain a psychic profit. "To make profits is invariably the aim sought by any action," as Ludwig von Mises has stated it. (Mises, 1966, p. 289)
Richard M. Ebeling
September 06, 2014
We live at a time when politicians and bureaucrats only know one public policy: more and bigger government. Yet, there was a time when even those who served in government defended limited and smaller government. One of the greatest of these died one hundred years ago on August 27, 1914, the Austrian economist Eugen von Böhm-Bawerk.
Joseph T. Salerno
August 29, 2014
According to mainstream economics textbooks, one of the primary functions of money is to measure the value of goods and services exchanged on the market. A typical statement of this view is given by Frederic Mishkin in his textbook on money and banking. "[M]oney ... is used to measure value in the economy," he claims. "We measure the value of goods and services in terms of money, just as we measure weight in terms of pounds and distance in terms of miles."
August 21, 2014
The following are six of the most prevalent economic myths that appear time and again in the mainstream media. I will give a brief description of each and a brief description of the economic reality, as seen from an Austrian perspective.
August 22, 2014
Argentina's economic minister, Axel Kicillof, has become famous for his assertion that it is possible to centrally manage the economy now because we have spreadsheets such as Microsoft Excel. This assertion comes from the mistaken view that the cost of production determines final prices, and it reveals a profound misunderstanding of the market process. This issue, however, is not new. The first half of the twentieth century witnessed the debate over economic calculation under socialism. Apparently, Argentine officials have much to learn from this old debate. The problem is not whether or not we have powerful spreadsheets at our disposal; the problem is the impossibility of successfully creating a centrally-planned market.