Does anyone know of any work (either by an Austrian or non Austrian) that attempts to derive the value of money in terms of amount of some produce or an amount of hours worked. Perhaps something along the lines of, if there are X dollars in total in the society and (other things defined...) then on average each dollar will buy Y hours labour.
As an illustration, here is my own formulation: Imagine a very simple society in which there is only one commodity: sandwiches. Everyone in the land grows the ingredients for their sandwiches in their gardens. Often they will exchange sandwiches with their neighbours just for variety. There is no money in this society only barter. But then one day the king of the land says "I've just invented something I'm going to call money. It consists of metal coins called shekels. I will give everyone in the land 1000 shekels and from now on bartering is banned. All exchanges must be via the medium of exchanging shekels. What's more, nobody is allowed to eat their own sandwiches." The question now is: how many shekels will a sandwich cost? It may well be that on day one, people will not have a clue and all sorts of silly prices may get paid... but presumably over time the price will gravitate towards a certain value. What will that value be?
Le Master:Let's let Rothbard elucidate:
I disagree, but it will take a long posting to say exactly why and I'm out of time - I gotta go for now.
mickanomics:Hmmm, good question.... probably amps, because its an electrical phenomena in the brain. It may correspond to the total positive electrical signal received by the set of neurons responsible for instigating the action that will satisfy your desires.
"It has always been the prerogative of children and half-wits to point out that the emperor has no clothes. But the half-wit remains a half-wit and the emperor remains an emperor." ~Dream
Even if it were somehow scientifically possible to hook up wires to his head and measure the value of his choice against the endless values of those foregone, what would that accomplish? And how will you measure his preferences in the past? You can't go back in time and hook up the wires to his head and measure.
And preferences and values aren't constants through time. Doing the exact same thing you just did in the near future will yield different results. There can never be a cardinal unit of measure of values. It must always be ordinal.
Le Master: Even if it were somehow scientifically possible to hook up wires to his head and measure the value of his choice against the endless values of those foregone, what would that accomplish? And how will you measure his preferences in the past? You can't go back in time and hook up the wires to his head and measure. And preferences and values aren't constants through time. Doing the exact same thing you just did in the near future will yield different results. There can never be a cardinal unit of measure of values. It must always be ordinal.
mickanomics:It is obvious that there are vast amounts of bad economics out there and I could spend a lifetime reading only a tenth of it. It makes sense to be very selective.
You will find very little bad economics in the writings of Ludwig von Mises, so it's a safe bet that making yourself very familiar with Human Action won't be a waste of time.
mickanomics:If you want to discuss etiquette then I suggest you have words with a few other people first. I have been called every kind of idiot in this forum, there are some incredibly rude and childish people here, I have no idea why they weren't barred long ago. I'm not saying I've never insulted anyone here, but if you look at the history of my posts (painful I know) you will find that I dish out about one insult for every ten that are thrown at me.
I'm sure some people have rudely over-reacted to the excesses in your posts which I mentioned, and that is indeed condemnable. Nonetheless you'd be less likely to be the victim of such over-reactions if you toned down the swagger in your posts, or at least backed up the swagger by making sure you've read up on the relevant literature before pronouncing to have revolutionized economics.
Human Action Comics Issues 1-6
Snowflake:If you're going to approach human beings as machines,
Which they are....
Snowflake:then start with the anatomy of the brain and the central nervous system.
Well my PhD was in neural networks, so I already have...
Snowflake:Economics cannot help you understand the complex biological structures of human thought.
Agreed... its the other way round.
Snowflake:No economist ever doubled as a neurobiologist, let alone synthesized it with economics.
Why ever not I wonder.... actually I'm not sure its true. But I shall confess I have no way to be sure. Anyway I would suggest that:
economics = psychology + maths.
No?... if your answer is no, then please answer me this question - if economics had not been invented, any you were put in charge of starting a world's first economics research institute, then from which academic fields would you choose your first researchers?
Snowflake:What he's saying is that if you somehow could know the quantum state of every atom in your body (and necessarily the universe because electric/gravitational fields effect your body) he could know what you would do.
Wow, that's an incredible conclusion to draw from what I have said. The modelling of human behaviour is a matter of degree. Its idiotic to suggest that you can either do it or you cant. Its very easy to say that when people are starving they will try and get food. When they are thirsty they will try and get water. I can go one step further and say that the hungrier they are the harder they will try to get food. I think those statements are pretty irrefutable without having to delve in to any quantum states of anything.
mickanomics: economics = psychology + maths.
APPLIED economic theory (that is, economic history) can be informed by psychology + maths. Economic theory itself has nothing to do with them.
Economics, by which Austrians mean economic THEORY, is...
the concept of action + logic
That's it.
Le Master:And preferences and values aren't constants through time.
I agree 100%
Le Master:There can never be a cardinal unit of measure of values.
Just because a measure is cardinal does not mean it is fixed in time and my modelling would never suggest fixed values are required. My body weight has a cardinal value, but it can increase if I eat too many donuts.
Lilburne:the concept of action + logic
Ok, back to my question, from what academic field would you find people who who were skilled in understanding "the concept of action".
mickanomics:if economics had not been invented, any you were put in charge of starting a world's first economics research institute, then from which academic fields would you choose your first researchers?
I would choose logicians.
Le Master:Even if it were somehow scientifically possible to hook up wires to his head and measure the value of his choice against the endless values of those foregone, what would that accomplish? And how will you measure his preferences in the past? You can't go back in time and hook up the wires to his head and measure.
Why on earth do you think I need to know the exact mental state of the entire worlds population going bak in time in order to make my model? I'm not claiming 100% accuracy. I don't need to survey the mental state of all of mankind to make s statement like "the hungrier people are the harder they will try and get food" which is the kind of feature that my model would include.
Lilburne: mickanomics:if economics had not been invented, any you were put in charge of starting a world's first economics research institute, then from which academic fields would you choose your first researchers? I would choose logicians.
I don't claim to have read huge ammounts of AE literature, but I have read enough to know that there are copious instances of Austrian economists stating things like "people would do this" and "people would do that". On what basis are the authors making these predictions? If your answer is "praxeology" then, I ask, on what basis does praxeology make those predictions?
mickanomics:but I have read enough to know that there are copious instances of Austrian economists stating things like "people would do this" and "people would do that". On what basis are the authors making these predictions?
Insofar as they are pursuing economic history, they are speculating. Insofar as they are pursuing economic theory, the statements aren't real-event predictions. They are, at bottom, the conclusions of a compound syllogism, the first premise of which is "the 'people' in this syllogism are actors".
Lilburne:Insofar as they are pursuing economic history, they are speculating. Insofar as they are pursuing economic theory, the statements aren't real-event predictions. They are, at bottom, the conclusions of a compound syllogism, the first premise of which is "the 'people' in this syllogism are actors".
I'm not sure I understood all that. Please help me by considering this quote from "economics in one lesson".
"But as most people are so firmly in the habit of thinking of their wealth and income in terms of money, they consider themselves better off as these monetary totals rise."
Is HH "speculating" or "pursuing economic theory" with this sentence? If he is pursuing economic theory, can you explain the difference between his statements about human behavior and mine.
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