Austrian Economics Overview

The only cartels that have lasted have been government cartels. There is no essential difference between a cartel and an ordinary corporation or partnership. Not even the De Beers cartel is all powerful.

Thou shalt not sell a certain product or service below a certain price, e.g. wheat, cotton, corn, cheese, sugar. This will result in an artificial unsold permanent surplus, as it does in the American farm situation.

Business men must make sure they can cover their costs by incoming revenue. The production function will yield a certain quantity of a product. The firm considers marginal costs and average costs to weigh where along the demand curve production is.

The peanut butter crunch was in 1980. Crop acreage and production was cut down by 45% by government price support, import quotas, and cartelizing of the industry. The price of peanuts more than tripled.

The words monopoly and competition have been changed. Competition meant rivalry or competing, either active or potential.  Businesses do not like this. Monopoly meant a grant of privilege by the government. It now means falling demand curve.

The disappearance of oil has been forecast every decade. Prices were overlooked. When the price is high it is more profitable to look for oil. Total reserves on the ground are higher than they were in 1890.

Recorded on 27 July 1975.

Recorded in Vienna, Austria; 25 May 1988.

Interviewed by Judge Andrew Napolitano on the “Freedom Watch” program, 27 January 2010.

Presented by Congressman Ron Paul at “The Failure of the Keynesian State,” the Mises Circle in Houston, sponsored by Jeremy S. Davis.