Austrian Economics Overview

The gold standard is not a game but a social institution.

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.

The objective of the corporate firm is to maximize profits and avoid losses - the same objective of the free market. But the costs are paid out before the income comes in. Stockholders will sell stock to shake up the managers.

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.

Recorded on 27 July 1975.

Recorded in Vienna, Austria; 25 May 1988.