Austrian Economics Overview
9. Money and Prices
In the history of money, bartering was awkward because wants were not divisible. Direct exchange depended upon a double coincidence of wants. Demand for a medium of exchange grew until a general medium of exchange emerged, like gold and silver.
8. Competition and Monopoly
Competition can mean rivalry or freedom. All firms must serve the preferences of consumers in order to exist. Monopoly has historically been an artificial privilege granted by the state.
7. Capital, Interest, and the Structure of Production
Time preference says that individuals prefer satisfaction now to later, present to future. This explains the loan market. In the structure of production, the capitalist pays wages now, despite the fact that he himself does not get paid until the final stage when the product actually comes to market.
6. Profit, Loss, and the Entrepreneur
Causal-realist analysis allows imaginary constructs like the ERE — Evenly Rotating Economy — in order to isolate certain factors like interest. There would be no profit or loss in the ERE, because those can only exist under conditions of uncertainty.
5. Pricing of the Factors of Production and the Labor Market
Factors of Production are economic goods: scarce means used to achieve an individual’s ends. They are land, labor and capital. Each is examined. Incomes are earned by factor owners as production takes place. There is no separated production and distribution.
4. Price Controls: Case Studies
As with all government intervention, price controls do not achieve what their originators think they will. Trying to maintain a supply of milk by putting a price control on it will cause shortages, which are the very situations the price manipulators said they wanted to avoid.
2. Exchange and Demand
All action is really exchange. What the actor prefers less is exchanged for something he prefers more, including gift giving. It is a fallacy to say that the goods exchanged have equal value.
3. The Determination of Prices
What determines market prices? Buyers and sellers must know of feasible trades. They can learn from their mistakes. They prefer higher profits to lower profits. They think in discreet terms. Both participants win in market exchanges.
