Introduction to Austrian Economic Analysis
1. Scarcity, Choice, and Value
The causal realist approach began with Carl Menger, but diminished in the 1920s. Keynesianism took over with mathematics by the 1950s. Economics was definitely on the wrong track. Salerno explores the causal realist approach which Austrians embrace.
Humans constantly use means to attain their ends. Action requires dissatisfaction, ability to imagine a better state of affairs, and then ideas about how to bring about that better state. Humans prefer now to later- time preference is either high or low. Choice is ordinal, not nominal – humans choose what they prefer now compared to other choices now. Economics is the relationship between scarcity and valued ends. Values are only revealed by action, not thought. Value reflects Menger’s Law of Marginal Utility. The law is that as the supply of a good possessed by an individual increases, the marginal utility, and therefore the value, of each unit of supply decreases.
The first of ten lectures from Joseph Salerno's Introduction to Austrian Economic Analysis seminar.