6. The Psychological Basis of the Opposition to Economic Theory
3. Use Value
Böhm-Bawerk expresses the opinion that the treatment of the theory of price determination should be divided into two parts.
4. ‘homo economicus’
The much talked about homo economicus of the classical theory is the personification of the principles of the businessman. The businessman wants to conduct every business with the highest possible profit: he wants to buy as cheaply as possible and sell as dearly as possible. By means of diligence and attention to business he strives to eliminate all sources of error so that the results of his action are not prejudiced by ignorance, neglectfulness, mistakes, and the like.
James Grant Explains “The Forgotten Depression”
The Forgotten Depression: 1921 — The Crash That Cured Itself, by James Grant, Simon & Schuster, 2014.
Thinkers Who Challenged the State
This essay is adapted from David Gordon’s talk at the Costa Mesa Mises Circle. Click here to register for January’s Houston Mises Circle.
5. Remarks on the Fundamental Problem of the Subjective Theory of Value
1. Exchange Ratios
The subjective theory of value traces the exchange ratios of the market back to the consumers’ subjective valuations of economic goods. For catallactics the ultimate relevant cause of the exchange ratios of the market is the fact that the individual, in the act of exchange, prefers a definite quantity of good A to a definite quantity of good B. The reasons he may have for acting exactly thus and not otherwise?for example, the reasons why someone buys bread, and not milk, at a given moment?are of absolutely no importance for the determination of a market price.
2. Scale of Values
The fact that modern economics starts from acting man’s subjective valuations and the action that is governed by these valuations, and not from any kind of objectively “correct” scale of values, is so familiar to everyone who is even slightly conversant with modern catallactics or who has thought only very little about the meaning of the terms “supply” and “demand” that it would be out of place to waste any more words on it.
11. Costs
By costs classical economics understood a quantity of goods and labor. From the standpoint of the modern theory, cost is the importance of the next most urgent want that can now no longer be satisfied. This conception of cost is clearly expressed outside the orbit of the economic in the narrower sense in a statement like the following, for example: The work involved in preparing for the examination cost me (i.e., prevented) the trip to Italy. Had I not had to study for the examination, I should have taken a trip to Italy.
