Section Five

Trade and Freedom

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Freedom, Inequality, Primitivism, and the Division of Labor

I.

If men were like ants, there would be no interest in human freedom. If individual men, like ants, were uniform, interchangeable, devoid of specific personality traits of their own, then who would care whether they were free or not? Who, indeed, would care if they lived or died? The glory of the human race is the uniqueness of each individual, the fact that every person, though similar in many ways to others, possesses a completely individuated personality of his own.

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Restrictionist Pricing of Labor

It might be asserted that labor unions, in exacting higher wage rates on the free market, are achieving monopoly prices. However, it is not true that a union wage rate could ever be called a monopoly price. For the characteristic of the monopolist is precisely that he monopolizes a factor or commodity.. To obtain a monopoly price, he sells only part of his supply and withholds selling the other part, because selling a lower quantity raises the price on an inelastic demand curve.

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Mercantilism: A Lesson for Our Times?

Mercantilism has had a “good press” in recent decades, in contrast to nineteenth-century opinion. In the days of Adam Smith and the classical economists, mercantilism was properly regarded as a blend of economic fallacy and state creation of special privilege.

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Capitalism versus Statism

From the very first we run into grave problems with the term “capitalism.” When we realize that the word was coined by capitalism’s most famous enemy, Karl Marx, it is not surprising that a neutral or a pro-“capitalist” analyst might find the term lacking in precision.

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A Future of Peace and Capitalism

In order to discuss the “future of capitalism,” we must first decide what the meaning of the term “capitalism” really is. Unfortunately, the term “capitalism” was coined by its greatest and most famous enemy, Karl Marx. We really can’t rely upon him for correct and subtle usage. And, in fact, what Marx and later writers have done is to lump together two extremely different and even contradictory concepts and actions under the same portmanteau term.

Section Six

Money, Banking, and Calculation

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The Austrian Theory of Money

The Austrian theory of money virtually begins and ends with Ludwig von Mises’s monumental Theory of Money and Credit, published in 1912.1 Mises’s fundamental accomplishment was to take the theory of marginal utility, built up by Austrian economists and other marginalists as the explanation for consumer demand and market price, and apply it to the demand for and the value, or the price, of money.

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Money, the State, and Modern Mercantilism

Money is the nerve center of any economy above the most primitive level. An economy consists of a vast and intricate network of two-person exchanges, and money constitutes one side of every exchange. Money is the medium by which producers of goods and services (sold for money) proceed to become consumers of goods and services (bought for money).

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Austrian Definitions of the Supply of Money

THE DEFINITION OF THE SUPPLY OF MONEY

The concept of the supply of money plays a vitally important role, in differing ways, in both the Austrian and the Chicago Schools of economics. Yet, neither school has defined the concept in a full or satisfactory manner; as a result, we are never sure to which of the numerous alternative definitions of the money supply either school is referring.