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Austrian Economics with Reasoning

Reasoning
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11/11/2010 11:48:51 PM
Posted: 6 years ago
Part 1

The Concept of Action and its Immediate Implications

Man acts. That is to say, that he consciously and purposefully employs scarce means to achieve desired ends.

The first implication of this axiom is, in order to act, man must expect that certain modes of behavior will enable him to attain his ends.

As Rothbard says, "A man may have a desire for sunshine, but if he realizes that he can do nothing to achieve it, he does not act on this desire. He must have certain ideas about how to achieve his ends. Action thus consists of the behavior of indi­viduals directed towards ends in ways that they believe will ac­complish their purpose. Action requires an image of a desired end and "technological ideas" or plans on how to arrive at this end."

Secondly, time itself is a scarce good. You can only do so many things at once that often you will have to forgo some things that you would rather not forgo.

Rothbard give the following example. Suppose you have a scale of preferences as follows:

(First) 1. Continuing to watch the baseball game
(Second) 2. Going for a drive
(Third) 3. Playing bridge

"Suppose now that he is allocating two hours of his time and can spend an hour on each pursuit. If he spends one hour on the game and then a second hour on the drive, this indicates that his ranking of preferences is as above. The lowest-ranking end—playing bridge—goes unful­filled. Thus, the larger the supply of means available, the more ends can be satisfied and the lower the rank of the ends that must remain unsatisfied."

From this we will derive the law of diminishing returns, so keep this in mind.

Man prefers his end sooner rather than later. This is known as the universal truth of time preference.

"Time preference may be called the preference for present satisfaction over future satisfaction or present good over future good, provided it is remembered that it is the same satisfaction (or "good") that is being compared over the periods of time. Thus, a common type of objection to the assertion of universal time preference is that, in the wintertime, a man will prefer the delivery of ice the next summer (future) to delivery of ice in the present. This, however, confuses the concept "good" with the material properties of a thing, whereas it actually refers to subjective satisfactions. Since ice-in-the-summer provides different (and greater) satisfactions than ice-in-the-winter, they are not the same, but different goods. In this case, it is different satisfactions that are being compared, despite the fact that the physical property of the thing may be the same."

Next we will introduce the structure of production. Goods that are ready for immediate consumption are called consumer goods or goods of the first order. Those goods that are transformable into consumer goods are called producer goods or factors of production or goods of higher order.

"Let us trace the relations among these goods by considering a typical human end: the eating of a ham sandwich. Having a desire for a ham sandwich, a man decides that this is a want that should be satisfied and proceeds to act upon his judgment of the meth­ods by which a ham sandwich can be assembled. The consumers' good is the ham sandwich at the point of being eaten. It is obvious that there is a scarcity of this consumers' good as there is for all direct means; otherwise it would always be available, like air, and would not be the object of action. But if the consumers' good is scarce and not obviously available, how can it be made available? The answer is that man must rearrange various elements of his environment in order to produce the ham sandwich at the desired place—the consumers' good. In other words, man must use various indirect means as co-operating factors of production to arrive at the direct means. This necessary process involved in all action is called production; it is the use by man of available elements of his environment as indirect means—as co-operating factors—to arrive eventually at a consumers' good that he can use directly to arrive at his end.

Let us consider the pattern of some of the numerous co-operat­ing factors that are involved in a modern developed economy to produce one ham sandwich as a consumers' good for the use of one consumer. Typically, in order to produce a ham sandwich for Jones in his armchair, it is necessary for his wife to expend energy in unwrapping the bread, slicing the ham, placing the ham be­tween bread slices, and carrying it to Jones. All this work may be called the labor of the housewife. The co-operating factors that are directly necessary to arrive at the consumers' good are, then: the housewife's labor, bread in the kitchen, ham in the kitchen, and a knife to slice the ham. Also needed is the land on which to have room to live and carry on these activities. Furthermore, this process must, of course, take time, which is another indispensable co-operating factor. The above factors may be called first-order producers' goods, since, in this case, these co-operate in the production of the consumers' good. Many of the first-order producers' goods, however, are also unavailable in nature and must be pro­duced themselves, with the help of other producers' goods. Thus, bread in the kitchen must be produced with the co-operation of the following factors: bread-in-retail-shop and housewife's labor in carrying it (plus the ever-present land-as-standing-room, and time). In this procedure, these factors are second-order producers' goods, since they co-operate in producing first-order goods. Higher­-order factors are those co-operating in the production of factors of lower order."

We must, then, look upon the process of production in stages. There a few generalizations we can make about the structure of production.

First, each stage of production takes time. Second, the factors of production may be divided into two categories, those that are themselves produced and those that are found already available in nature. The first of these we call capital goods. The second of these can be further divided into two classes. The expenditure of human energy, Labor, and the use of nonhuman elements provided by nature, Land.

We have found out factors of production! Capital, Labor, Land and, of course, Time.

I hope this gives you something to chew on. I will be back tomorrow to answer questions and continue.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
Puck
Posts: 6,457
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11/11/2010 11:54:18 PM
Posted: 6 years ago
At 11/11/2010 11:48:51 PM, Reasoning wrote:
I will be back tomorrow to answer questions and continue.

Q. Have you told your parents about your man crush?
Zetsubou
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11/13/2010 12:32:44 PM
Posted: 6 years ago
Umm... I'm very sure many followers of the traditional Austrian School would disagree with this. Your 'lesson' describes Libertarianism as defined by Rothbard and Rothbard alone. "The Concept of Action and its Immediate Implications" sounds a lot like, and probably is, a part of the anarchist theory of spontaneous order, a theory that Hadek and Manger(fiscal minarchists) didn't support. I think I might add the point that your axioms don't follow coherent conclusions(surprise, surprise), and rather, assume a great deal about human self interest. Examples being your parable about man's behavior.

Another thing, unlike Objectivism, which bases it's libertarian stance from a preference of complete liberty, Rothbard seems to say that people act in a certain way, or do actions to achieve certain ends. It's almost like structural functionalism that Marx(Conflict theory) used to justify communist ends and Communist social evolution. Understand that everything I'm learning about Rothbard is coming from you and should any claims be false, I'll attribute them to posts by you.

Lastly, you do make Rothbards work, which I've always overlooked, sound intriguing so your thread did teach someone, something. I'll buy "Man, Economy, and State" some time in January; when I've finished it, I'll debate you on it. Fair?
'sup DDO -- july 2013
belle
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11/13/2010 12:44:06 PM
Posted: 6 years ago
At 11/13/2010 12:32:44 PM, Zetsubou wrote:
"The Concept of Action and its Immediate Implications" sounds a lot like, and probably is, a part of the anarchist theory of spontaneous order, a theory that Hadek and Manger(fiscal minarchists) didn't support.

assuming you mean hayek and menger, because otherwise i can't even make sense of what you're talking about, this is all wrong. they were both originators and large proponents of the concept of spontaneous order. and they weren't anarchists. so... ?
evidently i only come to ddo to avoid doing homework...
mattrodstrom
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11/13/2010 12:53:46 PM
Posted: 6 years ago
At 11/13/2010 12:44:06 PM, belle wrote:
At 11/13/2010 12:32:44 PM, Zetsubou wrote:
"The Concept of Action and its Immediate Implications" sounds a lot like, and probably is, a part of the anarchist theory of spontaneous order, a theory that Hadek and Manger(fiscal minarchists) didn't support.

assuming you mean hayek and menger, because otherwise i can't even make sense of what you're talking about, this is all wrong. they were both originators and large proponents of the concept of spontaneous order. and they weren't anarchists. so... ?

zhuangzi originated it first!
"He who does not know how to put his will into things at least puts a meaning into them: that is, he believes there is a will in them already."

Metaphysics:
"The science.. which deals with the fundamental errors of mankind - but as if they were the fundamental truths."
Zetsubou
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11/13/2010 12:56:14 PM
Posted: 6 years ago
At 11/13/2010 12:44:06 PM, belle wrote:

assuming you mean hayek and menger, because otherwise i can't even make sense of what you're talking about, this is all wrong. they were both originators and large proponents of the concept of spontaneous order. and they weren't anarchists. so... ?
Yeah I noticed soon after, I suck at spelling foreign names and have a habit of spelling a lot of names wrong, (Vaber-Weber, Montisque-Montesquieu, Hadek-Hayek).

That's not what "they" said...
I was speaking in terms of society/social thought not economics which is a claim I am near certain is exclusive to Rothbard, he claimed that just like in economic theory social order could be achieved. Ha(y)ek uses spontaneous order to describe economic equilibrium, a claim all economists make.
'sup DDO -- july 2013
mattrodstrom
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11/13/2010 12:58:47 PM
Posted: 6 years ago
I was speaking in terms of society/social thought not economics which is a claim I am near certain is exclusive to Rothbard, he claimed that just like in economic theory social order could be achieved.

Zhuangzi!
"He who does not know how to put his will into things at least puts a meaning into them: that is, he believes there is a will in them already."

Metaphysics:
"The science.. which deals with the fundamental errors of mankind - but as if they were the fundamental truths."
belle
Posts: 4,113
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11/13/2010 1:00:46 PM
Posted: 6 years ago
At 11/13/2010 12:53:46 PM, mattrodstrom wrote:
At 11/13/2010 12:44:06 PM, belle wrote:
At 11/13/2010 12:32:44 PM, Zetsubou wrote:
"The Concept of Action and its Immediate Implications" sounds a lot like, and probably is, a part of the anarchist theory of spontaneous order, a theory that Hadek and Manger(fiscal minarchists) didn't support.

assuming you mean hayek and menger, because otherwise i can't even make sense of what you're talking about, this is all wrong. they were both originators and large proponents of the concept of spontaneous order. and they weren't anarchists. so... ?

zhuangzi originated it first!

i know some chinese author did but theres like 50 ways to spell each ones name so ionno if we're thinking of the same guy. in any case, you're probably right...
evidently i only come to ddo to avoid doing homework...
Zetsubou
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11/13/2010 1:06:10 PM
Posted: 6 years ago
At 11/13/2010 12:58:47 PM, mattrodstrom wrote:
I was speaking in terms of society/social thought not economics which is a claim I am near certain is exclusive to Rothbard, he claimed that just like in economic theory social order could be achieved.

Zhuangzi!
That guy does everything. It might be Tao or Zhuangzi, but wasn't one of them actually a group of people using a common alias.
'sup DDO -- july 2013
mattrodstrom
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11/13/2010 1:06:15 PM
Posted: 6 years ago
At 11/13/2010 1:00:46 PM, belle wrote:
At 11/13/2010 12:53:46 PM, mattrodstrom wrote:
At 11/13/2010 12:44:06 PM, belle wrote:
At 11/13/2010 12:32:44 PM, Zetsubou wrote:
"The Concept of Action and its Immediate Implications" sounds a lot like, and probably is, a part of the anarchist theory of spontaneous order, a theory that Hadek and Manger(fiscal minarchists) didn't support.

assuming you mean hayek and menger, because otherwise i can't even make sense of what you're talking about, this is all wrong. they were both originators and large proponents of the concept of spontaneous order. and they weren't anarchists. so... ?

zhuangzi originated it first!

i know some chinese author did but theres like 50 ways to spell each ones name so ionno if we're thinking of the same guy. in any case, you're probably right...

chuang di.

Master Chuang/Zhuang
"He who does not know how to put his will into things at least puts a meaning into them: that is, he believes there is a will in them already."

Metaphysics:
"The science.. which deals with the fundamental errors of mankind - but as if they were the fundamental truths."
mattrodstrom
Posts: 12,028
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11/13/2010 1:08:05 PM
Posted: 6 years ago
At 11/13/2010 1:06:10 PM, Zetsubou wrote:
At 11/13/2010 12:58:47 PM, mattrodstrom wrote:
I was speaking in terms of society/social thought not economics which is a claim I am near certain is exclusive to Rothbard, he claimed that just like in economic theory social order could be achieved.

Zhuangzi!
That guy does everything. It might be Tao or Zhuangzi, but wasn't one of them actually a group of people using a common alias.

Both the laozi and zhuangzi prolly had many authors...

but the "inner chapters" of the zhuangzi are of a singularish style and seem even to Literary analyzer people to be from one author..

whether the name "zhuangzi" was his, or was an alias... really doesn't matter.
"He who does not know how to put his will into things at least puts a meaning into them: that is, he believes there is a will in them already."

Metaphysics:
"The science.. which deals with the fundamental errors of mankind - but as if they were the fundamental truths."
PervRat
Posts: 963
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11/25/2010 11:07:06 PM
Posted: 6 years ago
Austria, origin of Adolf Hitler and that dude who locked his daughter in his basement for most of her life to have sex with her!
Ragnar_Rahl
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11/25/2010 11:50:40 PM
Posted: 6 years ago
At 11/25/2010 11:07:06 PM, PervRat wrote:
Austria, origin of Adolf Hitler and that dude who locked his daughter in his basement for most of her life to have sex with her!

Unfortunately both of those people disagree in all the worst ways with Austrian economics.
It came to be at its height. It was commanded to command. It was a capital before its first stone was laid. It was a monument to the spirit of man.