The Austrian Economics Wiki - User contributions [en]

Solidarism

2012-01-18T03:24:09Z

Matthew:

'''Solidarism''' is a system of social organization which attempts to maintain private ownership of the means of production while at the same time placing above the property owner an authority - for example the state or the church - which is responsible for ensuring that the owners use their property in a suitable manner.<ref name="socialism">[[Ludwig von Mises]]. [http://mises.org/resources/2736/Socialism-An-Economic-and-Sociological-Analysis Socialism], 1951, pages 263-266.</ref> In other words, the ruling authority determines the norms and overall goals of society and is then entitled to ensure that all property owners are making use of their property in a way that meshes with the authority's preferences. Solidarism was popular during the French Third Republic where prior to [[World War I]] it was referred to as the official social philosophy.<ref name="socialism" /> The advocates of solidarism believed that such a system would be a middle way between [[socialism]] and [[capitalism]]; making use of the beneficial characteristics of both.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

Solidarism

2012-01-18T03:23:00Z

Matthew:

'''Solidarism''' is a system of social organization which attempts to maintain private ownership of the means of production while at the same time placing above the property owner an authority - for example the state or the church - which is responsible for ensuring that the owners use their property in a suitable manner.<ref name="socialism">[[Ludwig von Mises]]. [http://mises.org/resources/2736/Socialism-An-Economic-and-Sociological-Analysis Socialism], 1951, pages 263-266.</ref> In other words the ruling authority determines the norms and overall goals of society and is then entitled to ensure that all property owners are making use of their property in a way that meshes with the authority's preferences. Solidarism was popular in the French Third Republic where prior to [[World War I]] it was referred to as the official social philosophy.<ref name="socialism" /> The advocates of solidarism believed that such a system would be a middle way between [[socialism]] and [[capitalism]]; making use of the beneficial characteristics of both.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

Solidarism

2012-01-18T03:19:41Z

Matthew: typo

'''Solidarism''' is a system of social organization which attempts to maintain private ownership of the means of production while at the same time placing above the property owner an authority - for example the state or the church - which is responsible for ensuring that the owners use their property correctly.<ref name="socialism">[[Ludwig von Mises]]. [http://mises.org/resources/2736/Socialism-An-Economic-and-Sociological-Analysis Socialism], 1951, pages 263-266.</ref> In other words the ruling authority determines the norms and overall goals of society and is then entitled to ensure that all property owners are making use of their property in a way that meshes with the norms of the authority. Solidarism was popular in the French Third Republic where prior to [[World War I]] it was referred to as the official social philosophy.<ref name="socialism" /> The advocates of solidarism believed that such a system would be a middle way between [[socialism]] and [[capitalism]]; making use of the beneficial characteristics of both.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

Solidarism

2012-01-10T19:30:23Z

Matthew: created initial page

'''Solidarism''' is a system of social organization which attempts to maintain private ownership of the means of production while at the same time placing above the property owner an authority - for example the state or the church - which is responsible for ensuring that the owners use their property correctly.<ref name="socialism">[[Ludwig von Mises]]. [http://mises.org/resources/2736/Socialism-An-Economic-and-Sociological-Analysis Socialism], 1951, pages 263-266.</ref> In other words the ruling authority determines the norms and overall goals of society and is then entitled to ensure that all property owners are making use of their property in a way that meshes with the norms of the authority. Solidarism was popular in French Third Republic where prior to [[World War I]] it was referred to as the official social philosophy.<ref name="socialism" /> The advocates of solidarism believed that such a system would be a middle way between [[socialism]] and [[capitalism]]; making use of the beneficial characteristics of both.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

User talk:Matthew

2011-12-08T23:22:48Z

Matthew:

==Welcome!==

Hello, Matthew, and welcome to the [[MisesWiki:About|Mises Wiki]]! Thanks for signing up – we're glad to have you! If you need help [[Help:Getting started|getting started]], take a look at our [[Help:Contents|help pages]].

Community discussion takes place at the [[MisesWiki:Commons|MisesWiki Commons]], so feel free to post any questions you might have there or on my talk page. Please sign your messages on talk and discussion pages using four tildes (<nowiki>~~~~</nowiki>); this will automatically insert your username and the date. Again, welcome!

And not to worry, you are doing just fine in the wiki, dive in and have fun. Cheers, [[User:Pestergaines|Pestergaines]] 12:16, 7 September 2011 (MSD)

==Contest winner==
Hallo Matthew, congratulations to your victory in the '''[[MisesWiki:2011 article improvement drive/September|contest]]!''' You did quite an end run there. I hope to see you in the [[MisesWiki:2011 article improvement drive/October|next round]] as well!

Now, if I may be so bold, do you have an account in the Mises Store - and if so, what is the username? We need to send you the prize somehow. :)

(On the side - consider creating a [[User:Matthew|user page]] with anything that you consider relevant.)

Best regards, [[User:Pestergaines|Pestergaines]] 01:28, 5 October 2011 (MSD)

:For the record, Matthew has kindly provided to me the information via email. Prize generation pending... [[User:Pestergaines|Pestergaines]] 11:14, 5 October 2011 (MSD)

::Gift certificate has been sent - please confirm. [[User:Pestergaines|Pestergaines]] 01:43, 6 October 2011 (MSD)
:: Thanks a lot, it has been received. [[User:Matthew|Matthew]] 02:52, 6 October 2011 (MSD)

:::Excellent - enjoy! [[User:Pestergaines|Pestergaines]] 03:10, 6 October 2011 (MSD)

{| style="border: 1px solid gray; background-color: #ffffff;"
|rowspan="2" valign="middle" | [[Image:Improvement Barnstar.png|100px]]
|rowspan="2" |
|style="font-size: x-large; padding: 0; vertical-align: middle; height: 1.1em;" | '''Improver Barnstar'''
|-
|style="vertical-align: middle; border-top: 1px solid gray;" | '''Matthew''', for your great efforts in the '''[[MisesWiki:2011 article improvement drive/September|MisesWiki article improvement drive]]''' in September, 2011, I award thee the Improver Barnstar! May you continue to be such a fruitful contributor! [[User:Pestergaines|Pestergaines]] 02:33, 17 October 2011 (MSD)
|}

== on book articles ==

Awesome addition of an article for ''[[The Ultimate Foundation of Economic Science]]''. Good stuff. I thought I might let you know about a handy template (of sorts, not an actual wiki template) that I made for creating book articles. You can grab it at my sandbox [[User:John James/sandbox|here]]. Any time you want to create a book article, you can go there, view the source code and copy and paste it into your article space. It'll save you a lot of time in building the article by entering all the form stuff and you just need to fill it in with the relevant info. Check out any of the works in the [http://wiki.mises.org/wiki/Category:Literature literature category] for reference.

Book covers can be found [http://picasaweb.google.com/MisesInstitute/BookCovers here], and uploaded to the Wikimedia Commons so they can be used on this, as well as any other wiki. Check the ones already uploaded in the [http://commons.wikimedia.org/wiki/Category:Books_published_by_the_Ludwig_von_Mises_Institute Books published by the Ludwig von Mises Institute category] for reference on what info and categories should be entered.

Congratulations on your contest win! --[[User:John James|John James]] 02:59, 21 October 2011 (MSD)

== October contest winner ==

Hallo Matthew,

congratulations, you did it again! I'm very glad you continue to contribute to the Mises Wiki and I hope you'll take part in the next round as well (there should be more competition, too ;) ). Seeing that you already have the requisite barnstar, I can only repeat my thanks for your work. The gift certificate has been already requested, please let us know when it reaches you.

Cheeers, [[User:Pestergaines|Pestergaines]] 13:31, 3 November 2011 (MSK)
: Got it thanks a lot! [[User:Matthew|Matthew]] 21:54, 3 November 2011 (MSK)

Hi Matthew,

do you have any plans to join the current contest? [[User:Pestergaines|Pestergaines]] 15:03, 11 November 2011 (MSK)
: Yeah I would definitely be willing to join if more competitors are needed, I just wasn't sure if you would want me involved 3 months in a row. [[User:Matthew|Matthew]] 03:28, 12 November 2011 (MSK)

::Hi, absolutely! You are both needed and welcome. Please join the fray. :) [[User:Pestergaines|Pestergaines]] 17:37, 14 November 2011 (MSK)

==November contest winner==
Hi Matthew,

congratulations to the third win in a row! The well-deserved honors are all yours (and the gift certificate is in the works, please let us know when it's ready).

You are a great contributor and I hope you will continue to help Mises Wiki grow. You are absolutely welcome to join in the current round (And I'll try to get you more competitors! ;) ) Hope to see more stuff from you!

Cheers, 
[[User:Pestergaines|Pestergaines]] 18:47, 4 December 2011 (MSK)
: Thanks a lot is has been received! [[User:Matthew|Matthew]] 21:54, 3 November 2011 (MSK)

Perfect competition

2011-12-08T01:01:04Z

Matthew: type

'''Perfect competition''' is an [[imaginary construct]] (i.e. a set of false assumptions) used primarily in mainstream, neo-classical economic discourse to explain [[competition]] and [[monopoly]] in the economy. Firms under perfect competition are assumed to operate in a market defined by the following characteristics:
* a homogeneous product available in infinitely divisible units
* an infinite number of buyers and sellers
* the absence of any barriers to entry
* and with each firm having access to [[perfect information]].<ref name="causal_realist">[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 7 Competition and Monopoly.</ref>

Under such conditions firms' [[demand]] curves would be perfectly [[elasticity of demand|elastic]] meaning that they could bring any supply to the market without affecting [[price]]. Furthermore for a profit-maximizing firm operating in a perfectly competitive market price would be equal to [[marginal cost]]. Firms who are able to sell products at a price above marginal cost (i.e. firms with downward sloping demand curves) are assumed to operate under conditions of [[imperfect competition]] and thus possess market power.<ref name="causal_realist" />

==Criticisms of perfect competition==
Many economists have been highly critical to the concept of perfect competition<ref name="Reisman_Platonic">[[George Reisman]]. [http://mises.org/daily/1988 "Platonic Competition"], 2005.</ref>, suggesting that the assumptions associated with the model do not correspond at all to the actual characteristics of real markets and when the assumptions are dropped the model does not provide any useful conclusions about market behavior. For example it is pointed out that in reality there is no such thing as a perfectly elastic demand curve as all firms face a downward sloping demand curve and thus possess some "market power". Furthermore, the model of perfect competition has often been used as the benchmark for [[anti-trust]] policy, where policy makers maintain that it is the job of government to promote perfect competition. Thus policy makers misuse the model as a normative benchmark in deciding what anti-trust actions should be taken against firms.<ref name="causal_realist" />

===Perfect competition vs. actual competition===
{{Main|Competition}}
"Pure and perfect competition" is completely unlike anything one normally means by the term "competition." Normally, one thinks of competition as denoting a rivalry among producers, in which each producer strives to match or exceed the performance of other producers. This is not what "pure and perfect competition" means. Indeed, the existence of rivalry, of competition as it is normally understood, is incompatible with "pure and perfect competition." Consider the following passage in a widely used economics textbook by Professor Richard Leftwich:<ref name="Reisman_Platonic" />

"By way of contrast, intense rivalry may exist between two automobile agencies or between two filling stations in the same city. One seller's actions influence the market of the other; consequently, pure competition does not exist in this case."<ref name="Leftwich_Price">Richard H. Leftwich and Ross D. Eckert, [http://books.google.com/books?id=96S7AAAAIAAJ&q=intense+rivalry#search_anchor "The Price System and Resource Allocation"], 9th ed., The Dryden Press, Chicago, 1985, p. 41. Referenced 2011-11-17.</ref>

[[F.A. Hayek]] argues that the theory of perfect competition has little claim to be called "competition" at all, and that its conclusions are of little use as guides to policy. None of the devices adopted in ordinary life for what is normally understood as competition would still be open to a seller in a market in which so-called "perfect competition" prevails.

[[Advertising]], undercutting, and improving ("differentiating") the goods or services produced are all excluded by definition — "perfect" competition means indeed the absence of all competitive activities.

Especially remarkable in this connection is the explicit and complete exclusion from the theory of perfect competition of all personal relationships existing between the parties. In actual life the fact that our inadequate knowledge of the available commodities or services is made up for by our experience with the persons or firms supplying them — that competition is in a large measure competition for reputation or good will — is one of the most important facts which enables us to solve our daily problems.

No products of two producers are ever exactly alike, even if it were only because, as they leave his plant, they must be at different places. These differences are part of the facts which create our economic problem, and it is little help to answer it on the assumption that they are absent.

That in conditions of real life the position even of any two producers is hardly ever the same is due to facts which the theory of perfect competition eliminates by its concentration on a long-term equilibrium which in an ever-changing world can never be reached. At any given moment the equipment of a particular firm is always largely determined by historical accident, and the problem is that it should make the best use of the given equipment (including the acquired capacities of the members of its staff) and not what it should do if it were given unlimited time to adjust itself to constant conditions.

Competition is the more important the more complex or "imperfect" are the objective conditions in which it has to operate. Indeed, far from competition being beneficial only when it is "perfect," Hayek argue that the need for competition is nowhere greater than in fields in which the nature of the commodities or services makes it impossible that it ever should create a perfect market in the theoretical sense.

The economic problem is a problem of making the best use of what resources we have, and not one of what we should do if the situation were different from what it actually is. There is no sense in talking of a use of resources "as if" a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.<ref name="Hayek_Competition">Friedrich A. Hayek. [http://mises.org/daily/4181 "The Meaning of Competition"], from [[Individualism and Economic Order]] (1948), referenced 2011-11-17.</ref>

==References==
{{reflist}}

==Links==
* [http://mises.org/journals/qjae/pdf/qjae5_2_4.pdf Austrian Economics, Neoclassical Economics, Marketing, and Finance] (pdf) by Walter Block, William Barnett II, and Stuart Woord, 2002
* [http://www.cato.org/pubs/journal/cj15n2-3-10.html Perfect Competition and the Transformation of Economics] a review by John B. Egger
* [http://mises.org/misesreview_detail.aspx?control=17 Perfect Competition and the Transformation of Economics] a review by David Gordon, 1997
* [http://mises.org/journals/jls/4_4/4_4_6.pdf The Austrian Theory of Efficiency and the Role of Government] (pdf) by Roy E. Cordato
* [http://blog.mises.org/19459/perfect-competition-gobble-degook/ Perfect Competition: “Gobble”-degook] by Joseph Salerno
* [http://mises.org/journals/qjae/pdf/qjae14_2_6.pdf A Note on the Canard of "Asymmetric information" As a source of market failure] (pdf) by Thomas DiLorenzo, 2011
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Perfect competition

2011-12-08T00:59:21Z

Matthew: fixed link for elastic

'''Perfect competition''' is an [[imaginary construct]] (i.e. a set of false assumptions) used primarily in mainstream, neo-classical economic discourse to explain [[competition]] and [[monopoly]] in the economy. Firms under perfect competition are assumed to operate in a market defined by the following characteristics:
* a homogeneous product available in infinitely divisible units
* an infinite number of buyers and sellers
* the absence of any barriers to entry
* and with each firm having access to [[perfect information]].<ref name="causal_realist">[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 7 Competition and Monopoly.</ref>

Under such conditions firms' [[demand]] curves would be perfectly [[elasticity of demand|elastic]] meaning that they could bring any supply to the market without affecting [[price]]. Furthermore for a profit-maximizing firm operating in a perfectly competitive market price would be equal to [[marginal cost]]. Firms who are able to sell products at a price above marginal cost (i.e. firms with downward sloping demand curves) are assumed to operate under conditions of [[imperfect competition]] and thus possess market power.<ref name="causal_realist" />

==Criticisms of perfect competition==
Many economists have been highly critical to the concept of perfect competition<ref name="Reisman_Platonic">[[George Reisman]]. [http://mises.org/daily/1988 "Platonic Competition"], 2005.</ref>, suggesting that the assumptions associated with the model do not correspond at all to the actual characteristics of real markets and when the assumptions are dropped the model does not provide any useful conclusions about market behavior. For example it is pointed out that in reality there is no such thing as a perfectly elastic demand curve as all firms face a downward sloping demand curve and thus possess some "market power". Furthermore, the model of perfect competition has often been used as the benchmark for [[anti-trust]] policy, where policy makers maintain that it is the job of government to promote perfect competition. Thus policy makers misuse the model as a normative benchmark in deciding what anti-trust actions should be taken against firms.<ref name="causal_realist" />

===Perfect competition vs. actual competition===
{{Main|Competition}}
"Pure and perfect competition" is completely unlike anything one normally means by the term "competition." Normally, one thinks of competition as denoting a rivalry among producers, in which each producer strives to match or exceed the performance of other producers. This is not what "pure and perfect competition" means. Indeed, the existence of rivalry, of competition as it is normally understood, is incompatible with "pure and perfect competition." Consider the following passage in a widely used economics textbook by Professor Richard Leftwich:<ref name="Reisman_Platonic" />

"By way of contrast, intense rivalry may exist between two automobile agencies or between two filling stations in the same city. One seller's actions influence the market of the other; consequently, pure competition does not exist in this case."<ref name="Leftwich_Price">Richard H. Leftwich and Ross D. Eckert, [http://books.google.com/books?id=96S7AAAAIAAJ&q=intense+rivalry#search_anchor "The Price System and Resource Allocation"], 9th ed., The Dryden Press, Chicago, 1985, p. 41. Referenced 2011-11-17.</ref>

[[F.A. Hayek]] argues that the theory of perfect competition has little claim to be called "competition" at all, and that its conclusions are of little use as guides to policy. None of the devices adopted in ordinary life for what is normally understood as competition would still be open to a seller in a market in which so-called "perfect competition" prevails.

[[Advertising]], undercutting, and improving ("differentiating") the goods or services produced are all excluded by definition — "perfect" competition means indeed the absence of all competitive activities.

Especially remarkable in this connection is the explicit and complete exclusion from the theory of perfect competition of all personal relationships existing between the parties. In actual life the fact that our inadequate knowledge of the available commodities or services is made up for by our experience with the persons or firms supplying them — that competition is in a large measure competition for reputation or good will — is one of the most important facts which enables us to solve our daily problems.

No products of two producers are ever exactly alike, even if it were only because, as they leave his plant, they must be at different places. These differences are part of the facts which create our economic problem, and it is little help to answer it on the assumption that they are absent.

That in conditions of real life the position even of any two producers is hardly ever the same is due to facts which the theory of perfect competition eliminates by its concentration on a long-term equilibrium which in an ever-changing world can never be reached. At any given moment the equipment of a particular firm is always largely determined by historical accident, and the problem is that it should make the best use of the given equipment (including the acquired capacities of the members of its staff) and not what it should do if it were given unlimited time to adjust itself to constant conditions.

Competition is the more important the more complex or "imperfect" are the objective conditions in which it has to operate. Indeed, far from competition being beneficial only when it is "perfect," Hayek argue that the need for competition is nowhere greater than in fields in which the nature of the commodities or services makes it impossible that it ever should create a perfect market in the theoretical sense.

The economic problem is a problem of making the best use of what resources we have, and not one of what we should do if the situation were different from what it actually is. There is no sense in talking of a use of resources "as if" a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.<ref name="Hayek_Competition">Friedrich A. Hayek. [http://mises.org/daily/4181 "The Meaning of Competition"], from [[Individualism and Economic Order]] (1948), referenced 2011-11-17.</ref>

==References==
{{reflist}}

==Links==
* [http://mises.org/journals/qjae/pdf/qjae5_2_4.pdf Austrian Economics, Neoclassical Economics, Marketing, and Finance] (pdf) by Walter Block, William Barnett II, and Stuart Woord, 2002
* [http://www.cato.org/pubs/journal/cj15n2-3-10.html Perfect Competition and the Transformation of Economics] a review by John B. Egger
* [http://mises.org/misesreview_detail.aspx?control=17 Perfect Competition and the Transformation of Economics] a review by David Gordo, 1997
* [http://mises.org/journals/jls/4_4/4_4_6.pdf The Austrian Theory of Efficiency and the Role of Government] (pdf) by Roy E. Cordato
* [http://blog.mises.org/19459/perfect-competition-gobble-degook/ Perfect Competition: “Gobble”-degook] by Joseph Salerno
* [http://mises.org/journals/qjae/pdf/qjae14_2_6.pdf A Note on the Canard of "Asymmetric information" As a source of market failure] (pdf) by Thomas DiLorenzo, 2011
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Exploitation theory

2011-12-07T23:00:00Z

Matthew:

The '''exploitation theory''' is a theory which attempts to explain the origin of profits which accrue to [[capitalist|capitalists]] as being the result of the curtailment of wages which should go to the laborer. The exploitation theory which is one of the pillars of [[Marxism]], was also put forth by other economists in the 19th century, such as the German [[socialist]] Johann Karl Rodbertus. The theory is based on the [[labor theory of value]], or in other words the view that all goods that have value are the product of human labor. The conclusion of the labor theory of value led proponents of the exploitation theory to put forth the view that laborers, being the sole creaters of value, are entitled to the whole value of the goods they produce.<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 241.</ref> However, according the the exploitation theory, because the capitalists have control of the means of production, as a result of the institution of [[private property]], they are able to force the laborer into a wage contract which only pays them a fraction of what they produce, the remainder going to the capitalist as [[profit]].<ref name="capitalandinterest" />

==References==
{{reflist}}

==Links==
* {{wplink}}
* [http://mises.org/daily/1729 Classical Economics vs. The Exploitation Theory] by George Reisman, January 2005

[[Category:Economic concepts]]
{{Stub}}

Exploitation theory

2011-12-07T22:58:40Z

Matthew: created initial page

The '''exploitation theory''' is a theory which attempts to explain the origin of profits which accrue to [[capitalist|capitalists]] as being the result of the curtailment of wages which should go to the laborer. The exploitation theory which is one of the pillars of [[Marxism]], was also put forth by other economists in the 19th century such as the German [[socialist]] Johann Karl Rodbertus. The theory is based on the [[labor theory of value]], or in other words the view that all goods that have value are the product of human labor. The conclusion of the labor theory of value led proponents of the exploitation theory to put forth the view that laborers, being the sole creaters of value, are entitled to the whole value of the goods they produce.<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 241.</ref> However, according the the exploitation theory, because the capitalists have control of the means of production, as a result of the institution of [[private property]], they are able to force the laborer into a wage contract which only pays them a fraction of what they produce, the remainder going to the capitalist as [[profit]].<ref name="capitalandinterest" />

==References==
{{reflist}}

==Links==
* {{wplink}}
* [http://mises.org/daily/1729 Classical Economics vs. The Exploitation Theory] by George Reisman, January 2005

[[Category:Economic concepts]]
{{Stub}}

Elasticity of demand

2011-12-05T17:02:33Z

Matthew: added text on slope of demand curve

'''Elasticity of demand''' is an [[economics|economic]] concept which measures the change in the [[demand|quantity demanded]] that results from a change in [[price]] of a good or service, or more specifically elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. Elasticity of demand can be seen as a measure of the responsiveness or sensitivity of buyers in the quantity they demand of a good or service to a given price change.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 144-145.</ref> Elasticity of demand can be divided into three categories, elastic, inelastic and unitary.<ref name="foundations" /> An elastic response is said to occur when a percentage change in price results in a larger percentage change in quantity demanded, while an inelastic response occurs when a percentage change in price results in a smaller percentage change in quantity demanded. A unitary response occurs in the rare case where a percentage change in price results in an exactly equal percentage change in quantity demanded. Elasticity of demand is reflected in the slope of a demand curve, a slope which becomes more horizontal reflects an increase in elasticity, while a demand curve whose slope becomes more vertical reflects an increasing level of inelastic demand.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Methodological dualism

2011-12-05T05:09:34Z

Matthew: typo

[[Methodological dualism]] is an [[epistemology|epistemological]] position which holds that it is necessary, based on our current levels of knowledge and understanding, to utilize a different methodology in our attempts to analyze the actions of human beings than the methodology used in the physical sciences (i.e. physics, biology etc...) to study external events.<ref name="theoryhistory_intro">[[Ludwig von Mises]]. [http://mises.org/resources.aspx?Id=67f46c43-d9cc-4576-8977-d50da757cd6b 1. Methodological dualism], Introduction, [[Theory and History]], online version.</ref> This position is based on the presupposition that humans differ fundamentally from other objects in the external world in that humans act, or in other words use means to achieve ends, while other objects in nature, such as stones, planets, molecules and atoms do not.<ref>[[Murray Rothbard]]. [http://mises.org/resources.aspx?Id=b4571551-79dd-4599-b345-969aa1567826 Preface to Theory and History], [[Theory and History]], online version.</ref> Furthermore, we do not at present know how external events affect an individual's "thoughts, ideas, and judgements of value"<ref name="theoryhistory_intro" /> and this ignorance forces us to adopt a dualistic approach to the two classes of phenomena.

This view was emphasized by [[Ludwig von Mises]] and formed the central basis of his epistemology. Methodological dualism, especially in Mises's case, was a reaction to the notion held by groups such as the [[logical positivist|logical positivists]] that the study of human action, and as such economics, should utilize the same experimental scientific method as the physical sciences, a view that has been referred to by Mises, [[Friedrich Hayek]] and others as [[scientism]]. The alternative methodology that Mises developed and utilized for his study of human action was [[praxeology]], which formed the basis for his work in economics. Praxeology differs from the mainstream neoclassical approach to economics, in that the mainstream approach utilizes the same overall methodology as the physical sciences in an attempt to develop economic theories and predict future economic.

==References==
{{reflist}}

==Links==
* [http://blog.mises.org/13484/methodological-dualism-debate Methodological dualism debate]

[[Category:Concepts]]
{{Stub}}

Methodological dualism

2011-12-05T05:07:02Z

Matthew: polish

[[Methodological dualism]] is an [[epistemology|epistemological]] position which holds that it is necessary, based on our current levels of knowledge and understanding, to utilize a different methodology in our attempts to analyze the actions of human beings than the methodology used in the physical sciences (i.e. physics, biology etc...) to study external events.<ref name="theoryhistory_intro">[[Ludwig von Mises]]. [http://mises.org/resources.aspx?Id=67f46c43-d9cc-4576-8977-d50da757cd6b 1. Methodological dualism], Introduction, [[Theory and History]], online version.</ref> This position is based on the presupposition that humans differ fundamentally from other objects in the external world in that humans act, or in other words use means to achieve ends, while other objects in nature, such as stones, planets, molecules and atoms do not.<ref>[[Murray Rothbard]]. [http://mises.org/resources.aspx?Id=b4571551-79dd-4599-b345-969aa1567826 Preface to Theory and History], [[Theory and History]], online version.</ref> Furthermore, we do not at present know how external events affect an individual's "thoughts, ideas, and judgements of value"<ref name="theoryhistory_intro" /> and this ignorance forces us to adopt a dualistic approach to the two classes of phenomena.

This view was emphasized by [[Ludwig von Mises]] and formed the central basis of his epistemology. Methodological dualism, especially in Mises's case, was a reaction to the notion held by groups such as the [[logical positivist|logical positivists]] that the study of human action, and as such economics, should utilize the same experimental scientific method as the physical sciences, a view that has been referred to by Mises, [[Friedrich Hayek]] and others as [[scientism]]. The alternative methodology that Mises developed and utilized for his study of human action was [[praxeology]], which formed the basis for his work in economics. Praxeology differs from the mainstream neoclassical approach to economics in that the mainstream approach utilizes the same methodology as the physical sciences in an attempt to develop economic theories and predict future economic.

==References==
{{reflist}}

==Links==
* [http://blog.mises.org/13484/methodological-dualism-debate Methodological dualism debate]

[[Category:Concepts]]
{{Stub}}

Elasticity of demand

2011-12-04T23:14:39Z

Matthew:

'''Elasticity of demand''' is an [[economics|economic]] concept which measures the change in the [[demand|quantity demanded]] that results from a change in [[price]] of a good or service, or more specifically elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. Elasticity of demand can be seen as a measure of the responsiveness or sensitivity of buyers in the quantity they demand of a good or service to a given price change.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 144-145.</ref> Elasticity of demand can be divided into three categories, elastic, inelastic and unitary.<ref name="foundations" /> An elastic response is said to occur when a percentage change in price results in a larger percentage change in quantity demanded, while an inelastic response occurs when a percentage change in price results in a smaller percentage change in quantity demanded. A unitary response occurs in the rare case where a percentage change in price results in an exactly equal percentage change in quantity demanded.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Price elasticity of demand

2011-12-04T22:00:32Z

Matthew: created redirect

#redirect [[Elasticity of demand]]

Elasticity of demand

2011-12-04T21:57:20Z

Matthew: changed category to economic concepts

'''Elasticity of demand''' is an [[economics|economic]] concept which measures the change in the [[demand|quantity demanded]] that results from a change in [[price]] of a good or service, or more specifically elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. Elasticity of demand can be seen as a measure of the responsiveness or sensitivity of buyers in the quantity they demand for a good or service in reaction to a price change.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 144-145.</ref> Elasticity of demand can be divided into three categories, elastic, inelastic and unitary.<ref name="foundations" /> An elastic response is said to occur when a percentage change in price results in a larger percentage change in quantity demanded, while an inelastic response occurs when a percentage change in price results in a smaller percentage change in quantity demanded. A unitary response occurs in the rare case where a percentage change in price results in an exactly equal percentage change in quantity demanded.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Elasticity of demand

2011-12-04T21:56:22Z

Matthew: created initial page

'''Elasticity of demand''' is an [[economics|economic]] concept which measures the change in the [[demand|quantity demanded]] that results from a change in [[price]] of a good or service, or more specifically elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. Elasticity of demand can be seen as a measure of the responsiveness or sensitivity of buyers in the quantity they demand for a good or service in reaction to a price change.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 144-145.</ref> Elasticity of demand can be divided into three categories, elastic, inelastic and unitary.<ref name="foundations" /> An elastic response is said to occur when a percentage change in price results in a larger percentage change in quantity demanded, while an inelastic response occurs when a percentage change in price results in a smaller percentage change in quantity demanded. A unitary response occurs in the rare case where a percentage change in price results in an exactly equal percentage change in quantity demanded.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-29T21:05:01Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 90
| 60
|
|
|
| '''150'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural law]], [[Causal-realist economics]], [[Statism]], [[Monetary policy]], [[Business Tides]], [[Usury]], [[Law of diminishing returns]], [[Technology]]
* Pages: [[Perfect competition]], [[Resurrecting Marx]], [[History and Critique of Interest Theories]]

Technology

2011-11-29T21:02:32Z

Matthew: created initial page

'''Technology''' can be defined as knowledge or information which tell us how an end can be achieved by the employment of combinations of various means.<ref>[[Ludwig von Mises]]. [http://mises.org/resources/3250 "Human Action"], 2010, page 208.</ref> Or more simply technology consists of ideas on how to produce things.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 63-64.</ref> Technology should be distinguished from the physical form, such a produced good, which embodies the technological idea.<ref name="foundations" />

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Concepts]]
{{Stub}}

Law of diminishing returns

2011-11-29T01:51:07Z

Matthew:

'''Law of diminishing returns''', also know as the law of non-proportional returns, states that when an increasing quantity of a factor of production (or group of factors) is used in conjunction with a fixed quantity of complementary factors, eventually a point will be reached where the additional output produced will be less than proportionate to the increased quantities of the input used.<ref name="reisman_capitalism">Reisman, George. [http://capitalism.net/Capitalism/CAPITALISM_Internet.pdf "Capitalism: A Treatise on Economics"], 1998, page 67.</ref> This law applies to a given point in time, or in other words assumes a static production process.<ref name="reisman_capitalism" /> Overtime changes in [[technology]] could cause the point of diminishing returns to be pushed back.

A classic example of the law of diminishing returns is increasing the amount of [[labor]] used to farm a given plot of land. If the number of laborers used are continually doubled eventually a point will be reached where the doubling of labor will result in less then a doubling of the return from the land.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Law of diminishing returns

2011-11-29T01:19:09Z

Matthew: added example

'''Law of diminishing returns''', also know as the law of non-proportional returns, states that when an increasing quantity of a factor of production (or group of factors) is used in conjunction with a fixed quantity of complementary factors, eventually a point will be reached where the additional output produced will be less than proportionate to the increased quantities of the input used.<ref name="reisman_capitalism">Reisman, George. [http://capitalism.net/Capitalism/CAPITALISM_Internet.pdf "Capitalism: A Treatise on Economics"], 1998, page 67.</ref> This law applies to a given point in time, or in other words assumes a static production process.<ref name="reisman_capitalism" /> Overtime changes in [[technology]] could cause the point of diminishing returns to be pushed back.

A classic example of the law of diminishing returns is increasing the amount of labor used to farm a given plot of land. If the number of laborers used are continually doubled eventually a point will be reached where the doubling of labor will result in less then a doubling of the return from the land.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Law of diminishing returns

2011-11-29T01:13:44Z

Matthew: created initial page

'''Law of diminishing returns''', also know as the law of non-proportional returns, states that when an increasing quantity of a factor of production (or group of factors) is used in conjunction with a fixed quantity of complementary factors, eventually a point will be reached where the additional output produced will be less than proportionate to the increased quantities of the input used.<ref name="reisman_capitalism">Reisman, George. [http://capitalism.net/Capitalism/CAPITALISM_Internet.pdf "Capitalism: A Treatise on Economics"], 1998, page 67.</ref> This law applies to a given point in time, or in other words assumes a static production process.<ref name="reisman_capitalism" /> Overtime changes in [[technology]] could cause the point of diminishing returns to be pushed back.

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

History and Critique of Interest Theories

2011-11-28T00:10:19Z

Matthew:

{{Infobox book
| name = History and Critique of Interest Theories
| title_orig =
| translator =
| image = 
| image_caption =
| author = Eugen von Böhm-Bawerk
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 1884
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''History and Critique of Interest Theories''''' is the first volume of [[Eugen von Böhm-Bawerk]] three volume set ''Capital and Interest'' which was originally published in 1884. In ''History and Critique of Interest Theories'', Böhm-Bawerk provides a broad historical survey of the major [[interest]] theories which had found prominence up to his day and additionally provides a thorough critiques each theory. Early in the book Böhm-Bawerk points out that while loan interest had originally occupied the efforts of theorists, the [[industrial revolution]] and the massive change this brought to Western economies, led to the need for theorists to explain the existence of [[originary interest]]. In order to explain originary interest Böhm-Bawerk points out that theorists were essentially trying to answer the following question: "Why is the gross return to [[capital]] regularly of greater value than the proportions of capital, which are consumed in acquiring that return?"<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 52,77.</ref>

==Classes of interest theories==
In ''History and Critique of Interest Theories'' Böhm-Bawerk groups the interest theories which he examines into five classes:
* ''Colorless theories'': are those which built on the idea of [[Adam Smith]] and [[Anne Robert Jacques Turgot]] that there must be interest otherwise capitalists would have no desire to employ capital productively.

* ''Productivity theories'': are based on the idea that there is an inherent productive capacity which exists in capital. Examples of economists who utilized this explanation for orignary interest include [[Carl Menger]] and [[Jean-Baptiste Say]].

* ''Abstinence theories'': put forth the idea that interest "is the equivalent of one element of cost which enters as a constituent into the price, namely, abstinence."<ref name="capitalandinterest" /> Or in other words, interest is the payment to the capitalist to cover the cost of sacrificing the present enjoyment which could have been attained from the use of their capital.

* ''Renumeration theories'': attributed the existence of interest to work done by the capitalist.

* ''Exploitation theories'': are based on the belief that interest is nothing but a curtailment of the just wage that should go to the worker. This class of interest theory is part of the theoretical foundation of [[socialism]], and was put forth by individuals such as [[Johann Karl Rodbertus]] and [[Karl Marx]].

==References==
{{reflist}}

==Links==
{{store|http://mises.org/store/Capital-and-Interest-Paperback-P446.aspx|Capital and Interest}}
* {{mr|164|Resources page}} (including full text)

{{stub}}

[[category:literature]]

History and Critique of Interest Theories

2011-11-28T00:08:51Z

Matthew: fixed typo

{{Infobox book
| name = History and Critique of Interest Theories
| title_orig =
| translator =
| image = 
| image_caption =
| author = Eugen von Böhm-Bawerk
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 1884
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''History and Critique of Interest Theories''''' is the first volume of [[Eugen von Böhm-Bawerk]] three volume set ''Capital and Interest'' which was originally published in 1884. In ''History and Critique of Interest Theories'', Böhm-Bawerk provides a broad historical survey of the major [[interest]] theories which had found prominence up to his day and additionally provides a thorough critiques each theory. Early in the book Böhm-Bawerk points out that while loan interest had originally occupied the efforts of theorists, the [[industrial revolution]] and the massive change this brought to Western economies, led to the need for theorists to explain the existence of [[originary interest]]. In order to explain originary interest Böhm-Bawerk points out that theorists were essentially trying to answer the following question: "Why is the gross return to [[capital]] regularly of greater value than the proportions of capital, which are consumed in acquiring that return?"<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 52,77.</ref>

==Classes of interest theories==
In ''History and Critique of Interest Theories'' Böhm-Bawerk groups the interest theories which he surveys and critiques into five classes:
* ''Colorless theories'': are those which built on the idea of [[Adam Smith]] and [[Anne Robert Jacques Turgot]] that there must be interest otherwise capitalists would have no desire to employ capital productively.

* ''Productivity theories'': are based on the idea that there is an inherent productive capacity which exists in capital. Examples of economists who utilized this explanation for orignary interest include [[Carl Menger]] and [[Jean-Baptiste Say]].

* ''Abstinence theories'': put forth the idea that interest "is the equivalent of one element of cost which enters as a constituent into the price, namely, abstinence."<ref name="capitalandinterest" /> Or in other words, interest is the payment to the capitalist to cover the cost of sacrificing the present enjoyment which could have been attained from the use of their capital.

* ''Renumeration theories'': attributed the existence of interest to work done by the capitalist.

* ''Exploitation theories'': are based on the belief that interest is nothing but a curtailment of the just wage that should go to the worker. This class of interest theory is part of the theoretical foundation of [[socialism]], and was put forth by individuals such as [[Johann Karl Rodbertus]] and [[Karl Marx]].

==References==
{{reflist}}

==Links==
{{store|http://mises.org/store/Capital-and-Interest-Paperback-P446.aspx|Capital and Interest}}
* {{mr|164|Resources page}} (including full text)

{{stub}}

[[category:literature]]

Qualitative easing

2011-11-27T04:56:06Z

Matthew: typo

'''Qualitative easing''' is a form of [[monetary policy]] whereby a [[central bank]] reduces the average quality of the assets backing its monetary base.<ref name="tragedy_euro">Bagus, Phillip. [http://mises.org/resources/6045/The-Tragedy-of-the-Euro "The Tragedy of the Euro"], 2010.</ref>

Qualitative easing could occur, for example, if a central bank were to move from gold being the primary asset backing its monetary base to a collection of assets more heavily composed of government bonds. Qualitative easing occurred in the [[European Union]] throughout the early 21st century as the [[European Central Bank]] increased its holdings of bonds issued by troubled countries (such as [[Greece]] and [[Italy]]) which decreased the average quality of the assets backing the Euro.<ref name="tragedy_euro" />

== Quantitative easing ==
{{Main|Quantitative easing}}

[[Willem Buiter]] has proposed a terminology to distinguish ''quantitative easing'', or an expansion of a central bank's balance sheet, from what he terms ''qualitative easing'', or the process of a central bank adding riskier assets onto its balance sheet:

{{quote|'''[[Quantitative easing]]''' is an increase in the size of the balance sheet of the central bank through an increase it is {{sic}} monetary liabilities ([[Monetary base|base money]]), holding constant the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio.

'''Qualitative easing''' is a shift in the composition of the assets of the central bank towards less liquid and riskier assets, holding constant the size of the balance sheet (and the official policy rate and the rest of the list of usual suspects). The less liquid and more risky assets can be private securities as well as sovereign or sovereign-guaranteed instruments. All forms of risk, including credit risk (default risk) are included.<ref>
{{ cite web
|url = http://blogs.ft.com/maverecon/2008/12/quantitative-easing-and-qualitative-easing-a-terminological-and-taxonomic-proposal/
|title = Quantitative easing and qualitative easing: a terminological and taxonomic proposal
|author = Willem Buiter
|date = 2008-12-09
|accessdate = 2009-02-02
}}
</ref>}}

==References==
{{reflist}}

==Links==
* [http://mises.org/daily/3725 The Fed's Dilemma] by Philipp Bagus, October 2009
* [http://mises.org/daily/4913 Will There Be QE3, QE4, QE5...?] by Philipp Bagus, December 2010
* {{wplink}}

[[Category:Economic concepts]]
[[Category:Interventions]]
{{Stub}}

History and Critique of Interest Theories

2011-11-27T03:39:53Z

Matthew:

{{Infobox book
| name = History and Critique of Interest Theories
| title_orig =
| translator =
| image = 
| image_caption =
| author = Eugen von Böhm-Bawerk
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 1884
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''History and Critique of Interest Theories''''' is the first volume of [[Eugen von Böhm-Bawerk]] three volume set ''Capital and Interest'' which was originally published in 1884. In ''History and Critique of Interest Theories'', Böhm-Bawerk provides a broad historical survey of the major [[interest]] theories which had found prominence up to his day and additionally provides a thorough critiques each theory. Early in the book Böhm-Bawerk points out that while loan interest had originally occupied the efforts of theorists, the [[industrial revolution]] and the massive change this brought to Western economies, led to the need for theorists to explain the existence of [[originary interest]]. In order to explain originary interest Böhm-Bawerk points out that theorists were essentially trying to answer the following question: "Why is the gross return to capital regularly of greater value than the proportions of [[capital]], which are consumed in acquiring that return?"<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 52,77.</ref>

==Classes of interest theories==
In ''History and Critique of Interest Theories'' Böhm-Bawerk groups the interest theories which he surveys and critiques into five classes:
* ''Colorless theories'': are those which built on the idea of [[Adam Smith]] and [[Anne Robert Jacques Turgot]] that there must be interest otherwise capitalists would have no desire to employ capital productively.

* ''Productivity theories'': are based on the idea that there is an inherent productive capacity which exists in capital. Examples of economists who utilized this explanation for orignary interest include [[Carl Menger]] and [[Jean-Baptiste Say]].

* ''Abstinence theories'': put forth the idea that interest "is the equivalent of one element of cost which enters as a constituent into the price, namely, abstinence."<ref name="capitalandinterest" /> Or in other words, interest is the payment to the capitalist to cover the cost of sacrificing the present enjoyment which could have been attained from the use of their capital.

* ''Renumeration theories'': attributed the existence of interest to work done by the capitalist.

* ''Exploitation theories'': are based on the belief that interest is nothing but a curtailment of the just wage that should go to the worker. This class of interest theory is part of the theoretical foundation of [[socialism]], and was put forth by individuals such as [[Johann Karl Rodbertus]] and [[Karl Marx]].

==References==
{{reflist}}

==Links==
{{store|http://mises.org/store/Capital-and-Interest-Paperback-P446.aspx|Capital and Interest}}
* {{mr|164|Resources page}} (including full text)

{{stub}}

[[category:literature]]

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-27T03:32:40Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 60
| 40
|
|
|
| '''100'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural law]], [[Causal-realist economics]], [[Statism]], [[Monetary policy]], [[Business Tides]], [[Usury]]
* Pages: [[Perfect competition]], [[Resurrecting Marx]], [[History and Critique of Interest Theories]]

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-27T03:31:47Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 60
| 40
|
|
|
| '''100'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural law]], [[Causal-realist economics]], [[Statism]], [[Monetary policy]], [[Business Tides]], [[Usury]]
* Pages: [[Perfect competition]], [[Resurrecting Marx]], [[History and Critique of Interest Theories]]

Austrian School

2011-11-27T03:24:30Z

Matthew: fixed link for History and Critique of Interest Theories

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The '''Austrian School of Economics''' is a [[Schools of economic thought|school of economic thought]] that derives its name from its [[Austrian]] founders and early supporters, including [[Carl Menger]], [[Eugen von Böhm-Bawerk]] and [[Ludwig von Mises]].

Other significant [[Austrian]] writers and economists include [[Murray Rothbard]], Nobel Laureate [[Friedrich Hayek]] and journalist [[Henry Hazlitt]]. Current research is produced by, among many others, scholars from the [[Mises Institute|Ludwig von Mises Institute]], and "Austrian" economists can now come from any part of the world. They are identified with the School through their shared views on the nature of economic science and its proper methodology.

The school emphasizes the spontaneous organizing power of the price mechanism and holds that the complexity of subjective human choices makes mathematical modeling of the evolving market practically impossible and therefore its scholars eschew what they consider "naïve" and pointless mathematical modeling of the economy, considering much of mainstream economics a form of economic charlatanism.<ref>[http://mises.org/daily/3582 Keynesians Can't Predict], [[L. Albert Hahn]], ''The Freeman'', October 6, 1952</ref> Its proponents tend to advocate the strong protection of private property rights and the strict enforcement of voluntary contractual agreements between economic agents, but otherwise advocate a laissez-faire approach to the economy and hold that the smallest imposition of coercive force (especially government-imposed force) on commercial transactions is the most effective way to secure long-run economic stability and well-being.

In particular, they voice serious concerns about the distorting and damaging effects of government involvement in commerce, arguing that few government regulations in this area are necessary or desirable and often trigger a "ratchet effect" as problems associated with existing regulations are often blamed on the free market, thereby justifying further damaging, coercive incursions into the market. They are particularly critical of long-standing governmental incursions into the area of private money production, advocating instead the immediate abolition of all coercive [[legal tender]] laws and the return to full reserve - or free - banking, where the financial system is decentralized and not dominated or controlled by coercive [[monopoly]] government or a monopoly [[central bank]].

==History==
While the Austrian School of Economics has connections as far back as the 15th century, it began with notable 19th century economists of Austrian origin. It is recognized to have emerged after the publication in 1871 of a trilogy of works (by [[William Stanley Jevons|Jevons]], [[Léon Walras|Walras]], and [[Carl Menger|Menger]]) which introduced the idea of the [[subjective theory of value]] and began what has been called “the [[marginal revolution]]” in economic thought.<ref>{{Citation | title = School of Thought: The Austrian School of Economics | publisher = [[Online Library of Liberty]] | url = http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Fcollection=8&Itemid=29&s=1 | accessdate = 2011-05-19}}</ref>

Other early theorists of the Austrian School were [[Eugen von Böhm-Bawerk]], [[Ludwig von Mises]], [[Friedrich Hayek]], and [[Friedrich von Wieser]]. Austrian economists no longer need be from Austria, and the term describes a particular school of economic thought rather than the nationality of its practitioners.

===Pre-Austrian Economists===
With noted contributions of earlier thinkers, like [[Nicole Oresme]], the Austrian school traces its roots to the followers of St. Thomas Aquinas, writing and teaching at the [[School of Salamanca|University of Salamanca]] in Spain.

These Late scholastics established the first modern economic theories and argued, in current terms, for free [[trade]] and property rights. Over the course of several generations, they discovered and explained the laws of [[supply]] and [[demand]], the cause of [[inflation]], the operation of foreign exchange rates, and the subjective nature of economic [[value]]. They were advocates of property rights and the freedom to contract and trade. "Austrians share the scholastic belief that there is no such thing as an economic science dealing with autonomous variables. Economic problems are aspects of larger social phenomena; and it is most expedient to deal with them as such, rather than to analyze them in some twisted separation."<ref name="Hulsmann_scholastics">Jörg Guido Hülsmann. [http://www.mises.org/books/moneyproduction.pdf "Ethics of Money Production"], online version, Introduction p. 12, referenced 2009-05-10.</ref>

The first general treatise on economics, [http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/cantillon/index.html Essay on the Nature of Commerce], was written in 1730 by [[Richard Cantillon]], a man schooled in the scholastic tradition. Born in Ireland, he emigrated to France. He saw economics as an independent area of investigation, and explained the formation of [[price]]s using the "thought experiment." He understood the market as an entrepreneurial process, and held to an Austrian theory of money creation: that it enters the economy in a step-by-step fashion, disrupting prices along the way.

Cantillon was followed by [[Anne Robert Jacques Turgot]], the pro-market French aristocrat and finance minister under the ''ancien regime'', one of the [[Physiocrats]]. His economic writings were few but profound. His paper "Value and Money" spelled out the origins of money, and the nature of economic choice: that it reflects the subjective rankings of an individual's preferences. Turgot solved the famous [[Paradox of value|diamond-water paradox]] that baffled later classical economists, articulated the law of diminishing returns, and criticized usury laws (a sticking point with the Late Scholastics). He favored a classical liberal approach to economic policy, recommending a repeal of all special privileges granted to government-connected industries.

Turgot was the intellectual father of a long line of great French economists of the eighteenth and nineteenth century, most prominently [[Jean-Baptiste Say]] and [[Frederic Bastiat|Claude-Frederic Bastiat]]. Say was the first economist to think deeply about economic method. He realized that economics is not about the amassing of data, but rather about the verbal elucidation of universal facts (for example, wants are unlimited, means are scarce) and their logical implications.

Say discovered the productivity theory of resource pricing, the role of [[capital]] in the division of labor, and "[[Say's Law]]": there can never be sustained "overproduction" or "underconsumption" on the free market if prices are allowed to adjust. He was a defender of laissez-faire and the [[industrial revolution]], as was Bastiat. As a free-market journalist, Bastiat also argued that nonmaterial services are subject to the same economic laws as material [[good]]s. In one of his many economic allegories, Bastiat spelled out the "[[Parable of the broken window|broken-window fallacy]]" later popularized by [[Henry Hazlitt]].

Despite the theoretical sophistication of this developing pre-Austrian tradition, the [[Classical economics|British school]] of the late eighteenth and early nineteenth centuries won the day, mostly for political reasons. This British tradition (based on the objective-cost and labor-productivity theory of value) ultimately led to the rise of the Marxist doctrine of capitalist exploitation.

===The First Austrians===
The dominant British tradition received its first serious challenge in many years when [[Carl Menger]]'s ''[[Principles of Economics]]'' was published in 1871. Menger, the founder of the Austrian School proper, resurrected the Scholastic-French approach to economics, and put it on firmer ground.

Together with the contemporaneous writings of [[Leon Walras]] and [[Stanley Jevons]], Menger spelled out the subjective basis of [[Value|economic value]], and fully explained, for the first time, the theory of [[Utility|marginal utility]] (the greater the number of units of a [[good]] that an individual possesses, the less he will value any given unit). In addition, Menger showed how money originates in a free market when the most marketable [[commodity]] is desired, not for consumption, but for use in trading for other goods.

Menger's book was a pillar of the "[[marginalist revolution]]" in the history of economic science. When Mises said it "made an economist" out of him, he was not only referring to Menger's theory of money and prices, but also his approach to the discipline itself. Like his predecessors in the tradition, Menger was a classical liberal and methodological individualist, viewing economics as the science of individual choice. His Investigations, which came out twelve years later, battled the [[Wikipedia:Historical school of economics|German Historical School]], which rejected theory and saw economics as the accumulation of data in service of the state. They took great exception to his defense of "theory" and gave the work of Menger and his followers the derogatory name "Austrian school" because of their faculty positions at the University of Vienna. The term stuck.<ref name="School">[http://mises.org/about/3467#Austrian_Economics "FAQ: What is Austrian Economics"], ''[[Mises Institute]]'', referenced 2009-04-27.</ref>

As professor of economics at the University of Vienna, and then tutor to the young but ill-fated [[Wikipedia:Rudolf, Crown Prince of Austria|Crown Prince Rudol]]f of the House of Habsburg, Menger restored economics as the science of human action based on deductive [[logic]], and prepared the way for later theorists to counter the influence of socialist thought. Indeed, his student [[Friederich von Wieser]] strongly influenced Friedrich von Hayek's later writings. Menger's work remains an excellent introduction to the economic way of thinking.

Menger's admirer and follower at the University of Innsbruck, [[Eugen von Böhm-Bawerk]], took Menger's exposition, reformulated it, and applied it to a host of new problems involving [[value]], [[price]], [[capital]], and interest. His ''[[History and Critique of Interest Theories]]'', appearing in 1884, is a sweeping account of fallacies in the history of thought and a firm defense of the idea that the interest rate is not an artificial construct but an inherent part of the market. It reflects the universal fact of "[[time preference]]," the tendency of people to prefer satisfaction of wants sooner rather than later (a theory later expanded and defended by [[Frank Fetter]]<ref name="Fetter">Jeffrey Herbener. [http://mises.org/about/3231 "Frank A. Fetter (1863-1949): A Forgotten Giant"], ''[[Mises Institute]]'', referenced 2009-04-28.</ref>).

Böhm-Bawerk's ''[[Positive Theory of Capital]]'' demonstrated that the normal rate of business profit is the interest rate. Capitalists [[Saving|save]] money, pay laborers, and wait until the final product is sold to receive profit. In addition, he demonstrated that [[capital]] is not homogeneous but an intricate and diverse structure that has a time dimension. A growing economy is not just a consequence of increased capital investment, but also of longer and longer processes of production.

Böhm-Bawerk engaged in a prolonged battle with the [[Marxian Economics|Marxists]] over the exploitation theory of capital, and refuted the socialist doctrine of capital and wages long before the communists came to power in Russia. Böhm-Bawerk also conducted a seminar that would later become the model for Mises's own Vienna seminar.

Böhm-Bawerk favored policies that deferred to the ever-present reality of economic law. He regarded interventionism as an attack on market economic forces that cannot succeed in the long run. In the last years of the Habsburg monarchy, he three times served as finance minister, fighting for balanced budgets, sound money and the [[gold standard]], free trade, and the repeal of export subsidies and other monopoly privileges.

===Mises and Hayek===
It was Böhm-Bawerk's research and writing that solidified the status of the Austrian School as a unified way of looking at economic problems, and set the stage for the School to make huge inroads in the English-speaking world. But one area where Böhm-Bawerk had not elaborated on the analysis of Menger was [[money]], the institutional intersection of the "micro" and "macro" approach. The young [[Ludwig von Mises]]<ref name="Mises">Murray N. Rothbard. [http://mises.org/about/3248 "Ludwig von Mises (1881-1973)"], ''[[Mises Institute]]'', referenced 2009-04-26.</ref>, economic advisor to the Austrian Chamber of Commerce, took on the challenge.

The result of Mises's research was ''[[The Theory of Money and Credit]]'', published in 1912. He spelled out how the theory of [[Utility|marginal utility]] applies to [[money]], and laid out his "regression theorem," showing that money not only originates in the market, but must always do so. Drawing on the [[British Currency School|British Currency School]], [[Knut Wicksell]]'s theory of [[interest rate]]s, and Böhm-Bawerk's theory of the structure of production, Mises presented the broad outline of the [[Austrian Business Cycle Theory|Austrian theory of the business cycle]]. A year later, Mises was appointed to the faculty of the University of Vienna, and Böhm-Bawerk's seminar spent a full two semesters debating Mises's book.

Mises's career was interrupted for four years by [[World War I]]. He spent three of those years as an artillery officer, and one as a staff officer in economic intelligence. 1919, at war's end, he published ''[[Nation, State, and Economy]]'', arguing on behalf of the economic and cultural freedoms of minorities in the now-shattered empire, and spelling out a theory of the economics of war. Meanwhile, Mises's monetary theory received attention in the U.S. through the work of [[Benjamin Anderson|Benjamin M. Anderson, Jr.]]<ref name="Anderson">Mark Thornton. [http://mises.org/about/3226 "Benjamin Anderson (1886-1949)"], ''[[Mises Institute]]'', referenced 2009-04-26.</ref>, an economist at [[Chase National Bank]]. (Mises's book was panned by [[John Maynard Keynes]], who later admitted he could not read German.{{Fact|reason=It would be cool to quote this somewhere.}})

In the political chaos after the war, the main theoretician of the now-socialist Austrian government was Marxist [[Otto Bauer]]. Knowing Bauer from the Böhm-Bawerk seminar, Mises explained economics to him night after night, eventually convincing him to back away from Bolshevik-style policies.{{fact|reason=It would be great to have a resource on this.}} The Austrian socialists never forgave Mises for this, waging war against him in academic politics and successfully preventing him from getting a paid professorship at the university.

Undeterred, Mises turned to the problem of socialism itself, writing a blockbuster essay in 1921, which he turned into the book ''[[Socialism (book)|Socialism]]'' over the next two years. Socialism permits no private property or exchange in [[capital goods]], and thus no way for resources to find their most highly valued use. Socialism, Mises predicted, would result in utter chaos and the end of civilization.

Mises challenged the socialists to explain, in economic terms, precisely how their system would work, a task which the socialists had hitherto avoided. The debate between the Austrians and the socialists continued for the next decade and beyond, and, until the collapse of world socialism in 1989, academics had long thought that the debate was resolved in favor of the socialists.

Meanwhile, Mises's arguments on behalf of the free market attracted a group of converts from the socialist cause, including [[Friedrich Hayek|Hayek]], [[Wilhelm Roepke]]<ref name="Roepke">Shawn Ritenour. [http://mises.org/about/3241 "Wilhelm Röpke (1899-1966): Humane Economist"], ''[[Mises Institute]]'', referenced 2009-04-27.</ref> , and [[Wikipedia:Lionel Robbins|Lionel Robbins]]. Mises began holding a private seminar in his offices at the Chamber of Commerce that was attended by [[Wikipedia:Fritz Machlup|Fritz Machlup]]<ref name="Machlup">Mark Thornton. [http://mises.org/about/3237 "Biography of Fritz Machlup (1902-1983)"], ''[[Mises Institute]]'', referenced 2009-04-27.</ref>, [[Wikipedia:Oskar Morgenstern|Oskar Morgenstern]], [[Wikipedia:Gottfried von Haberler|Gottfried von Haberler]]<ref name="Haberler">[http://mises.org/journals/aen/aen20_1_1.asp "Between Mises and Keynes An Interview with Gottfried von Haberler (1900-1995)"], ''The Austrian Economics Newsletter'' Spring 2000 Volume 20, Number 1, referenced 2009-04-27.</ref>, [[Wikipedia:Alfred Schutz|Alfred Schutz]]<ref name="Schutz">Peter Kurrild-Klitgaard. [http://mises.org/journals/qjae/pdf/qjae6_2_2.pdf "The Viennese Connection: Alfred Schutz and the Austrian School"](pdf), ''The Quarterly Journal Of Austrian Economics'' Vol.6, no.2, referenced 2009-04-27.</ref>, Richard von Strigl<ref name="Strigl">Jörg Guido Hülsmann. [http://mises.org/about/3243 "Richard von Strigl (1891-1942)"], ''[[Mises Institute]]'', referenced 2009-04-27.</ref>, [[Wikipedia:Eric Voegelin|Eric Voegelin]], [[Wikipedia:Paul Rosenstein-Rodan|Paul Rosenstein-Rodan]], and many other intellectuals from all over Europe.

Also during the 1920s and 30s, Mises was battling on two other academic fronts. He delivered the decisive blow to the [[Historical school of economics|German Historical School]] with a series of essays in defense of the deductive method in economics, which he would later call [[praxeology]] or the logic of [[action]]. He also founded the Austrian Institute for Business Cycle Research, and put his student Hayek in charge of it.

During these years, Hayek and Mises authored many studies on the [[business cycle]], warned of the danger of credit expansion, and predicted the coming currency crisis. This work was cited by the [[Nobel Memorial Prize in Economic Sciences|Nobel Memorial Prize]] committee in 1974 when Hayek received the award for economics. Working in England and America, Hayek later became a prime opponent of [[Keynesian economics]] with books on exchange rates, capital theory, and monetary reform. His popular book ''[[Road to Serfdom]]'' helped revive the classical liberal movement in America after the [[New Deal]] and [[World War II]]. And his series ''[[Law, Legislation, and Liberty]]'' ([http://books.google.com/books?id=wK49AAAAIAAJ&dq=Law,+Legislation+and+Liberty&printsec=frontcover&source=bl&ots=YAvviNdntc&sig=ZdwmZeD_vlQzvUM5nIIs2xmqp50&hl=en#PPP1,M1 online]) elaborated on the Late Scholastic approach to law, and applied it to criticize egalitarianism and [[nostrums]] like [[social justice]].

===Outside of Austria===
In the late 1930s, after suffering from the [[Great Depression|worldwide depression]], Austria was threatened by a Nazi takeover. Hayek had already left for London in 1931 at Mises's urging, and in 1934, Mises himself moved to Geneva to teach and write at the [[Graduate Institute of International Studies|International Institute for Graduate Studies]], later emigrating to the United States. Knowing Mises as the sworn enemy of national socialism, the Nazis confiscated Mises's papers from his apartment and hid them for the duration of the war. Ironically, it was Mises's ideas, filtered through the work of Roepke and the statesmanship of [[Ludwig Erhard]], that led to Germany's postwar economic reforms and rebuilt the country. Then, in 1992, Austrian archivists discovered Mises's stolen Vienna papers in a reopened archive in Moscow.<ref name="Documents">Richard M. Ebeling. [http://www.fff.org/comment/ed0397e.asp "The Discovery of the Lost Papers of Ludwig von Mises"], ''The Future of Freedom Foundation'', March 1997, referenced 2009-04-28.</ref>

While in Geneva, Mises's wrote his masterwork, ''[[Nationalökonomie]]'', and, after coming to the United States, revised and expanded it into ''[[Human Action]]'', which appeared in 1949. His student [[Murray N. Rothbard]]<ref name="Rothbard">David Gordon. [http://mises.org/about/3249 "Murray N. Rothbard (1926-1995)"], ''[[Mises Institute]]'', referenced 2009-04-28.</ref> called it "Mises's greatest achievement and one of the finest products of the human mind in our century. It is economics made whole." It remains the economic treatise that defines the School. Even so, it was not well received in the economics profession, which had already made a decisive turn towards Keynesianism, which accepted fiat money, fractional-reserve banking and central banking, as well as the premise that government had to intervene in the economy because somehow the free market sometimes did not "work" - all principles that Mises found objectionable and wrong.

Though Mises never held the paid academic post he deserved, he gathered students around him at New York University, just as he had in Vienna. Even before Mises emigrated, journalist [[Henry Hazlitt]] had become his most prominent champion, reviewing his books in the New York Times and Newsweek, and popularizing his ideas in such classics as ''[[Economics in One Lesson]]''. Yet Hazlitt made his own contributions to the Austrian School. He wrote a line-by-line [[The Failure of the New Economics|critique]] of Keynes's ''[[The General Theory of Employment, Interest and Money|General Theory]]'', defended the writings of Say, and restored him to a central place in Austrian macroeconomic theory. Hazlitt followed Mises's example of uncompromising adherence to principle, and as a result was pushed out of four high-profile positions in the journalistic world.

Mises's New York seminar continued until two years before his death in 1973. During those years, [[Murray Rothbard]], a PhD student at Columbia, attended Mises's seminars and become student of the Austrian School, moving further away from "mainstream" economics the more he studied the Austrian School.

===Murray Rothbard and the revival of the Austrian School===

Although Murray Rothbard proved to be a brilliant student, he had difficulties obtaining his PhD from Columbia, and the rejection of his views within mainstream economic thought was to become a theme throughout his professional career. Although a prolific writer and polymath, he never obtained an academic posting at any Ivy League institution, having to accept an academic posting at Brooklyn Polytechnic and later becoming a professor of economics at the University of Nevada.

In the tradition of many Austrian scholars, Rothbard was uncompromising in his views and was ostracized from many influential political bodies because of his perceived radicalism, even within right-leaning conservative groups that would normally have been sympathetic to his views. William F. Buckley wrote a bitter obituary on Rothbard's death, and supporters of [[Ayn Rand]] ultimately rejected his views on the corrupting influence of big business on politics.

Rothbard wrote of the betrayal of the "true spirit" of the American conservative movement in his book, ''[[The Betrayal of the American Right]]''.

On economic matters, Rothbard's ''[[Man, Economy, and State]]'' was patterned after ''Human Action'', and in some areas--[[monopoly]] theory, [[utility]] and [[welfare]], and the theory of the state--tightened and strengthened Mises's own views. Rothbard's approach to the Austrian School followed directly in the line of Late Scholastic thought by applying economic science within a framework of a natural-rights theory of property.

What resulted was a full-fledged defense of a capitalistic and [[stateless social order]], based on [[property]] and freedom of association and contract. Rothbard extended and in a sense "completed" Mises's views on economic thought, removing inconsistencies and drawing more radical policy conclusions than Mises's early works (that were, in themselves, radical in their day and are still considered to be so even today).

Rothbard followed his economic treatise with an investigation of the [[Great Depression]], which applied [[Austrian Business Cycle Theory]] to show that the stock market crash and economic downturn was attributable to a prior [[bank]] [[Inflation|credit expansion]]. Then in a series of studies on government policy, he established the theoretical framework for examining the effects of all types of intervention in the market.

Rothbard extended and "radicalized" the Austrian School, taking Mises's insights and pushing them to their logical conclusion. Unlike Mises's view that there was a role for the State (in providing public goods and services such as law and order and basic infrastructure) it was Rothbard's view that all goods and services could be - and should be - produced by the private sector. He viewed many regulations and laws ostensibly promulgated for the "public interest" as self-interested power grabs by scheming government bureaucrats engaging in dangerously unfettered self-aggrandizement, as they were not subject to real competition. Rothbard held that there were inherent inefficiencies involved with governments providing commercial services and asserted that real competition would eliminate these efficiencies, if those services could be provided by the private sector.<ref>[http://www.lewrockwell.com/rothbard/rothbard40.html The Great Society: A Libertarian Critique], Murray Rothbard</ref><ref>[http://www.lewrockwell.com/rothbard/rothbard53.html The Noble Task of Revisionism], Murray Rothbard</ref><ref>[http://www.lewrockwell.com/rothbard/rothbard37.html The Fallacy of the 'Public Sector'], Murray Rothbard</ref>

Rothbard was equally condemning of state corporatism. He criticized many instances where business elites co-opted government's monopoly power so as to influence laws and regulatory policy in a manner benefiting them at the expense of their competitive rivals.<ref>''For a New Liberty'', Chapter 3</ref> He was a seminal writer in an area that would later branch out to become public choice theory, but his work is now rarely associated with this area of study.

He argued that [[taxation]] represents coercive theft on a grand scale, and "a compulsory [[monopoly]] of force" prohibiting the more efficient voluntary procurement of defense and judicial services from competing suppliers.<ref>[http://www.lewrockwell.com/rothbard/rothbard24.html Tax Day], Murray Rothbard</ref> He also considered [[central bank]]ing and [[fractional reserve banking]] under a monopoly [[fiat money]] system a form of state-sponsored, legalized financial [[embezzlement|fraud]], antithetical to [[Libertarianism|libertarian]] principles and ethics.<ref>Rothbard, Murray. [http://www.mises.org/Books/mysteryofbanking.pdf ''The Mystery of Banking''] Ludwig von Mises Institute. 2008. p. 111</ref><ref>{{cite news |url=http://www.accessmylibrary.com/coms2/summary_0286-2737288_ITM |title=Has fractional-reserve banking really passed the market test? (Controversy). |date=January 2003 |format= |work= Independent Review|accessdate=}}</ref><ref>[http://www.fff.org/freedom/0999c.asp The Case for the 100% Gold Dollar], Murray Rothbard</ref><ref>See also Murray Rothbard articles: [http://www.lewrockwell.com/rothbard/rothbard191.html Private Coinage]; [http://www.lewrockwell.com/rothbard/rothbard190.html Repudiate the National Debt]; and [http://www.lewrockwell.com/rothbard/rothbard181.html Taking Money Back]</ref>

It was Rothbard who firmly established the Austrian School and classical liberal doctrine in the U.S., especially with ''[[Conceived in Liberty]]'' (volumes [http://mises.org/books/conceived1.pdf I], [http://mises.org/books/conceived2.pdf II], [http://mises.org/books/conceived3.pdf III], [http://mises.org/books/conceived4.pdf IV]), his four-volume history of colonial America and the secession from Britain. The reunion of natural-rights theory and the Austrian School came in his philosophical work, ''[[The Ethics of Liberty]]'' ([http://www.mises.org/rothbard/ethics/ethics.asp text]), all while he was writing a series of scholarly economic pieces gathered in the two-volume ''Logic of Action'', published in Edward Elgar's ''Economists of the Century'' series.

The founding of the [[Mises Institute|Ludwig von Mises Institute]] in 1982, with the aid of Margit von Mises as well as Hayek and Hazlitt, provided a range of new opportunities for both Rothbard and the Austrian School. Through a steady stream of academic conferences, instructional seminars, books, monographs, newsletters, studies, and even films, they carried the Austrian School forward into the post-socialist age.

The Austrian School enters a new millennium with many new advocates, including economists such as prominent Spanish economist [[Jesus Huerta de Soto]], German economist [[Jörg Guido Hülsmann]] and American economists [[William Anderson]], [[Robert Murphy]] and [[Walter Block]], writers such as [[Thomas Woods]], [[Lew Rockwell]], and [[Charles Goyette]], and media commentators and public figures such as [[Peter Schiff]] and [[Ron Paul]]. Some commentators have described this as a recent renaissance of [[classical liberal]] scholarship and thought.<ref>[http://www.nationalreview.com/articles/255968/who-ron-paul-interview Ron Paul Interview], National Review Online</ref>

==Methodology==
Austrian School economists advocate strict adherence to [[methodological individualism]] – analyzing human [[action]] from the perspective of individual agents.<ref name="Mises_Individualism">Ludwig von Mises [http://mises.org/humanaction/chap2sec4.asp "The Principle of Methodological Individualism"], ''[[Human Action]]'' online edition, [[Mises Institute]]. Referenced 2009-04-24}.</ref> Proponents of this method, [[praxeology]], argue that the only means of arriving at a valid economic theory is to derive it logically from basic principles of human action. Proponents of this method hold that it allows for the discovery of fundamental economic laws valid for all human action. Alongside praxeology, the school has traditionally advocated an interpretive approach to history to address specific historical events.

Austrian economists reject empirical [[Econometrics|statistical methods]] as tools applicable to economics, saying that while it is appropriate in the natural sciences where causal factors can be isolated in laboratory conditions, the actions of human beings are far too complex for this "numerical" treatment as passive non-adaptive subjects. Instead one should isolate the logical processes of human action. Von Mises called this discipline "[[praxeology]]" – a term he adapted from [[Alfred Espinas]] (but which had been in use by others).<ref>Ludwig von Mises, Nationalökonomie (Geneva: Union, 1940), p. 3; Human Action (Auburn, Ala.: Mises Institute, [1949] 1998), p. 3.</ref>

The Austrian praxeological method is based on the heavy use of logical [[deductive reasoning|deduction]] from what they assert to be undeniable, self-evident [[axioms]] or irrefutable facts about human existence. The primary axiom from which Austrian economists deduce further certain conclusions is the action axiom, which holds that humans take conscious action toward chosen goals.<ref>Hans-Hermann Hoppe, Economic Science and the Austrian Method (Auburn, Ala.: Mises Institute, [1995] 2007), p. 63.</ref>

Austrian school theorists, like [[Ludwig von Mises]], insist that praxeology must be [[positive economics|value-free]]—that the method does not answer the question "should this policy be implemented?", but rather "if this policy is implemented, will it have [[Law of unintended consequences|the effects you intend]]"? However, Austrian economists often make policy recommendations that call for the elimination of government regulations and their policy prescriptions often overlap with [[libertarian]] or [[Anarcho-capitalism|anarcho-capitalist]] solutions. These recommendations are similar to, but further reaching than the [[minarchism|minarchist]] ideas of [[Chicago school of economics|Chicago School]] economists, and frequently address issues that other schools ignore, such as [[monetary reform]].<ref>{{cite book | last = Skousen | first = Mark | title = Vienna & Chicago, Friends or Foes? | publisher = Capital Press/Regnery Pub | location = Washington | year = 2005 | isbn = 0-89526-029-8 }}</ref>

Austrian economists view [[entrepreneurship]] as the driving force in [[economic development]], see [[private property]] as essential to the efficient use of resources, and usually (if not always) see [[government]] interference in market processes as counterproductive. In this, their views do not differ far from those of the Chicago school.

As with neoclassical economists, Austrian economists reject [[classical economics|classical]] cost of production theories, most famously the [[labor theory of value]]. Instead, they explain value by reference to the [[Subjective theory of value|subjective preferences of individuals]]. This psychological aspect to Menger's economics has been attributed to the school's birth in turn of the century [[Vienna]]. [[Supply and demand]] are explained by aggregating over the decisions of individuals, following the precepts of [[methodological individualism]], which asserts that only individuals and not collectives make decisions, and [[marginalist]] arguments, which compare the costs and benefits for incremental changes.

[[Frank van Dun]] outlines the basic difference between the methods:
: The central dogma of [[positivism]] in fields such as “law” and “economics” is that every order is artificial. There are no [[natural order]]s, or, if there are, they are not suitable objects of scientific investigation. Consequently, persons can be admitted as objects of study only if they are disguised as artificial persons. In economics, positivism typically involves the personification of “theoretical constructs” (for example, utility functions) constrained by the rules of a model or a simulation. It fits the profile of a technology of want-satisfaction that characterises modern neo-classical and mainstream economics, but obviously is useless for the anarchocapitalists’ program of research into the conditions of order and disorder of the real human world.<ref>Frank van Dun. [http://www2.units.it/etica/2003_2/index.html ''Natural Law: A Logical Analysis'']. Etica & Politica, 2003.2. Dipartimento di Filosofia, Lingue e Letterature, Università di Trieste.</ref>

===Criticism of mainstream practices===
Austrians consider their methodology to be superior to mainstream economists' attempts to mimic the "hard' sciences through what Austrians consider to be a "naive" [[empiricism]]. This "naive" attempt by the mainstream academic community to mimic the hard sciences through econometrics has had questionable results. German economist, banker and Keynesian critic, L. Albert Hahn, noted the following in October 1952:<ref>[http://mises.org/daily/3582 Keynesians Can't Predict], L. Albert Hahn, ''The Freeman'', October 6, 1952</ref>

{{quote|It is seldom realized that belief in the possibility of "scientific" business forecasts, and the forecasting mania of our time, are comparatively new phenomena. Until about 1930 serious economists were not so bold — or so naive — as to pretend to be able to calculate the coming of booms and depressions in advance. It would not have fitted into their general view on the working of a free economy. They considered the economic future as basically dependent on unpredictable price-cost relationships and on the equally unpredictable psychological reactions of entrepreneurs. Predictions of future business conditions would have seemed to them mere charlatanry, just as predictions, say, regarding the resolutions of Congress two years from now... The basic error of the whole approach lies in the fact that the causative link between objective data and the decision of the members of the community are treated as mechanical. But men are still men and not automatons... Insufficiently educated in the history of economic thought, they [Anglo-American economists] do not realize that Keynesianism — down to the most technical details, like the concept of the foreign exchange multiplier — is mercantilism or, more precisely, John Lawism pure and simple... Reading, quoting, praising, and promoting each other, and only each other, will not liberate these economists from their voluntary isolationism. They will remain in their dream world. They will continue to predict the unpredictable.}}

Mainstream economists mostly ignore the Austrian assertion that prediction in economics is inherently impossible and continue to focus on mathematical modelling of the economy derived from simplified assumptions about human behaviour and preferences.<ref>[http://www.lewrockwell.com/orig11/rosen-e1.1.1.html What is the Current State of Economic Science?], Erwin Rosen</ref> However, in the past some mainstream economists and central bankers held similar views to those of the Austrians, eschewing econometric analysis and disparaging attempts to control statistical data that were not amenable to central control and direction (or prediction).<ref>[http://mises.org/daily/5146/Over-to-You-H-Parker-Willis Over To You H. Parker Willis], James Grant</ref> For example, H. Parker Willis co-authored the 1936 text ''The Theory and Practice of Central Banking'' and wrote the following:

{{quote|Central banks will do wisely to lay aside their inexpert ventures in half-baked monetary theory, meretricious statistical measures of trade, and hasty grinding of the axes of speculative interests with their suggestion that by so doing they are achieving some sort of vague 'stabilization' that will, in the long run, be for the greater good.}}

In their rejection of mainstream practices, Austrians have long argued that mainstream economic models have a very poor record of prediction, citing the [[Global Financial Crisis]] as one of many examples of the utter uselessness of theoretical economic modelling - and risk analysis - just when it is needed most.<ref>[http://www.lewrockwell.com/orig11/rosen-e1.1.1.html What is the Current State of Economic Science?], Erwin Rosen</ref><ref>[http://www.lewrockwell.com/thornton/thornton38.html You Heard It Here First], Mark Thornton, LRC</ref><ref>[http://mises.org/media/4019 Business Cycles and Prediction, Mark Thornton]</ref> However, some Austrian adherents have themselves been labeled as "Chicken Littles" for continually making predictions of "catastrophic" financial crises.<ref>[http://www.goldensextant.com/SavingtheSystem.html Saving the System], Robert K. Landis</ref><ref>{{cite news
|last=Brodie
|first=Lee
|title=Is This Market Heading For A Serious Correction?
|date=2009-08-17
|work=CNBC
|url=http://www.cnbc.com/id/32441070/Is_This_Market_Heading_For_A_Serious_Correction }}
</ref><ref>[http://www.youtube.com/watch?v=FPxYg6mgGpE Inflation is There], Peter Schiff</ref>

==Contributions==
Some significant general contributions of Austrian economists are listed below:
* The Regression Thereom of Money, wherein Mises hypothesized that the creation of money is a time-dependent process where market participants, by spontaneously engaging in barter and trading goods, quickly reach a market-based consensus regarding what should be commonly accepted as a medium of exchange in that market. An item becomes "money" based primarily on participants' subjective values - their past experience of ''other'' traders accepting this "good" as money - and their expectation that it will be accepted by others in future. If people stop trusting that others will accept this item in future, this item can lose its tradeability - or "moneyness" - suddenly and immediately.
* A fundamental rejection of mathematical methods in economics, seeing the function of economics as investigating the essences rather than the specific quantities of economic phenomena. This was seen as an evolutionary, or "genetic-causal", approach against the alleged "unreality" and internal stresses inherent in the "static" approach of [[economic equilibrium|equilibrium]] and [[perfect competition]], which are the foundations of mainstream Neoclassical economics (see also [[praxeology]]). This methodology is also driven by the belief that [[econometrics]] is inherently misleading in that it creates a fallacious "precision" in economics where there is none.
* [[Eugen von Böhm-Bawerk]]'s critique of [[Karl Marx|Marx]], which centered on the untenability of the [[labor theory of value]] in the light of the [[transformation problem]]. There was also the connected argument that capitalists do not exploit workers; they ''accommodate'' workers by providing them with income well in advance of the revenue from the output they helped to produce.
* Eugen von Böhm-Bawerk's demonstration that the law of marginal utility, as formulated by [[Carl Menger|Menger]] necessarily implies the classical law of costs and hence the vast majority of the conclusions of the British [[classical economists]]. This discovery was later fully developed and its implications traced by a student of [[Ludwig von Mises|von Mises]], [[George Reisman]], in his book, ''Capitalism''.
* An emphasis on [[opportunity cost]] and reservation demand in defining [[marginal theory of value|value]], and a refusal to consider supply as an otherwise independent cause of value.<ref>"Values are not seen (as they are in Marshallian economics) as ''jointly'' determined by subjective (utility) and objective (physical cost) considerations. Rather, values are seen as determined ''solely'' by the actions of consumers... Cost is seen (by Menger, and especially by Wieser...) merely as prospective utility deliberately sacrificed (in order to command more highly preferred utility)." Israel M. Kirzner, "The Austrian School of Economics", ''The New Palgrave: Dictionary of Economics'' (1987)</ref> (The British economist [[Philip Wicksteed]] adopted this perspective.)
* The Mises-Hayek [[business cycle]] theory, which is asserted as explaining depression as a reaction to an intertemporal production structure fostered by [[monetary policy]] setting [[interest rate]]s inconsistent with individual time preferences.
* Mises and Hayek's view of prices as permitting agents to make use of [[dispersed knowledge|dispersed tacit knowledge]].
* The [[time preference theory of interest]], which explains interest rates through [[intertemporal choice]] - the different time preferences of the borrower or lender - rather than as a price paid for a [[factor of production]].
* The [[economic calculation debate]] between Austrian and [[Marxist]] economists, with the Austrians claiming that Marxism is flawed because prices could not be set to recognize opportunity costs of factors of production, and so [[socialism]] could not make rational decisions.
* [[Friedrich Hayek]] was one of the few economists who gave warning of a major economic crisis before [[Wall Street Crash of 1929|the great crash]] of 1929.<ref>{{cite book |title=The Making of Modern Economics |last=Skousen |first=Mark |authorlink=Mark Skousen |year=2001 |publisher=M.E. Sharpe |isbn=0-7656-0479-5 |page=284 }}</ref><ref>{{cite web |url=http://nobelprize.org/nobel_prizes/economics/laureates/1974/press.html |title=The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1974 |accessdate=2008-10-12 |publisher=[[Nobel Foundation]] |date=1974-10-09 }}</ref> In February 1929, Hayek warned that a coming financial crisis was an unavoidable consequence of reckless monetary expansion.<ref>{{cite book |title= Keynes and Hayek |last= Steele |first=G. R. |year=2001 |publisher= Routledge |isbn= 0-415-25138-9 |page=9 }}</ref>
* Stressing uncertainty in the making of economic decisions, rather than relying on "[[Homo economicus]]" or the rational man who was fully informed of all circumstances impinging on his decisions. The fact that perfect knowledge never exists, means that all economic activity implies risk.
* Seeing the entrepreneurs' role as collecting and evaluating information and acting on risks.
* An emphasis on the forward-looking nature of choice, seeing time as the root of uncertainty within economics (see also [[time preference]]).

==Notable theories==
===Economic calculation problem===
{{Main|Economic calculation problem}}
The economic calculation problem was first proposed by Ludwig von Mises in 1920 and later expounded by Friedrich Hayek.<ref name="Mises">{{cite book |title=Economic calculation in the Socialist Commonwealth |accessdate=2008-09-08 |last=Von Mises |first=Ludwig |authorlink=Ludwig von Mises |year=1990|format=pdf |publisher=[[Ludwig von Mises Institute]] |url=http://mises.org/pdf/econcalc.pdf |isbn=0945466072 }}</ref><ref>F. A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," om in F. A. Hayek, ed. ''Collectivist Economic Planning'', pp. 1–40, 201–243.</ref> The problem referred to is that of how to distribute resources efficiently in an economy. The capitalist or free market solution is to produce and distribute goods and services according to the [[price mechanism]]; Mises and Hayek argued that this is the only viable solution, as the [[price mechanism]] co-ordinates supply and investment decisions most efficiently, favoring the production of desired goods and services and eliminating those goods and services that are not wanted by reducing their prices and thereby rationing the resources given to "unwanted" or inefficient producers. Without the "feedback" information being provided by market prices, centrally planned [[socialism]] lacks a method to efficiently allocate resources over an extended period of time in any market where the [[price mechanism]] is effective (an example where the [[price mechanism]] may not work is in the relatively confined area of [[public goods|public]] and [[common good (economics)|common goods]]). This thereom implies that a [[socialist]] [[planned economy]] could never be sustainable in the long term for the vast bulk of the economy, as huge shortages of desired goods and large surpluses of unwanted goods would continually occur in the economy, resulting in misallocations and dislocations that would eventually cause chaos throughout the economic system. The debate over whether socialism was a viable economic system raged in the 1920s and 1930s, and that specific period of the debate has come to be known by historians of economic thought as ''The Socialist Calculation Debate.''<ref name="School">[http://cepa.newschool.edu/het/essays/paretian/social.htm The socialist calculation debate]</ref>
[[Ludwig von Mises]] argued in a famous 1920 article "[[Economic Calculation in the Socialist Commonwealth]]" that the pricing systems in socialist economies were necessarily deficient because if government owned the [[means of production]], then no prices could be obtained for [[capital goods]] as they were merely internal transfers of goods in a socialist system and not "objects of exchange," unlike final goods. Therefore, they were unpriced and hence the system would be necessarily inefficient since the central planners would not know how to allocate the available resources efficiently.<ref name="School" /> This led him to declare "…that rational economic activity is impossible in a socialist commonwealth."<ref name="Mises" />

===Inflation===
The Austrian School has consistently argued that a "traditionalist" approach to inflation yields the most accurate understanding of the causes (and the cure) for [[inflation]]. Austrian economists maintain that inflation is ''by definition'' always and everywhere simply an increase in the [[money supply]] (i.e. units of currency or means of exchange), which in turn leads to a higher nominal price level for assets (such as housing) and other goods and services in demand, as the real value of each monetary unit is eroded, loses purchasing power and thus buys fewer goods and services.<ref>[http://mises.org/daily/5407/Is-Higher-Inflation-Inevitable Is Higher Inflation Inevitable?], Thorsten Polleit</ref>

Given that all major economies currently have a [[central bank]] supporting the private [[bank]]ing system, money can be supplied into these economies by way of private bank-created credit (or [[debt]]).<ref>[http://mises.org/media/4014 The Economics of Legal Tender Laws], [[Jorg Guido Hulsmann]] (includes detailed commentary on [[central banking]], [[inflation]] and [[fractional reserve banking|FRB]])</ref> Austrian School economists therefore regard the private bankers and the state-sponsored [[central bank]] as the main cause of [[inflation]] in an economy where the bulk of the money supply is created through debt, because they regard the central bank as the institution charged with supporting the banking system and supplying cash to the banking system when needed by the banks.<ref>[http://www.lewrockwell.com/north/north803.html Why Deflation Is not Inevitable (Sadly)], Gary North</ref><ref>[http://www.marketoracle.co.uk/Article25964.html QE is Nothing New], Mike Hewitt</ref>

The Austrian School also views the "contemporary" definition of [[inflation]] as inherently misleading in that it draws attention only to the ''effect'' of inflation (rising prices) and does not address the "true" phenomenon of [[inflation]], which they believe simply involves the debasement of the means of exchange. They argue that this semantic difference is important in defining inflation and finding a cure for inflation.<ref>[http://www.marketoracle.co.uk/Article25964.html QE is Nothing New], Mike Hewitt</ref> Austrian School economists maintain the most effective cure is the strict maintenance of a stable money supply.<ref>{{cite web|url=http://mises.org/story/908 |title=Defining Inflation |accessdate=2008-09-20 |last=Shostak, Ph.D |first=Frank |date=2002-03-02 |publisher=Mises Institute }}</ref> [[Ludwig von Mises]], the seminal scholar of the Austrian School, asserts that:

<blockquote>
Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation.<ref>{{Cite book |first=Ludwig |last=von Mises |chapter=Economic Freedom and Interventionism |editor1-first=Bettina B. |editor1-last=Greaves |title=Economics of Mobilization |publisher=The Commercial and Financial Chronicle |location=Sulphur Springs, West Virginia |pages= |year=1980 |isbn= |chapterurl=http://mises.org/efandi/ch20.asp |ref=harv}}</ref>
</blockquote>

Austrian economists tend to measure the inflation by calculating the growth of what they call 'the true money supply', i.e. how many new units of money that are available for immediate use in exchange, that have been created over time.<ref>Ludwig von Mises Institute, "[http://mises.org/content/nofed/chart.aspx?series=TMS True Money Supply]"</ref><ref>Joseph T. Salerno, (1987), Austrian Economic Newsletter, "[http://www.mises.org/journals/aen/aen6_4_1.pdf The "True" Money Supply: A Measure of the Medium of Exchange in the U.S. Economy]"</ref><ref>Frank Shostak, (2000), "[http://www.mises.org/journals/qjae/pdf/qjae3_4_3.pdf The Mystery of the Money Supply Definition]"</ref>

Austrian School economists claim that the state uses subtle forms of inflation as one of the three means by which it can fund its activities, the other two being taxing and borrowing.<ref>[[Lew Rockwell]], interview on "[http://mises.org:88/Now NOW with Bill Moyers]"</ref> Because of the disruptive and dislocating effects of inflation, many Austrian School economists support the abolition of the [[central bank]]s and the [[fractional-reserve banking]] system, and advocate instead a return to money based on the [[gold standard]], or less frequently, [[free banking]].<ref>Ludwig von Mises Institute, "[http://mises.org/books/goldstandard.pdf The Gold Standard]"</ref><ref>Ron Paul, "[http://mises.org/books/caseforgold.pdf The Case for Gold]"</ref> Money could only be created by finding and putting into circulation more gold under a [[gold standard]]. In the absence of a return to commodity money, many Austrian analysts predict catastrophe for the economy. For example, Austrian commentator Robert K. Landis has written the following:<ref>[http://www.goldensextant.com/SavingtheSystem.html Saving The System], Robert K. Landis</ref>

<blockquote> No, the die is cast: we shall have the catastrophe. Our fiat monetary system got a reprieve in the 1980's, not a deliverance. All that has happened since, with the fantastic mispricing of credit the Greenspan Fed has engineered, and the massive global malinvestment this has engendered, is that the dimensions of the unraveling have become more dire.

Mises called this one too:

"Certainly, the banks would be able to postpone the collapse; but nevertheless, as has been shown, the moment must eventually come when no further extension of the circulation of fiduciary media is possible. Then the catastrophe occurs, and its consequences are the worse and the reaction against the bull tendency of the market the stronger, the longer the period during which the rate of interest on loans has been below the natural rate of interest and the greater the extent to which roundabout processes of production that are not justified by the state of the capital market have been adopted."

With respect to the form the denouement will take, much has been written within the gold community on the subject of whether we face hyperinflation or deflationary depression as the prelude to monetary collapse. Both sides of the debate appear to accept the premise that whatever may transpire will bear a linear relationship to what now exists. The disagreement centers on the direction the line will go. But today's markets are fully linked by derivatives and technology, and they are patrolled by wolf packs of large, leveraged speculators not noted for their patient outlook. So it seems likely that the terminal monetary crisis will unfold on virtually an instantaneous and discontinuous basis, once the fog of statistical deceit and false market cues begins to lift and a clear trend either way becomes evident. We are not likely to enjoy the luxury of observing either a deflation or an inflation unfold in the fullness of time, but rather, just as Mises foretold, a final and total catastrophe of our fiat monetary system. All we can hope is that once the curtain falls on the current system, the wisdom in the gold bugs' submissions to the Gold Commission will finally find a receptive audience.</blockquote>

Advocates argue that the abolition of legal tender laws and the spontaneous return to a gold or silver monetary system would effectively constrain unsustainable and volatile [[fractional-reserve banking]] practices, ensuring that [[money supply]] growth ("[[inflation]]") would never spiral out of control.<ref>Murray Rothbard, "[http://mises.org/rothbard/100percent.pdf The Case for a 100 Percent Gold Dollar]"</ref><ref>Ludwig von Mises Institute, "[http://mises.org/story/2870 Money, Banking and the Federal Reserve]"</ref>

In relation to the current [[central bank]]-managed [[fractional reserve banking|fractional reserve]] [[fiat currency]] [[debt-based monetary system|system]], Austrian economist [[Murray Rothbard]] stated the following:<ref>Rothbard, Murray. [http://www.mises.org/Books/mysteryofbanking.pdf ''The Mystery of Banking''], p. 261</ref>

{{quote|Given this dismal monetary and banking situation, given a 39:1 pyramiding of checkable deposits and currency on top of gold, given a Fed unchecked and out of control, given a world of fiat moneys, how can we possibly return to a sound noninflationary market money? The objectives, after the discussion in this work, should be clear: (a) to return to a gold standard, a commodity standard unhampered by government intervention; (b) to abolish the Federal Reserve System and return to a system of free and competitive banking; (c) to separate the government from money; and (d) either to enforce 100 percent reserve banking on the commercial banks, or at least to arrive at a system where any bank, at the slightest hint of nonpayment of its demand liabilities, is forced quickly into bankruptcy and liquidation. While the outlawing of fractional reserve as fraud would be preferable if it could be enforced, the problems of enforcement, especially where banks can continually innovate in forms of credit, make free banking an attractive alternative.}}

[[Ludwig von Mises]] asserted that, in addition to reducing the serverity of business cycles and eliminating inflation, civil liberties would be better protected through a return to the gold standard:

<blockquote>
It is impossible to grasp the meaning of the idea of [[sound money]] if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings.<ref>{{cite book |last=von Mises |first=Ludwig |authorlink=Ludwig von Mises |coauthors= |title=The Theory of Money and Credit |publisher=Liberty Fund, Inc. |date=1981-07-01 |location= |pages=Chapter 21 |url=http://mises.org/story/2276 |doi= |id= |isbn=0-913966-71-1 |nopp=true }}</ref>
</blockquote>

===Business cycles===
{{Main|Austrian Business Cycle Theory}}
The Austrian School is one of the few schools of economic thought that considers different forms of money to be "non-neutral" - meaning that changes in the money supply can have real economic effects, disrupting the price mechanism and causing "ripple" effects throughout the economy. Mainstream theories generally consider money to be "neutral" (in other words, they consider that changes in the money supply do not have significant effects on the real economy). According to Austrian School economist [[Joseph Salerno]], what most distinctly sets the Austrian school apart from [[neoclassical economics]] is the [[Austrian Business Cycle Theory]]:<ref>{{Cite journal
| last = Salerno
| first = Joseph
| author-link = Joseph Salerno
| title = Why We're Winning: An Interview with Joseph T. Salerno
| journal = The Austrian Economics Newsletter
| volume = 16
| issue = 3
| pages =
| date =
| origyear =
| year = 1996
| month =
| url = http://mises.org/journals/aen/aen16_3_1.asp
| archiveurl =
| archivedate =
| doi =
| id =
| ref = harv }}
</ref>
{{quote|The Austrian theory embodies all the distinctive Austrian traits: the theory of heterogeneous capital, the structure of production, the passage of time, sequential analysis of monetary interventionism, the market origins and function of the interest rate, and more. And it tells a compelling story about an area of history neoclassicals think of as their turf. The model of applying this theory remains [[Murray Rothbard|Rothbard]]'s ''[[America's Great Depression]]''.}}

Austrian School economists focus on the changes in the money supply and the associated credit cycle as the primary cause of most business cycles. Austrian economists assert that the pernicious monetary effects of [[fractional reserve banking]] are the predominant cause of most business cycles, as the inflating effects of the practice result in lower interest rates than would prevail in a stable money system, thereby causing excessive credit creation, speculative "[[economic bubble|bubbles]]" and "artificially" low savings.<ref>Thorsten Polleit, [http://mises.org/story/2810 Manipulating the Interest Rate: a Recipe for Disaster], 13 December 2007</ref>

According to the Austrian School business cycle theory, the business cycle unfolds in the following way:

Fractional reserve banking continually causes inflation through the "artificial" lowering of interest rates (compared to what they would be in a stable money environment).<ref>[http://mises.org/daily/5407/Is-Higher-Inflation-Inevitable Is Higher Inflation Inevitable?], Thorsten Polleit</ref> This can occur indefinitely with the aid and assistance of the central bank. Low interest rates encourage fresh borrowing and new credit creation, thereby increasing the short term profitability of the banking system. But this expansion of credit also causes an expansion of the [[money supply|supply of money]], through the [[money creation]] process in a [[fractional reserve banking]] system and misallocates resources, skewing production to "unwanted" capital goods industries and encouraging Ponzi-like speculation. This artificial increase in money and credit inevitably leads to an unsustainable "credit-fuelled boom" during which the "artificially stimulated" borrowing seeks out diminishing investment opportunities and causes widespread [[malinvestment]]s, where capital resources are misallocated into areas that would not attract investment if the money supply remained stable.

[[Murray Rothbard]] used the concept of malinvesment and the distorting effects of bank-induced credit creation to study the [[Great Depression]] is his [[historical revisionism|revisionist]] work, ''[[America's Great Depression]]'':<ref>[[Murray Rothbard]], [http://mises.org/rothbard/agd/chapter1.asp#cluster_of_error|''America's Great Depression'', 2005, 5th Edition, Ludwig von Mises Institute, Chapter 1, ''The Cluster of Error''].</ref>

{{quote|A credit expansion may appear to render submarginal capital profitable once more, but this too will be malinvestment, and the now greater error will be exposed when this boom is over. Thus, credit expansion generates the business cycle regardless of the existence of unemployed factors. Credit expansion in the midst of unemployment will create more distortions and malinvestments, delay recovery from the preceding boom, and make a more grueling recovery necessary in the future. While it is true that the unemployed factors are not now diverted from more valuable uses as employed factors would be (since they were speculatively idle or malinvested instead of employed), the other complementary factors will be diverted into working with them, and these factors will be malinvested and wasted. Moreover, all the other distorting effects of credit expansion will still follow, and a depression will be necessary to correct the new distortion.}}

Austrian School economists argue that a correction or "[[credit crunch]]" – commonly called a "[[recession]]" or "bust" – occurs when credit creation cannot be sustained. They claim that the [[money supply]] suddenly and sharply contracts when markets finally "clear", causing resources to be reallocated back toward more efficient uses.

Economist [[Steve H. Hanke]] identifies the [[Great Recession|financial crisis of 2007–2010]] as the direct outcome of the Federal Reserve Bank's interest rate policies as is predicted by Austrian school economic theory.<ref>{{Cite web |url= http://www.cato.org/pub_display.php?pub_id=10100 |title=The Fed's Modus Operandi: Panic | Cato Institute: Commentary |first=Steve H. |last=Hanke |work=cato.org |accessdate=17 July 2010 }}</ref> Some analysts such as Jerry Tempelman have also argued that the predictive and explanatory power of ABCT in relation to the recent [[Global Financial Crisis]] has reaffirmed its status and, perhaps, cast into question the utility of mainstream theories and critiques.<ref>[http://mises.org/journals/qjae/pdf/qjae13_1_1.pdf ABCT and the GFC: Confessions of a Mainstream Economist] by Jerry Tempelman</ref>

===Monetary Reform===
{{Main|Debt-based monetary system}}
The Austrian School is currently the only major school of economic thought that advocates radical monetary reform and actively debates the efficacy of fundamental banking reform.<ref>See for example these [[Murray Rothbard]] articles: [http://www.mises.org/money.asp What Has Government Done to Our Money?], [http://www.mises.org/story/1829 The Case for the 100% Gold Dollar]; [http://www.lewrockwell.com/rothbard/cartelization.pdf The Fed as Cartel], [http://www.lewrockwell.com/rothbard/rothbard191.html Private Coinage], [http://www.lewrockwell.com/rothbard/rothbard190.html Repudiate the National Debt]; [http://www.lewrockwell.com/rothbard/rothbard181.html Taking Money Back], [http://www.lewrockwell.com/rothbard/rothbard163.html Anatomy of the Bank Run], [http://www.lewrockwell.com/rothbard/rothbard128.html Money and the Individual]</ref>

All other schools of economic thought (including Keynesian, monetarist and neo-classical) implicitly accept the current monopoly fiat money and central bank-dominated financial system as optimal - or at least as not actively destructive of the economy.<ref>[http://mises.org/story/3108 Sound Money], [[Lew Rockwell]]</ref><ref>[http://mises.org/story/1971 Our Money Madness], [[Lew Rockwell]]</ref> This is based on the mainstream idea of "money neutrality" - the idea that inflation does not have real economic effects over the long term and does not significantly distort real resource allocation.<ref>[http://www.lewrockwell.com/wenzel/wenzel87.1.html Senior Fed Economist Calls Ron Paul a Pinhead], Robert Wenzel</ref>

Austrian scholars, on the other hand, uniformly see coercive legal tender laws (which inevitably force people to use the national fiat currency as money) and the current fractional-reserve financial system as an extremely dysfunctional and disruptive influence on the economy.<ref>[http://mises.org/daily/5407/Is-Higher-Inflation-Inevitable Is Higher Inflation Inevitable?], Thorsten Polleit</ref><ref>[http://mises.org/story/3108 Sound Money], [[Lew Rockwell]]</ref><ref>[http://mises.org/story/1971 Our Money Madness], [[Lew Rockwell]]</ref> Through the centralized control of interest rates, through the arbitrary diversion of scarce resources to repeatedly bail out the "too big to fail" banks, through the manipulation of financial markets via the buying of government bonds (so called "quantitative easing"), Austrian scholars see coercive legal tender laws, central banking and the current financial system generally as a source of continual disruption in the price discovery mechanism, misleading investors and market participants and ultimately causing continual and ongoing misallocations in scarce resource distribution, resulting in massive [[malinvestment]]s and wrenching and disruptive business cycles.<ref>[http://mises.org/daily/5407/Is-Higher-Inflation-Inevitable Is Higher Inflation Inevitable?], Thorsten Polleit</ref><ref>[http://mises.org/daily/4880 The Faults of Fractional-Reserve Banking], Thorsten Polleit</ref>

However, Austrian scholars are divided on the optimal solution to this urgent problem.<ref>[http://mises.org/daily/4898 ''Free Banking''], review by John P. Cochran</ref>

Some Austrian scholars advocate "free banking", where banks are permitted to engage in fractional-reserve banking activities provided they comply with the laws against fraud and are not supported in any way against the possibility of bank runs and are forced into bankruptcy should they not be able to pay their debts as and when they fall due.<ref>[http://mises.org/daily/4898 ''Free Banking''], review by John P. Cochran</ref>

Advocates of this system of banking include Lawrence White, Steven Horwitz, George Selgin, and Kevin Dowd, amongst others.<ref>[http://mises.org/daily/4898 ''Free Banking''], review by John P. Cochran</ref> F.A. Hayek also advocated the de-nationalization of money production and implicitly supported a free banking financial system in some of his works on monetary reform.<ref>[http://www.mises.org/store/Free-Market-Monetary-System-A-P553.aspx?AFID=14 ''Free Market Money System''] by [[F.A. Hayek]]</ref>

Other Austrian scholars advocate "full-reserve banking", considering fractional-reserve banking to be inherently unethical, disruptive and dysfunctional, akin to embezzlement.<ref>See for example these [[Murray Rothbard]] articles: [http://www.mises.org/money.asp What Has Government Done to Our Money?], [http://www.mises.org/story/1829 The Case for the 100% Gold Dollar]; [http://www.lewrockwell.com/rothbard/cartelization.pdf The Fed as Cartel], [http://www.lewrockwell.com/rothbard/rothbard191.html Private Coinage], [http://www.lewrockwell.com/rothbard/rothbard190.html Repudiate the National Debt]; [http://www.lewrockwell.com/rothbard/rothbard181.html Taking Money Back], [http://www.lewrockwell.com/rothbard/rothbard163.html Anatomy of the Bank Run], [http://www.lewrockwell.com/rothbard/rothbard128.html Money and the Individual]</ref> [[Full reserve banking]] would require banks to retain in reserve all deposits that are legally available for immediate withdrawal, and permit lending only from longer-term deposits.

Advocates of this system of banking include [[Murray Rothbard]],<ref name="The Mystery of Banking">[http://www.mises.org/Books/mysteryofbanking.pdf ''The Mystery of Banking''], Murray Rothbard</ref><ref name="The Case for a 100% Gold Dollar">[http://mises.org/story/1829 The Case for a 100% Gold Dollar], Murray Rothbard</ref> [[Jesus Huerta de Soto]],<ref>[http://www.mises.org/books/desoto.pdf ''Money, Bank Credit, and Economic Cycles''], Jesus Huerta de Soto, First English edition (2006), pp. 98-114</ref> and [[Jörg Guido Hülsmann]],<ref>[http://mises.org/media/4014 The Economics of Legal Tender Laws], [[Jorg Guido Hulsmann]] (includes detailed commentary on [[central banking]], [[inflation]] and [[fractional reserve banking|FRB]])</ref><ref name=FBFB>[http://mises.org/journals/rae/pdf/RAE9_1_1.pdf Free Banking and the Free Bankers], Jörg Guido Hülsmann, Quarterly Journal of Austrian Economics (Vol. 9, No. 1)</ref><ref>[http://www.lewrockwell.com/lewrockwell-show/2011/01/04/181-hyperinflation-ahead/ Interview with Jörg Guido Hülsmann], The Lew Rockwell Show</ref> amongst others.<ref>[http://mises.org/daily/4880 The Faults of Fractional-Reserve Banking], Thorsten Polleit</ref>

==Criticism of the Austrian School==
Critics argue that modern Austrian economics generally lacks scientific rigor,<ref name="white1">{{Cite journal |title=The research program of Austrian economics |publisher=Emerald Group Publishing Limited |first=Lawrence H. |last=White |journal=Advances in Austrian Economics |year=2008 |pages=20 |url=http://www.emeraldinsight.com/books.htm?chapterid=1775479&show=pdf}}</ref> which forms the basis of the most prominent criticism of the school. Austrian theories are not formulated in formal mathematical form,<ref>{{cite web |first=Deborah L. |last=Walker |title=Austrian Economics |publisher=Library of Economics and Liberty |url=http://www.econlib.org/library/Enc1/AustrianEconomics.html |accessdate=2010-01-23 }}</ref> but by using mainly verbal logic and self-evident axioms. Mainstream economists believe that this makes Austrian theories too imprecisely defined to be clearly used to explain or predict real world events. Economist [[Bryan Caplan]] noted that, "what prevents Austrian economists from getting more publications in mainstream journals is that their papers rarely use [[mathematics]] or [[econometrics]]."

There are also criticisms of specific Austrian theories. For example, Nobel laureate [[Milton Friedman]], after examining the history of business cycles in the US, concluded that "The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false."<ref name="Friedman1969">{{cite book|last=Friedman |first=Milton |title=The Optimal Quantity of Money and Other Essays |publisher=Aldine |location=Chicago |pages=261–284 |chapter=The Monetary Studies of the National Bureau, 44th Annual Report}}</ref><ref name="Friedman93">{{cite journal|last=Friedman|first=Milton|title=The 'Plucking Model' of Business Fluctuations Revisited|journal=Economic Inquiry|pages=171–177|url=http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7295.1993.tb00874.x/abstract}}</ref><ref name="Friedman_ABCT_false">{{cite book|last=Friedman |first=Milton |title=The Optimal Quantity of Money and Other Essays |publisher=Aldine |location=Chicago |pages=261–284 |chapter=The Monetary Studies of the National Bureau, 44th Annual Report | quote=The Hayek-Mises explanation of the business cycle is contradicted by the evidence. It is, I believe, false. }}</ref> In addition to Milton Friedman's criticism, noted liberal [[Neo-Keynesian Economics|neo-Keynesian]] economist [[Paul Krugman]] has criticized the theory.<ref name="Krugman">{{cite web|url=http://www.slate.com/id/9593 |title=The Hangover Theory |last=Krugman |first=Paul |date=1998-12-04 |publisher=Slate |accessdate=2008-06-20}}</ref>

[[Jeffrey Sachs]] has argued that high tax rates and a "mixed" economy (with some "socialist" elements such as high levels of social welfare transfer payments) appears to have generated higher growth rates in the second half of the 20 century - which appears to run counter to the Austrians' assertion that strong deference to private property rights (and therefore low tax rates) are essential for a properly functioning free market economy. Sachs asserts that poverty rates are lower, median income is higher, the government budget has larger surpluses, and the trade balance is stronger (although unemployment tends to be higher).<ref>{{cite journal|title=The Social Welfare State, Beyond Ideology |last=Sachs|first=Jeffrey |date=October 2006 |journal=Scientific American |url=http://www.sciam.com/article.cfm?id=the-social-welfare-state |accessdate=2008-06-20|ref=harv }}</ref> In response to Sachs' article, [[William Easterly]] states that Hayek, writing in 1944, correctly recognized the dangers of large-scale state economic planning. He also questions the validity of comparing poverty levels in the Nordic countries and the United States, when the former have been moving away from social planning toward a more market-based economy, and the latter has historically taken in impoverished immigrants.<ref>{{cite news |url=http://online.wsj.com/article/SB116355956112023480.html?mod=opinion_main_commentaries|title=Dismal Science|accessdate=2008-09-07|author=[[William Easterly]]
|date=2006-11-15|publisher=[[The Wall Street Journal]]}}</ref>

==Seminal works==
* ''[[Principles of Economics]]'' (1871) by [[Carl Menger]]
* ''[[Capital and Interest]]'' (1884–1921) by [[Eugen von Böhm-Bawerk]]
* ''[[Human Action]]'' (1940–1949) by [[Ludwig von Mises]]
* ''[[Economics in One Lesson]]'' (1946) by [[Henry Hazlitt]]
* ''[[Individualism and Economic Order]]'' (1948) by [[Friedrich Hayek]]
* ''[[Man, Economy, and State]]'' (1962) by [[Murray Rothbard|Murray N. Rothbard]]
* ''[[Competition and Entrepreneurship]]'' (1973) by [[Israel Kirzner|Israel M. Kirzner]]

==See also==
* ''[[The Austrian School of Economics]]''
* ''[[An Introduction to Economic Reasoning‎]]''
* ''[[An Introduction to Austrian Economics]]''
* ''[[The Historical Setting of the Austrian School of Economics]]''
* ''[[Austrian Economics: An Anthology]]''
* ''[[Economic Science and the Austrian Method]]''

==References==
{{Reflist|2}}

==Links==
{{store|http://mises.org/store/Home-Study-Course-in-Austrian-Economics-P211.aspx|Home Study Course in Austrian Economics}}
===Writings===
* What is economics (Austrian perspective)
** [http://mises.org/daily/987 "What is Economics? Why Study It?"] by [[Gene Callahan]] (excerpt from ''[[Economics for Real People]]'')
** [http://mises.org/daily/1294 "Why Study Economics?"] by Stephen Carson, April 2003
** {{md|2025|What Is A Priori Science, and Why Does Economics Qualify As One?|Gene Callahan|February 2006}}
** {{mb|8056|The Real Problem With Non-Austrian Economics|Stefan Karlsson|April 2008}}

* Austrian School tenets
** [http://mises.org/etexts/austrian.asp What is Austrian Economics?] from the [[Mises Institute]] (republished in Mises About [http://mises.org/about/3223 here])
** [http://mises.org/resources/1200 "Why Austrian Economics Matters"] by [[Lew Rockwell]]
** [http://www.econlib.org/library/Enc/AustrianSchoolofEconomics.html Austrian School of Economics] from The Concise Encyclopedia of Economics
** [http://homepage.newschool.edu/het//schools/austrian.htm The Austrian School] from the History of Economic Thought page
** [http://mises.org/daily/5091 "The Austrian School in Brief"] by Schulak and Unterköfler (excerpt from ''[[The Austrian School of Economics]]'')
** {{md|1665|To Be an Austrian: A Primer|Sean Corrigan|November 2004}}
** [http://mises.org/daily/3561 Understanding "Austrian" Economics] by [[Henry Hazlitt]], February 1981
** [http://mises.org/daily/4390 A Primer on Austrian Economics] by Jonathan M. Finegold Catalan, June 2010
** [http://www.cobdencentre.org/literature/primer/ Austrian economics primer] list of resources by [[Cobden Centre]]
** [http://mises.org/daily/3512 "Mises Introduces the Austrian School"] (Excerpt from [[Memoirs (Mises)|Memoirs]])
** "Ludwig von Mises and the Austrian School of Economics" ([http://mises.org/journals/rae/pdf/rae5_2_2.pdf PDF]) by [[Jeffrey M. Herbener]], 1991
** [http://mises.org/resources/1004 "Hermeneutics vs. Austrian Economics"] by [[David Gordon]], 1986
** [http://blog.mises.org/15965/adventures-in-austrian-economics/ "Adventures in Economics"] Interview with [[Richard M. Ebeling]], March 2011
** [http://mises.org/resources/204/ "The Austrian School and the Theory of Value"] by [[Friedrich Wieser]], 1891
** [http://mises.org/resources/976/ "Austrian School of Economics at the University of Vienna"] lecture by Ludwig von Mises, May 1962
** [http://mises.org/daily/2200 "The Philosophical Origins of Austrian Economics"] by David Gordon, 1994
** [http://ontology.buffalo.edu/smith/articles/menger.html "Aristotle, Menger, Mises: An Essay in the Metaphysics of Economics"] by Barry Smith, 1990

* Collections
** [http://mises.org/literature.aspx?action=subject&Id=1 Overview of the Austrian School of Economics] literature collection at [[Mises.org]]
** [http://mises.org/literature.aspx?action=subject&Id=116 Austrian core] literature collection at Mises.org
** [http://mises.org/literature.aspx?Id=3&action=subject Methodological Foundations] literature collection at Mises.org
** [http://mises.org/literature.aspx?action=subject&Id=127 Austrian Methodology for the Social Sciences] literature collection at Mises.org
** [http://www.fee.org/category/intro-to-austrian-economics/ Intro to Austrian Economics Category] article collection at [[Foundation for Economic Education|FEE.org]]

* {{wplink}}

===Recommendations===
* [http://mises.org/store/For-Beginners-C9.aspx "For Beginners"] - Mises Store reading list
* [http://www.garynorth.com/public/3112.cfm "Ten Steps to Understand Austrian Economic Theory"] - [[Gary North]] recommended reading list (in order of difficulty)
* [http://blog.mises.org/8831/how-do-i-get-started-with-austrian-economics/ "How Do I Get Started with Austrian Economics?"] by [[Thomas E. Woods]], October 2008
* [http://austrianomics.com "Learn Austrian Economics"] - Tom Woods' recommended reading list
** {{mb|19148|Learn Austrian Economics|Justin Ptak|November 2011}}
*"[http://www.cobdencentre.org/2010/06/review-how-an-economy-grows-and-why-it-crashes/ And Then There Were Three]" by Andy Duncan, June 2010
{{See also|Where to study Austrian Economics}}

===Media and interactive===
* [http://academy.mises.org/ Mises Academy]
* [http://mises.org/classroom/default.asp The Mises Classroom] - study in Austrian economics and libertarian theory ([http://mises.org/resources/2022/ MP3 downloads])([http://mises.org/HSCAE/lessonplan.pdf PDF Lesson Plan & Study Guide])
** [http://mises.org/freemarket_detail.aspx?control=562 "Why Home Study?"] by [[Robert P. Murphy]] (republished as Mises Daily [http://mises.org/daily/1901 here])
* [http://mises.org/media.aspx?action=category&ID=89 Introduction to Austrian Economic Analysis] lecture series with [[Joseph T. Salerno]]
* [http://mises.org/media/category/176The-Austrian-School-of-Economics-An-Introduction The Austrian School of Economics: An Introduction] lecture series
* [http://vforvoluntary.com/austrian-economics Austrian economics lectures] (selected lectures, including "Introduction to Austrian Economics" by [[Jörg Guido Hülsmann]] and [[Hans-Hermann Hoppe]])([http://www.youtube.com/playlist?list=1AD95D0593508BD8 YouTube])
* [http://mises.org/media/5618/media.aspx?action=author&ID=1619 "Why Does Economics Matter?"] lecture by [[Mark Thornton]], November 2010
* [http://mises.org/media/4288/The-Core-of-What-Economics-Teaches "The Core of What Economics Teaches"] lecture by [[Bob Murphy]], November 2009
* [http://mises.org/media/6143/The-Core-of-What-Economics-Teaches "The Core of What Economics Teaches"] lecture by [[Mark Thornton]], April 2011
* [http://mises.org/media/5722/Why-Should-We-Care-About-Economic-Theory "Why Should We Care About Economic Theory?"] lecture by [[Lew Rockwell]], January 2011
* [http://mises.org/quiz.aspx Are You an Austrian?] quiz at Mises.org

[[Category:Austrian School of Economics|*]]

History and Critique of Interest Theories

2011-11-27T03:22:17Z

Matthew: created initial page

{{Infobox book
| name = History and Critique of Interest Theories
| title_orig =
| translator =
| image = 
| image_caption =
| author = Eugen von Böhm-Bawerk
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 1884
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''History and Critique of Interest Theories''''' is the first volume of [[Eugen von Böhm-Bawerk]] three volume set ''Capital and Interest'' which was originally published in 1884. In ''History and Critique of Interest Theories'', Böhm-Bawerk provides a broad historical survey of the major [[interest]] theories which had found prominence up to his day and additionally provides a thorough critiques each theory. Early in the book Böhm-Bawerk points out that while loan interest had originally occupied the efforts of theorists, the [[industrial revolution]] and the massive change this brought to Western economies, led to the need for theorists to explain the existence of [[originary interest]]. In order to explain originary interest Böhm-Bawerk points out that theorists were essentially trying to answer the following question: "Why is the gross return to capital regularly of greater value than the proportions of [[capital]], which are consumed in acquiring that return?"<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 52,77.</ref>

==Classes of interest theories==
In ''History and Critique of Interest Theories'' Böhm-Bawerk groups the interest theories which he surveys and critiques into five classes:
* ''Colorless theories'': are those which built on the idea of [[Adam Smith]] and [[Anne Robert Jacques Turgot]] that there must be interest otherwise capitalists would have no desire to employ capital productively.

* ''Productivity theories'': are based on the idea that there is an inherent productive capacity which exists in capital. Examples of economists who utilized this explanation for orignary interest include [[Carl Menger]] and [[Jean-Baptiste Say]].

* ''Abstinence theories'': put forth the idea that interest "is the equivalent of one element of cost which enters as a constituent into the price, namely, abstinence."<ref name="capitalandinterest" /> Or in other words interest is the payment to the capitalist to cover the cost of sacrificing the present enjoyment which could have been attained from the use of their capital.

* ''Renumeration theories'': attributed the existence of interest to work done by the capitalist.

* ''Exploitation theories'': are based on the belief that interest is nothing but a curtailment of the just wage that should go to the worker. This class of theory became the foundation of [[socialism]], and was put forth by individuals such as [[Johann Karl Rodbertus]] and [[Karl Marx]].

==References==
{{reflist}}

==Links==
{{store|http://mises.org/store/Capital-and-Interest-Paperback-P446.aspx|Capital and Interest}}
* {{mr|164|Resources page}} (including full text)

{{stub}}

[[category:literature]]

Usury

2011-11-25T17:21:09Z

Matthew: typo

'''Usury''' is a term which originally was used to denote the charging of [[interest]], but is also used to express the charging of excessively high interest rates. Usury is derived from the Latin term ''usura'' which means "money paid for use".<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 10,167.</ref> One of the first commentaries on usury<ref name="capitalandinterest" /> can be found in [[Aristotle|Aristotle's]] ''Politics'' where he expresses his disdain for the practice by saying:
{{Quote|The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term usury, which means the birth of money from money, is applied to the breeding of money, because the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural.|Aristotle|''[[Politics]]''}}

{{See also|Interest}}

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Usury

2011-11-25T17:19:51Z

Matthew: created initial page

'''Usury''' is a term which originally was used to denote the charging of [[interest]], but is also used to express the charging of excessively high interest rates. Usury is derived from the Latin term ''usura'' which means "money paid for use".<ref name="capitalandinterest">[[Eugen von Böhm-Bawerk]]. "Capital and Interest: History and Critique of Interest Theories", 1959, page 10,167.</ref> One of the first commentaries on usury<ref name="capitalandinterest" /> can be found in [[Aristotle|Aristotle's]] ''Politics'' where he expresses his disdain for the practice by saying:
{{Quote|The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural use of it. For money was intended to be used in exchange, but not to increase at interest. And this term usury, which means the birth of money from money, is applied to the breeding of money, because of the offspring resembles the parent. Wherefore of all modes of making money this is the most unnatural.|Aristotle|''[[Politics]]''}}

{{See also|Interest}}

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Perfect competition

2011-11-25T01:58:59Z

Matthew: added link and text

'''Perfect competition''' is an [[imaginary construct]] (i.e. a set of false assumptions) used primarily in mainstream, neo-classical economic discourse to explain [[competition]] and [[monopoly]] in the economy. Firms under perfect competition are assumed to operate in a market defined by the following characteristics; a homogeneous product available in infinitely divisible units, an infinite number of buyers and sellers, the absence of any barriers to entry, and with each firm having access to [[perfect information]].<ref name="causal_realist">[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 7 Competition and Monopoly.</ref> Under such conditions firms' demand curves would be perfectly [[elasticity|elastic]] meaning that they could bring any supply to the market without affecting price. Furthermore for a profit-maximizing firm operating in a perfectly competitive market price would be equal to marginal cost. Firms who are able to sell products at a price above marginal cost (i.e. firms with downward sloping demand curves) are assumed to operate under conditions of [[imperfect competition]] and thus possess market power.<ref name="causal_realist" />

==Criticisms of perfect competition==
Many economists have been highly critical to the concept of perfect competition<ref name="Reisman_Platonic">[[George Reisman]]. [http://mises.org/daily/1988 "Platonic Competition"], 2005.</ref>, suggesting that the assumptions associated with the model do not correspond at all to the actual characteristics of real markets and when the assumptions are dropped the model does not provide any useful conclusions about market behavior. For example it is pointed out that in reality there is no such thing as a perfectly elastic demand curve as all firms face a downward sloping demand curve and thus possess some "market power". Furthermore, the model of perfect competition has often been used as the benchmark for [[anti-trust]] policy, where policy makers maintain that it is the job of government to promote perfect competition. Thus policy makers misuse the model as a normative benchmark in deciding what anti-trust actions should be taken against firms.<ref name="causal_realist" />

===Perfect competition vs. actual competition===
{{Main|Competition}}
"Pure and perfect competition" is completely unlike anything one normally means by the term "competition." Normally, one thinks of competition as denoting a rivalry among producers, in which each producer strives to match or exceed the performance of other producers. This is not what "pure and perfect competition" means. Indeed, the existence of rivalry, of competition as it is normally understood, is incompatible with "pure and perfect competition." Consider the following passage in a widely used economics textbook by Professor Richard Leftwich:<ref name="Reisman_Platonic" />

"By way of contrast, intense rivalry may exist between two automobile agencies or between two filling stations in the same city. One seller's actions influence the market of the other; consequently, pure competition does not exist in this case."<ref name="Leftwich_Price">Richard H. Leftwich and Ross D. Eckert, [http://books.google.com/books?id=96S7AAAAIAAJ&q=intense+rivalry#search_anchor "The Price System and Resource Allocation"], 9th ed., The Dryden Press, Chicago, 1985, p. 41. Referenced 2011-11-17.</ref>

[[F.A. Hayek]] argues that the theory of perfect competition has little claim to be called "competition" at all, and that its conclusions are of little use as guides to policy. None of the devices adopted in ordinary life for what is normally understood as competition would still be open to a seller in a market in which so-called "perfect competition" prevails.

[[Advertising]], undercutting, and improving ("differentiating") the goods or services produced are all excluded by definition — "perfect" competition means indeed the absence of all competitive activities.

Especially remarkable in this connection is the explicit and complete exclusion from the theory of perfect competition of all personal relationships existing between the parties. In actual life the fact that our inadequate knowledge of the available commodities or services is made up for by our experience with the persons or firms supplying them — that competition is in a large measure competition for reputation or good will — is one of the most important facts which enables us to solve our daily problems.

No products of two producers are ever exactly alike, even if it were only because, as they leave his plant, they must be at different places. These differences are part of the facts which create our economic problem, and it is little help to answer it on the assumption that they are absent.

That in conditions of real life the position even of any two producers is hardly ever the same is due to facts which the theory of perfect competition eliminates by its concentration on a long-term equilibrium which in an ever-changing world can never be reached. At any given moment the equipment of a particular firm is always largely determined by historical accident, and the problem is that it should make the best use of the given equipment (including the acquired capacities of the members of its staff) and not what it should do if it were given unlimited time to adjust itself to constant conditions.

Competition is the more important the more complex or "imperfect" are the objective conditions in which it has to operate. Indeed, far from competition being beneficial only when it is "perfect," Hayek argue that the need for competition is nowhere greater than in fields in which the nature of the commodities or services makes it impossible that it ever should create a perfect market in the theoretical sense.

The economic problem is a problem of making the best use of what resources we have, and not one of what we should do if the situation were different from what it actually is. There is no sense in talking of a use of resources "as if" a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.<ref name="Hayek_Competition">Friedrich A. Hayek. [http://mises.org/daily/4181 "The Meaning of Competition"], from [[Individualism and Economic Order]] (1948), referenced 2011-11-17.</ref>

==References==
{{reflist}}

==Links==
* [http://mises.org/journals/qjae/pdf/qjae5_2_4.pdf Austrian Economics, Neoclassical Economics, Marketing, and Finance] (pdf) by Walter Block, William Barnett II, and Stuart Woord, 2002
* [http://www.cato.org/pubs/journal/cj15n2-3-10.html Perfect Competition and the Transformation of Economics] a review by John B. Egger
* [http://mises.org/journals/jls/4_4/4_4_6.pdf The Austrian Theory of Efficiency and the Role of Government] (pdf) by Roy E. Cordato
* [http://blog.mises.org/19459/perfect-competition-gobble-degook/ Perfect Competition: “Gobble”-degook] by Joseph Salerno
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Business Tides

2011-11-24T19:27:42Z

Matthew:

{{Infobox book
| name = Business Tides
| title_orig =
| translator =
| image = 
| image_caption =
| author = Henry Hazlitt
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 2011
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''Business Tides: The Newsweek Era of Henry Hazlitt''''' is a book composed of the entire collection of articles written by journalist and economist [[Henry Hazlitt]] during his employment at ''Newsweek'' magazine. "Business Tides" was the title of Hazlitt's column which ran in ''Newsweek'' from 1946 until the publishing of his final column for the magazine on September 12th, 1966. Written from a [[classical liberal]] standpoint with a grounding in [[Austrian economics]], Hazlitt's columns covered the economic and political issues of the day concentrating on topics such as [[inflation]], [[Keynesian economics]], [[taxation|tax policy]], [[price controls]] as well as a wide variety of other forms of [[government intervention]]. The volume includes a lengthy introduction writtern by Paul Milazzo which provides a thematic and historical perspective of Hazlitt's articles.

==Links==
{{store|http://mises.org/store/Business-Tides-P10750.aspx|Business Tides}}
* {{mr|6737|Resources page}} (including full text)

{{stub}}

[[category:literature]]

Business Tides

2011-11-24T19:17:18Z

Matthew: created initial page

{{Infobox book
| name = Business Tides
| title_orig =
| translator =
| image = 
| image_caption =
| author = Henry Hazlitt
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]]
| genre = [[Non-fiction]]
| publisher = [[Ludwig von Mises Institute]]
| pub_date = 2011
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''Business Tides: The Newsweek Era of Henry Hazlitt''''' is a book composed of the entire collection of articles written by journalist and economist [[Henry Hazlitt]] during his employment at ''Newsweek'' magazine. "Business Tides" was the title of Hazlitt's column which ran in ''Newsweek'' from 1946 until the publishing of his final column for the magazine on September 12th, 1966. Written from a [[classical liberal]] standpoint with a grounding in [[Austrian economics]], Hazlitt's columns covered the economic and political issues of the day concentrating on topics such as [[inflation]], [[Keynesian economics]], [[taxation|tax policy]], [[price controls]] and a wide variety of other forms of [[government intervention]]. The volume includes a lengthy introduction writtern by Paul Milazzo which provides a thematic and historical perspective of Hazlitt's articles.

==Links==
{{store|http://mises.org/store/Business-Tides-P10750.aspx|Business Tides}}
* {{mr|6737|Resources page}} (including full text)

{{stub}}

[[category:literature]]

Monetary policy

2011-11-23T21:42:06Z

Matthew:

'''Monetary policy''' refers to the manipulation of the supply of money by an institution which has the [[monopoly]] control of money production in a nation - usually a [[central bank]] - in an attempt to achieve certain objectives. Commonly these stated objectives are to maintain economic growth, limit unemployment, or both.<ref name="Monetary_policy">Tobin, James. [http://www.econlib.org/library/Enc/MonetaryPolicy.html "The Concise Encyclopedia of Economics: Monetary Policy"], referenced 2011-11-23.</ref> Monetary policy inculdes actions such as [[qualitative easing]] and [[quantitative easing]]. Those who advocate the use of monetary policy, such as [[monetarists]] and [[Keynsians]], pressupose that changes in the money supply can result in positive changes in economic growth or employment.<ref name="Monetary_policy" /> However, other economic schools of thought such as [[Austrian economics]], suggest that manipulation in the money supply will not achieve such desired effects and instead often will result in redistributions of wealth and other harmful economic distortions.<ref>[[Murray Rothbard]].[http://mises.org/resources/617 "What Has Government Done to Our Money?"], 2010, page 57.</ref> Furthermore, the [[Austrian business cycle theory]] attempts to show how it is in fact the actions of central banks, through inflationary monetary policies, which lead to the booms and busts of business cycles.<ref>[[Murray Rothbard]].[http://mises.org/resources/1082 "Man, Economy, and State"], 2009, page 859.</ref>

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Monetary policy

2011-11-23T18:35:01Z

Matthew: created initial page

'''Monetary policy''' refers to the manipulation of the supply of money by an institution which has the [[monopoly]] control of money production in a nation - usually a [[central bank]] - in an attempt to achieve certain objectives. Commonly these stated objectives are to maintain economic growth, limit unemployment, or both.<ref name="Monetary_policy">Tobin, James. [http://www.econlib.org/library/Enc/MonetaryPolicy.html "The Concise Encyclopedia of Economics: Monetary Policy"], referenced 2011-11-23.</ref> Monetary policy inculdes actions such as [[qualitative easing]] and [[quantitative easing]]. Those who advocate the use of monetary policy, such as [[monetarists]] and [[Keynsians]], pressupose that changes in the money supply will result in positive changes in economic growth or employment.<ref name="Monetary_policy" /> However, other economic schools of thought such as [[Austrian economics]], suggest that manipulation in the money supply will not achieve such desired effects and instead often will result in redistributions of wealth and other harmful economic distortions.<ref>[[Murray Rothbard]].[http://mises.org/resources/617 "What Has Government Done to Our Money?"], 2010, page 57.</ref> Furthermore, the [[Austrian business cycle theory]] attempts to show how it is in fact the actions of central banks, through inflationary monetary policies, which lead to the booms and busts of business cycles.<ref>[[Murray Rothbard]].[http://mises.org/resources/1082 "Man, Economy, and State"], 2009, page 859.</ref>

==References==
{{reflist}}

==Links==
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-22T16:48:21Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 20
| 20
|
|
|
| '''40'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural law]], [[Causal-realist economics]], [[Statism]]
* Pages: [[Perfect competition]], [[Resurrecting Marx]]

Resurrecting Marx

2011-11-22T16:46:56Z

Matthew:

{{Infobox book
| name = Resurrecting Marx
| title_orig =
| translator =
| image = 
| image_caption =
| author = [[David Gordon]]
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]], [[Marxism]], [[Capitalism]]
| genre = [[Non-fiction]]
| publisher = Transaction Publishers
| pub_date = 1990
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''Resurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and Justice''''' is a book written by philosopher and historian [[David Gordon]] first published in 1990, on the topic of [[analytical Marxism]]. As Gordon points out in the introduction, [[Marxism]] enjoyed a revival in the American academic world in the latter half of the 20th century, albeit in a form which differed from the traditional theory. This new form of Marxism came to be termed analytical Marxism as those involved in the movement utilized the tools of [[analytic philosophy]]. The analytical Marxists while accepting the main doctrine of Marxism, attempted to rework some of the tenets which had been widely rejected by the middle of the 20th century. In doing so these thinkers believed that their form of Marxism would then stand up to the criticisms that had led many in the mainstream economic and philosophy communities to reject Marxism. Like [[Karl Marx]], the analytical Marxists share his belief that [[capitalism]] is a system which leads to the exploitation of the laborer; however, the various approaches taken by the analytical Marxists' to defend this position differ from the original approach taken by Mark and his colleague [[Friedrich Engels]]. The purpose of the book is to show how ultimately these new justifications of the exploitation theory ultimately fail in their attack on capitalism. In the process of doing so Gordon also attempts to strengthen the case for the desirability and supremacy of capitalism. The book concentrates on arguments put forth by the analytic Marxists [[G.A. Cohen]], [[Jon Elster]], and [[John Roemer]].

==Links==
{{store|http://mises.org/store/Resurrecting-Marx-P22.aspx|Resurrecting Marx}}

* {{wplink}}

{{stub}}

[[category:literature]]

Resurrecting Marx

2011-11-22T16:30:22Z

Matthew:

{{Infobox book
| name = Resurrecting Marx
| title_orig =
| translator =
| image = 
| image_caption =
| author = [[David Gordon]]
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]], [[Marxism]], [[Capitalism]]
| genre = [[Non-fiction]]
| publisher = Transaction Publishers
| pub_date = 1990
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''Resurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and Justice''''' is a book written by philosopher and historian [[David Gordon]] first published in 1990, on the topic of [[analytical Marxism]]. As Gordon points out in the introduction, [[Marxism]] enjoyed a revival in the American academic world in the latter half of the 20th century, albeit in a form which differed from the traditional theory. This new form of Marxism came to be termed analytical Marxism as those involved in the movement utilized the tools of [[analytic philosophy]]. The analytical Marxists while accepting the main doctrine of Marxism, attempted to rework some of the tenets which had been widely rejected by the middle of the 20th century. In doing so these thinkers believed that their form of Marxism would then stand up to the criticisms that had led many in the mainstream economic and philosophy communities to reject Marxism. Like [[Karl Marx]] himself, the analytical Marxists share his belief that [[capitalism]] is a system which leads to the exploitation of the laborer; however, the various approaches taken by the analytical Marxists' to defend this position differ from the original approach taken by Mark and his colleague [[Friedrich Engels]]. The purpose of the book is to show how ultimately these new justifications of the exploitation theory ultimately fail in their attack on capitalism. In the process of doing so Gordon also attempts to strengthen the case for the desirability and supremacy of capitalism. The book concentrates on arguments put forth by the analytic Marxists [[G.A. Cohen]], [[Jon Elster]], and [[John Roemer]].

==Links==
{{store|http://mises.org/store/Resurrecting-Marx-P22.aspx|Resurrecting Marx}}

* {{wplink}}

{{stub}}

[[category:literature]]

David Gordon

2011-11-22T16:29:43Z

Matthew: added link

'''David Gordon''' is a philosopher, historian, and senior fellow at the [[Ludwig von Mises Institute]]. He was educated at UCLA, where he earned his PhD in intellectual history. He is the author of [[Resurrecting Marx|''Resurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and Justice'']]; ''The Philosophical Origins of Austrian Economics''; ''An Introduction to Economic Reasoning''; and ''Critics of Marx''. He is also editor of ''Secession, State, and Liberty'', ''The Turgot Collection'' and co-editor of H.B. Acton's ''Morals of Markets and Other Essays''.

Dr. Gordon is the editor of ''The Mises Review'', and a contributor to such journals as ''Analysis'', ''The International Philosophic Quarterly'', ''The Journal of Libertarian Studies'', and ''The Quarterly Journal of Austrian Economics''.

==Links==
{{Contact faculty|dgordon@mises.org}}
*[http://www.mises.org/Gordon Homepage] on [[Mises Institute|Mises.org]]
** [http://mises.org/media.aspx?action=author&ID=64 Media archive]
** [http://mises.org/literature.aspx?action=author&Id=64 Literature archive]
** [http://mises.org/daily/author/64/David-Gordon?AuthorId=64 Daily Article archive]
** [http://blog.mises.org/13768/ Faculty Spotlight Interview: David Gordon]

*[http://mises.org/periodical.aspx?Id=2 ''The Mises Review'' archives] on Mises.org

{{DEFAULTSORT:Gordon, David}}
[[Category:Libertarians]]
[[Category:Philosophers]]

Resurrecting Marx

2011-11-22T16:26:41Z

Matthew: created initial page

{{Infobox book
| name = Resurrecting Marx
| title_orig =
| translator =
| image = 
| image_caption =
| author = [[David Gordon]]
| illustrator =
| cover_artist =
| country = [[United States]]
| language =
| series =
| subject = [[Economics]] [[Marxism]] [[Capitalism]]
| genre = [[Non-fiction]]
| publisher = Transaction Publishers
| pub_date = 1990
| english_pub_date =
| media_type = Print, Digital
| pages =
| isbn =
| oclc =
| dewey =
| congress =
| preceded_by =
| followed_by =
}}

'''''Resurrecting Marx: The Analytical Marxists on Exploitation, Freedom, and Justice''''' is a book written by philosopher and historian [[David Gordon]] first published in 1990, on the topic of [[analytical Marxism]]. As Gordon points out in the introduction, [[Marxism]] enjoyed a revival in the American academic world in the latter half of the 20th century, albeit in a form which differed from the traditional theory. This new form of Marxism came to be termed analytical Marxism as those involved in the movement utilized the tools of [[analytic philosophy]]. The analytical Marxists while accepting the main doctrine of Marxism, attempted to rework some of the tenets which had been widely rejected by the middle of the 20th century. In doing so these thinkers believed that their form of Marxism would then stand up to the criticisms that had led many in the mainstream economic and philosophy communities to reject Marxism. Like [[Karl Marx]] himself, the analytical Marxists share his belief that [[capitalism]] is a system which leads to the exploitation of the laborer; however, the various approaches taken by the analytical Marxists' to defend this position differ from the original approach taken by Mark and his colleague [[Friedrich Engels]]. The purpose of the book is to show how ultimately these new justifications of the exploitation theory ultimately fail in their attack on capitalism. In the process of doing so Gordon also attempts to strengthen the case for the desirability and supremacy of capitalism. The book concentrates on arguments put forth by the analytic Marxists [[G.A. Cohen]], [[Jon Elster]], and [[John Roemer]].

==Links==
{{store|http://mises.org/store/Resurrecting-Marx-P22.aspx|Resurrecting Marx}}

* {{wplink}}

{{stub}}

[[category:literature]]

Statism

2011-11-21T15:05:52Z

Matthew: created initial page

'''Statism''' is a political [[ideology]] where the central state, rather than the people, are the ultimate source of authority and power.<ref name="Denson_War">Denson, John. "The Costs of War", 1999, page 63.</ref> Statism tends towards increased [[central planning]] in the economic sphere and a curtailing of civil liberties, which may be deemed necessary by those in power to achieve social or militaristic goals. The term statism is derived from the French word etatism, a term which was preferred by [[Ludwig von Mises]] as he believed it expressed the fact that the ideology did not originally emerge in Anglo-Saxon countries but rather was later adopted by them.<ref>[[Ludwig von Mises]]. [http://mises.org/resources/5829/Omnipotent-Government-The-Rise-of-the-Total-State-and-Total-War "Omnipotent Government: The Rise of the Total State and Total War"], 1985, page 5.</ref>

==References==
{{reflist}}

==Links==
* {{wplink}}
* [http://mises.org/daily/3735 Capitalism versus Statism]
* [http://mises.org/daily/5328 The Political Doctrine of Statism]

[[Category:Concepts]]
{{Stub}}

Perfect competition

2011-11-20T02:17:53Z

Matthew: fixed typo

'''Perfect competition''' is an [[imaginary construct]] (i.e. a set of false assumptions) used primarily in mainstream, neo-classical economic discourse to explain [[competition]] and [[monopoly]] in the economy. Firms under perfect competition are assumed to operate in a market characterized by a homogeneous product, an infinite number of buyers and sellers, the absence of any barriers to entry, and with access to [[perfect information]].<ref name="causal_realist">[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 7 Competition and Monopoly.</ref> Under such conditions firms' demand curves would be perfectly [[elasticity|elastic]] meaning that they could bring any supply to the market without affecting price. Furthermore for a profit-maximizing firm operating in a perfectly competitive market price would be equal to marginal cost. Firms who are able to sell products at a price above marginal cost (i.e. firms with downward sloping demand curves) are assumed to operate under conditions of [[imperfect competition]] and thus possess market power.<ref name="causal_realist" />

==Criticisms of perfect competition==
Many economists have been highly critical to the concept of perfect competition<ref name="Reisman_Platonic">[[George Reisman]]. [http://mises.org/daily/1988 "Platonic Competition"], 2005.</ref>, suggesting that the assumptions associated with the model do not correspond at all to the actual characteristics of real markets and when the assumptions are dropped the model does not provide any useful conclusions about market behavior. For example it is pointed out that in reality there is no such thing as a perfectly elastic demand curve as all firms face a downward sloping demand curve and thus possess some "market power". Furthermore, the model of perfect competition has often been used as the benchmark for [[anti-trust]] policy, where policy makers maintain that it is the job of government to promote perfect competition. Thus policy makers misuse the model as a normative benchmark in deciding what anti-trust actions should be taken against firms.<ref name="causal_realist" />

===Perfect competition vs. actual competition===
{{Main|Competition}}
"Pure and perfect competition" is completely unlike anything one normally means by the term "competition." Normally, one thinks of competition as denoting a rivalry among producers, in which each producer strives to match or exceed the performance of other producers. This is not what "pure and perfect competition" means. Indeed, the existence of rivalry, of competition as it is normally understood, is incompatible with "pure and perfect competition." Consider the following passage in a widely used economics textbook by Professor Richard Leftwich:<ref name="Reisman_Platonic" />

"By way of contrast, intense rivalry may exist between two automobile agencies or between two filling stations in the same city. One seller's actions influence the market of the other; consequently, pure competition does not exist in this case."<ref name="Leftwich_Price">Richard H. Leftwich and Ross D. Eckert, [http://books.google.com/books?id=96S7AAAAIAAJ&q=intense+rivalry#search_anchor "The Price System and Resource Allocation"], 9th ed., The Dryden Press, Chicago, 1985, p. 41. Referenced 2011-11-17.</ref>

[[F.A. Hayek]] argues that the theory of perfect competition has little claim to be called "competition" at all, and that its conclusions are of little use as guides to policy. None of the devices adopted in ordinary life for what is normally understood as competition would still be open to a seller in a market in which so-called "perfect competition" prevails.

[[Advertising]], undercutting, and improving ("differentiating") the goods or services produced are all excluded by definition — "perfect" competition means indeed the absence of all competitive activities.

Especially remarkable in this connection is the explicit and complete exclusion from the theory of perfect competition of all personal relationships existing between the parties. In actual life the fact that our inadequate knowledge of the available commodities or services is made up for by our experience with the persons or firms supplying them — that competition is in a large measure competition for reputation or good will — is one of the most important facts which enables us to solve our daily problems.

No products of two producers are ever exactly alike, even if it were only because, as they leave his plant, they must be at different places. These differences are part of the facts which create our economic problem, and it is little help to answer it on the assumption that they are absent.

That in conditions of real life the position even of any two producers is hardly ever the same is due to facts which the theory of perfect competition eliminates by its concentration on a long-term equilibrium which in an ever-changing world can never be reached. At any given moment the equipment of a particular firm is always largely determined by historical accident, and the problem is that it should make the best use of the given equipment (including the acquired capacities of the members of its staff) and not what it should do if it were given unlimited time to adjust itself to constant conditions.

Competition is the more important the more complex or "imperfect" are the objective conditions in which it has to operate. Indeed, far from competition being beneficial only when it is "perfect," Hayek argue that the need for competition is nowhere greater than in fields in which the nature of the commodities or services makes it impossible that it ever should create a perfect market in the theoretical sense.

The economic problem is a problem of making the best use of what resources we have, and not one of what we should do if the situation were different from what it actually is. There is no sense in talking of a use of resources "as if" a perfect market existed, if this means that the resources would have to be different from what they are, or in discussing what somebody with perfect knowledge would do if our task must be to make the best use of the knowledge the existing people have.<ref name="Hayek_Competition">Friedrich A. Hayek. [http://mises.org/daily/4181 "The Meaning of Competition"], from [[Individualism and Economic Order]] (1948), referenced 2011-11-17.</ref>

==References==
{{reflist}}

==Links==
* [http://mises.org/journals/qjae/pdf/qjae5_2_4.pdf Austrian Economics, Neoclassical Economics, Marketing, and Finance] (pdf) by Walter Block, William Barnett II, and Stuart Woord, 2002
* [http://www.cato.org/pubs/journal/cj15n2-3-10.html Perfect Competition and the Transformation of Economics] a review by John B. Egger
* [http://mises.org/journals/jls/4_4/4_4_6.pdf The Austrian Theory of Efficiency and the Role of Government] (pdf) by Roy E. Cordato
* {{wplink}}

[[Category:Economic concepts]]
{{Stub}}

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-18T01:06:06Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 20
| 20
|
|
|
| '''40'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural law]], [[Causal-realist economics]]
* Pages: [[Perfect competition]]

Austrian Economics Wiki:2011 article improvement drive/November

2011-11-18T01:05:22Z

Matthew:

This is the user contribution page for the [[MisesWiki:2011 article improvement drive]] and the month '''November'''. Contestants should add their contributions to the bottom of the page. In case of any questions please consult the [[MisesWiki:2011 article improvement drive|Talk page]].

==Points summary==
The points will be awarded by the contest's judges according to the [[MisesWiki:2011 article improvement drive#Rules|rules]]. The judges will update the table regularly.

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
| '''User / points'''
| Featured article
| Stub created
| Article created
| Extended short article
| WP article
| New anniversary
| '''User total'''
|-
| '''Wheylous'''
|
|
| 20
|
|
|
| '''20'''
|-
| '''Matthew'''
|
| 20
| 20
|
|
|
| '''40'''
|}

{| class="wikitable" border="1" style="margin: 1em auto 1em auto"
|+ '''The points are awarded for achieving the following objectives:'''
| Turned an article into a [[MisesWiki:Featured articles|Featured article]].
| 100 points
|-
| Created a decent [[:Category:Article stubs|Stub]] of at least 500 bytes about a relevant, heretofore uncovered topic.
| 10 points
|-
| Created a decent article of at least 2000 bytes about a relevant, heretofore uncovered topic.
| 20 points
|-
| Turned a [[Special:ShortPages|short article]] with less than 500 bytes into a decent article of at least 2000.
| 20 points
|-
| Turned an article originally coming from [[:Category:Mises Wiki articles incorporating text from Wikipedia|Wikipedia]] into original content.
| 20 points
|-
| Added a brand new day page with a relevant anniversary to [[MisesWiki:Anniversaries]].
| 5 points
|}

==Contest contributions==
Please sign in to the contest below and add your contributions as they accumulate. The judges will evaluate the number of points and add them to the table below. A simple summary is perfectly sufficient - i.e. I've created pages X, Y and Z, improved A and B, etc. (Check out the previous [[MisesWiki:2011 article improvement drive/September|contest page]] for an example.)

'''Contestants:'''
* Wheylous
* Matthew

=== Wheylous ===
Created:
* Pages: [[Standard Oil]]

=== Matthew ===
Created:
* Stubs: [[Interventionism]], [[Qualitative easing]], [[Imaginary construct]], [[Natural Law]], [[Causal-realist economics]]
* Pages: [[Perfect competition]]

Causal-realist economics

2011-11-17T22:39:01Z

Matthew: created initial page

'''Causal-realist economics''' is an approach to economics put forth by economists such as [[Joseph Salerno]] and [[Peter Klein]] which attempts to derive universal laws of social interaction which are relevant and applicable to a wide array of real world situations.<ref>[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 5 Pricing of the Factors of Production and the Labor Market.</ref> This approach has its roots in the development of economic science between 1871 and 1914 by economists such as [[Carl Menger]], [[Frank Fetter]], and [[Knut Wicksell]].<ref>[[Joseph Salerno]] [http://mises.org/daily/2740 "What is a Causal-Realist Approach?"], 2007.</ref> The approach is said to be causal in that purposeful human action and economic phenomenon are explained in terms of the Aristotelian notion of cause-and-effect, while it is realist because the approach attempts to explain real world situations rather than hypothetical ones.<ref>[[Peter Klein]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 6 Profit, Loss, and the Entrepreneur.</ref>

{{See also|Austrian economics}}

==References==
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==Links==
* [http://mises.org/daily/2740 What is a Causal-Realist Approach?]
* [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach Fundamentals of Economic Analysis: A Causal-Realist Approach]
* [http://mises.org/resources/595/Principles-of-Economics Principles of Economics]

[[Category:Economic concepts]]
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Natural law

2011-11-17T03:37:32Z

Matthew:

'''Natural law''' is the view that there exists an absolute and eternal standard of value.<ref name="theoryhistory">[[Ludwig von Mises]]. [http://mises.org/resources.aspx?Id=d114e50f-c3dc-438f-86e9-ab6c77a23dc8 Theory and History], 1985, page 44.</ref> Or alternatively natural law can be seen as a an "ultimate measure of right and wrong, as the pattern of the good life or life according to nature".<ref name="natural_law">D'Entreves, A.P., "Natural Law: A Historical Survey", 1951, page 7.</ref> Natural law is seen as a form of justice or set of laws which human authority can express, or ought to express, but does not create.<ref name="natural_law" /> Law which is created by humans is often termed [[positive law]]. Natural law is closely related to the position of [[objective ethics]], as contrasted to [[subjective ethics]], whereby it is believed that value judgments are able to satisfy a [[truth function]], i.e., be judged as being either true or false. The source of natural law has been attributed at various times to divine power, the structure of the universe, or the result of human's capacity to reason.

==References==
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==Links==
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[[Category:Concepts]]
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Natural law

2011-11-16T22:26:54Z

Matthew: create

'''Natural law''' is the view that there exists an absolute and eternal standard of value.<ref name="theoryhistory">[[Ludwig von Mises]]. [http://mises.org/resources.aspx?Id=d114e50f-c3dc-438f-86e9-ab6c77a23dc8 Theory and History], 1985, page 44.</ref> Or alternatively natural law can be seen as a an "ultimate measure of right and wrong, as the pattern of the good life or life according to nature".<ref name="natural_law">D'Entreves, A.P., "Natural Law: A Historical Survey", 1951, page 7.</ref> Natural law is thought to be a form of justice or set of laws which human authority can express, or ought to express, but does not create.<ref name="natural_law" /> Law which is created by humans is often termed [[positive law]]. Natural law is closely related to the position of [[objective ethics]], as contrasted to [[subjective ethics]], whereby it is believed that value judgments are able to satisfy a [[truth function]], i.e., be judged as being either true or false. The source of natural law has been attributed at various times to divine power, the structure of the universe, or the result of human's capacity to reason.

==References==
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==Links==
* {{wplink}}

[[Category:Concepts]]
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Classical liberal

2011-11-16T21:30:22Z

Matthew: redirect set up

#REDIRECT [[Classical liberalism]]

Imaginary construct

2011-11-16T04:19:48Z

Matthew:

An '''imaginary construct''' is a set of false assumptions that are used to form a model of a set of phenomena in an attempt to isolate cause-and-effect relationships.<ref name="causal_realist">[[Joseph Salerno]] [http://mises.org/media/categories/99/Fundamentals-of-Economic-Analysis-A-CausalRealist-Approach "Fundamentals of Economic Analysis: A Causal-Realist Approach"], 2007, Lecture 1 Scarcity, Choice, and Value.</ref> Imaginary constructs are said to be useful if the conclusions derived from them are applicable to reality after the assumptions are dropped.<ref name="causal_realist" /> Examples of imaginary constructs in economics include the [[evenly rotating economy]] and [[perfect competition]].

==References==
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==Links==
* {{wplink}}

[[Category:Economic concepts]]
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