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jmherbener
ParticipantThis website breakdown the federal debt by who holds it. Of the $16.7 trillion in U.S. Treasury debt, $11.,9 trillion is held by the public and $4.8 trillion is “intergovernmental holdings.”
ParticipantClarence Carson was a Ph.D. historian who taught history at several colleges including Hillsdale and Grove City. He advocated liberty, though he was not a libertarian.
http://www.fee.org/the_freeman/detail/clarence-b-carson-rip#axzz2bQiqlTSr
On your first point, it’s not uncommon for economists to assert that government as defender of person and property is a precursor to the market economy. Ludwig von Mises makes the same claim in his book, Human Action.
On your second point, there are good points on both sides of the debate over whether or not to call the market economy “capitalism.” Historians tend to define “capitalism” as the historical system of government-business partnership that emerged in the West in the mid-nineteenth century. Karl Marx himself coined the term on the grounds you mention (it’s the system that favors capital over labor). On the other side, “capitalism” does describe an essential feature of the market economy, namely, that entrepreneurs can calculate “capital value” and thereby, efficiently allocate resources and invest in capital capacity.
Carson was not an Austrian economist, but his views on these two points don’t contradict Austrian economics.
More thorough introductory treatments of Austrian economics are David Gordon’s, Introduction to Economics Reasoning:
http://library.mises.org/books/David%20Gordon/An%20Introduction%20to%20Economic%20Reasoning.pdf
And Bob Murphy’s, Lessons for the Young Economist:
ParticipantOne would need to know the pay scale and employment pattern at Wal-Mart to determine the answer to your question.
However, if we make a reasonable guess, namely, that Wal-Mart pays wages below $12 an hour only to entry-level workers. (If this were not the case, then it’s hard to believe that computed prices would rise only 1.1 percent if Wal-Mart raised the minimum wage it pays workers to $12. Put another way, contrary to the bashing by the anti-Wal-Mart crowd, Wal-Mart must be paying reasonable high wages to most of its workers already if raising the minimum to $12 would only increase computed prices by 1.1 percent.) Then if Wal-Mart were forced to pay wages at $12 or above to all its workers, it would have to eliminate entry-level positions. Given that such a minimum wage restriction is the reason it refused to open its planned stores in the D.C. area, we can surmise that Wal-Mart’s current business model depends on these positions. It seems that Wal-Mart would have to significantly change the way it operated to survive a $12 minimum wage.
ParticipantBut that’s just the point. Entrepreneurs cannot pay workers less than the DMRP. Such is the conclusion of economic theory. In an unhampered market, each factor of production earns its DMRP. Of course, there are constant adjustments that entrepreneurs must make to changing underlying conditions, but they are always acting to exploit value differences and by so doing they eliminate them. And entrepreneurs can make mistakes, but they are corrected by entrepreneurs with superior foresight. So there is no systematic deviation of wages from DMRPs.
The problem in arguing about this topic is that people use the term “exploitation” ambiguously. In economic theory it refers only to the narrow point about whether entrepreneurs can systematically pay workers less than their DMRP. To others, exploitation means not paying a “living wage” or manipulating workers psychologically and so on. In economic theory, the only meaning one can give to “exploitation” is the case of involuntary exchange. The criminal gains at the expense of his victim. But voluntary exchange is mutual beneficial and therefore, involves no exploitation.
ParticipantI don’t think the socialists could take that line as effectively. After all sometimes business earns profit and sometimes it suffers losses. Karl Marx was trained as a classical economists and argued more tellingly from a general equilibrium position in which there are neither entrepreneurial profits nor losses. How then, could a classical economist who had no time preference theory of interest, explain the normal rate of return to investment?
You might try reading Boehm-Bawerk’s book to get an historical perspective:
ParticipantSuch estimates are difficult to come by because the conditions of generating empirical evidence do not often occur or, at least, are not often recorded. Entrepreneurs make such estimates in making business decisions, but the public data recorded is usually just the wage rate and the number employed.
Richard Vedder is a fellow-traveler of Austrian economics who has ventured to make estimates of MRP in the case of slave labor. Here is one Vedder article on teh topic:
ParticipantBoehm-Bawerk was arguing that revenues from selling output necessarily exceed costs from buying inputs in equilibrium. That is, even if there is no profit, revenue exceeds costs because of interest and not exploitation. The socialists claimed that exploitation explained any excess of revenues over costs.
ParticipantThe gold reserve act allowed FDR to devalue the dollar relative to gold. He did so by 70 percent, from $20.67 an ounce to $35 an ounce. This policy resulted in the “golden avalanche.” The gold stock tripled from 1934 to 1940. The Treasury department monetized the gold by issuing gold certificates, which banks could use as reserves. The Treasury also issued silver certificates from 1934 to 1938. The resulting monetary inflation re-inflated assets price bubbles, e.g., the stock market, but had little effect on the real production. When the monetary expansion slowed in 1937, the malinvestments were revealed and the apparent gains of 1934-1937 were exposed as such.
Robert Higgs’s paper on Regime Uncertainty tells the tale of real production during the Great Depression:
ParticipantYou’re on the right track. The Austrian view is that to make decisions about production that economize for society entrepreneur must use economic calculation. The use of resources in one line of production is justified if the revenues generated by satisfying consumer demands in that line exceed the revenues generated by satisfying consumer demands in another line of production. This occurs when an entrepreneur pays the opportunity costs of the resources (which are their prices) he uses to the resource owners and more than covers these costs with the revenues he generates from selling his outputs. Neither the production of fiat money nor fiduciary media is so regulated by profit. Their production does not require the producer to compensate for the opportunity cost others incur to allow for the satisfaction of the demand of those who issue fiat money and fiduciary media. Instead when they spend the fiat money or fiduciary media, people in general throughout the economy have their command over resources reduced to allow the issuers to have their command over resources augmented. And yet, no test has been passed to show that the value of the satisfactions gained relative to money to the issuers exceeds the value of satisfactions lost relative to money to people in general. The only test is voluntary exchange. But the issuers, who gain, do not compensate the people in general, who lose. They do not beat the opportunity costs of their actions.
ParticipantA good place to start is the relevant sections of Human Action (Ch. 8 and the references in the index):
http://library.mises.org/books/Ludwig%20von%20Mises/Human%20Action.pdf
ParticipantYour inquiry raises two related issues. First, would anything except money itself and money certificates be used by people as media of exchange on the unhampered market. Would merchants in general throughout the economy accept claims on short term loans, i.e., fractional-reserve deposits like our checking accounts, instead of money or money substitutes? Not likely. Second, given that merchants accept claims on short term loans as a medium of exchange would they tolerate reserve ratios much below 100 percent. Not likely.
For time deposits, which are loans, banks will structure their reserve ratios to manage unanticipated defaults and other factors affecting the asset value of the loans. These ratios may be quite small, certainly under 10 percent for high quality loans.
Any fiduciary media issue, however, involves malinvestments in the economy. Of course, there would be fewer malinvestments the closer the reserve ratio was to 100 percent.
ParticipantAlong with Dr. Klein, you might contact Guido Huelsmann at the University of Angers:
and Huerta de Soto at Rey Juan Carlos University in Madrid:
ParticipantThere are a growing number of financial analysts who use Austrian economics. Peter Schiff is just the tip of the iceberg.
http://en.wikipedia.org/wiki/Peter_Schiff
Austrian economists do policy analyses for think tanks. There are many in state-level policy institutes. Greg Kaza is executive director of the Arkansas Policy Foundation.
http://www.arkansaspolicyfoundation.org/
Austrian economics is making inroads into business programs. One can obtain a Ph.D. in business without having to learn the modeling techniques of economics and yet do Austrian research. Contact Peter Klein about such an opportunity.
ParticipantValuation does play a role in all action. But calculation cannot be done in subjective value. Arithmetic operations can only be performed in a common unit. In decisions on the market, the common unit in which calculation can be done is the monetary unit. So, for actions on the market a person uses economic calculation and subjective value in making decisions. For example, Tim Cook decides to produce the iPad Mini on the basis of his calculation of the profit from its production and his subjective valuations concerning the production and its alternative. He can calculate, i.e., use arithmetic operations, with respect to profit, but not with respect to his valuations. Apple earns $12 billion dollars in profit, but Cook cannot calculate that he receives 6 utils of value from choosing to produce the iPad Mini. He just knows that he values producing the Mini more highly than the alternative and therefore, he chooses to produce the Mini.
ParticipantDear Patricia, Many thanks for your kind remarks.
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