The Measurement Chimera

While, after the advent of modern value theory, most economists accepted that valuation is not objective, and thus not cardinal, they just could not let go of cardinality altogether. Cardinality is necessary for the use of measurement and mathematics, and according to the prejudice of many thinkers, "science is measurement."


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The Mystery of the Marginal Pairs

The great Austrian economist Eugen von Böhm-Bawerk considered the supply-and-demand formulation as all well and good, but he discovered that prices are determined more directly by something else.

In any given market for a good, there will always be four people whose valuations put them in a special position. Böhm-Bawerk called these four people the "marginal pairs." It is these marginal pairs that directly determine prices.

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Principles of Production

However, you can't have your cake and eat it too. And neither can you have your corn as ethanol and eat it as Corn Flakes too. As the rapping Hayek says, eventually the "grasping for resources reveals there's too few," (this revelation comes in the form of business losses) and resources are reallocated accordingly. Austrians say this reallocation period is the painful, but ultimately salutary, cyclical economic "bust" that inevitably follows the boom.


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Mises on Marginal Utility

"Notice the difference between the above presentations of marginal utility and Mises's presentation of the concept. Mises treats of utility in a formal, praxeological sense: "Importance attached to a thing on account of the belief that it can remove uneasiness." In contrast, the passages above give a sensuous, psychological connotation: they treat of the satiation of hunger, or the sensuous enjoyment of taste.

Also, diminishing marginal utility is presented as an empirically discovered regularity that is the result of certain empirically discovered facts of human physiology and behavior. The diminishing marginal utility of hamburgers is due to the physiological/psychological facts that people get full and that people grow weary of tastes. And this regularity is sometimes present, sometimes not (which is probably why it is called a "principle" in the first excerpt and not a "law")."

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Mises on Action

And there are the Keynesian and other under-consumptionist fallacies, which, at bottom, are just as absurd as thinking that Crusoe could become richer in consumers' goods by consuming more in order to stimulate his own production. There is a great deal that Mr. Crusoe could teach Mr. Krugman, if the arch-Keynesian would only deign to spend some quality time with him.
As the great Frederic Bastiat wrote, "How happy will nations be when they see clearly how and why what we find false and what we find true of man in isolation continue to be false or true of man in society!"

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Mises on Mind and Method

"The most important "mental equipment" for thinking about mankind is the "category of teleology/action": our inbuilt conception of purpose and purposeful behavior. Action (purposeful behavior) is the use of means to seek an end (the "end" always being "the relief from a felt uneasiness").

Just as the natural world would be a meaningless jumble of sensations without the category of causality, the social world around us (as well as our understanding of our own states of mind) would be a meaningless jumble of sensations if we were not equipped with the category of teleology/action. The conception of action in general is necessarily prior to the cognition of any particular action.
Gestures and words would be meaningless motions and sounds unless the mind were able to apply the conception of "purpose" to them. And how could you explain "purpose" to someone who did not already have an inbuilt conception of it, when such an explanation would be, to your "student," meaningless motions and sounds?

If I know anything, I know what action is. With every sentence I write with the purpose of communicating to you, the reader, I live it. And if you are looking at these words with the purpose of understanding them, you, too, are living it. Should I try to deny the reality of purpose, means and ends, I would find myself caught in the manifest absurdity of trying to deny the reality of trying."

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Of Time and Marshmallows

The phenomenon of interest occurs because of the simple fact that, other things being equal, people prefer satisfaction sooner rather than later. This universal feature of acting man is called "time preference." Time preference can even be seen in the behavior of children, as in the seminal "marshmallow experiment" conducted at Stanford University.

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