Javier A. Tabush

CHAPTER 2: The Epistemological Problems of the Sciences of Human Action

 

1. PRAXEOLOGY AND HISTORY

• History: Collection and systematic arrangement of all the data of experience concerning human action

• History makes a man wise and judicious

• Praxeology: theoretical and systematic science, its scope is HUMAN ACTION

1. THE FORMAL AND APRIORISTIC CHARACTER OF PRAXEOLOGY

• What is Blithe?

• Metaphysician thought reason could explain everything/answer all questions

• Reason and Mind à Survival

• “The present state of the universe is the product of its past” pg. 35

• We cannot think of a word without causality

• “The course of History is determined by the actions of individuals and by the effects of these actions”

EXTRA NOTES

• Mises is a fundamentalist

• “It is necessarily conditioned by the historian’s world view and thus not impartial but an outcome of preconceived ideas”

• To reproduce the past exactly as it happened we would require a duplication not humanly possible

• Relevant things in history

• The job of prexeology in history is to arrange and interpret the data

• What does Mises say about understanding?

• Its task is to establish the facts that people were motivated by definite value judgments and aimed at definite means.

• Conception: Mental tool for praxeology

• Understanding: Mental tool for history

 

CHAPTER 4: A First analysis of the Category of Action

1. ENDS AND MEANS

• End: The result sought by an action

• Mean: what serves to the attainment of any end

• Means don’t exist in the universe, there are only things which we later turn into means if we need to.

• Praxeological reality: Man’s conscious reaction to the given state of his universe

• Means are always limited

1. THE SCALE OF VALUE

• Abnormality and perversity are not applied in economics

• Value: importance that acting man attaches to ultimate ends.

• Not intrinsic

1. THE SCALE OF NEEDS

• Men strive after abundance and health

• “Economics deals with real man, weak, and subject to error as he is, not with ideal beings, omniscient as only gods could be”

1. ACTION AS AN ACTION

• Action: attempt to substitute a more satisfactory state of affairs for a less satisfactory one.

• Costs: the value of the price paid

• Loss: Difference between the valuation of the result and the costs incurred

 

CHAPTER 5: Time as a Praxeological Factor

1. TIME AS A PRAXEOLOGICAL FACTOR

• Praxeological system is aprioristic and deductive

1. PAST, PRESENT, AND FUTURE

• Action is always directed towards the future conditions

• Time is always past

• Past vs. present        past vs. future

1. THE ECONOMIZATION OF TIME

• Today’s goals were set yesterday

• Logical consistency à thinking

• Presence of mind à ability to think

• One will never succeed in formulating the notion of irrational

1. EXTRA NOTES

• Action is inseparable from change and time

• Action is always done thinking about the futre

• Acting must be suited to a purpose

• Does the present exist praxeological

• Action is the manifestation of time

• Time is a praxeological category

 

CHAPTER 7: ACTION WITHIN THE WORLD

1. THE LAW OF MARGINAL UTILITY

• How much humans like something

• Valuation of the utility

• Utility: “causal relevance for the removal of uneasiness”

• Men chooses according to satisfaction

• No need of calculation or arithmetic

• Marginal value vs. total supply

1. THE LAW OF RETURNS

• “The law of Returns asserts that for the combination of economic goods of higher orders there exists an optimum”

1. HUMA LABOR AS A MEANS

• Labor: The employment of the physiological functions and manifestations of human life as a mean

• Labor is a means

• What is leisure? Use of free time for enjoyment

• “The work a certain individual can perform is more suitable for some ends, less suitable for other ends, and altohether unsuitable for still other ends”

1. PRODUCTION

• Not an act of creation

• “Man is creative only in thinking and in the realm of imagination”

• Nature dispenses its gifts gratuitously

• “The material changes are the outcome of the spiritual changes.

 

CHAPTER 8: HUMAN SOCIETY

1. HUMAN COOPERATION

• Society: The total complex of the mutual relations created by such concerted actions.

• Social cooperation leads us to feelings of sympathy and friendship

• What is consciousness of kind?

• Division of labor between parts of an organism

• “society is an outcome of human action”

1. A CRITIQUE OF THE HOLISTIC AND METAPHYSICAL VIEW OF SOCIETY

• For a society to work selfishness needs to be vanished

• “Laws of God or Destiny claim universal validity@

• Individuals and groups of individuals whose intellect is so narrow can’t grasp benefits of society.

• “State or government is the social apparatus of compulsion and coercion”

 

CHAPTER 9: THE ROLE OF IDEAS

1. HUMAN REASON

• Thinking and acting are inseparable

• Thinking is linked up with language and vice-versa

• “Thinking is always a manifestation of individuals”

1. WORLD VIEW AND IDEOLOGY

• What is a world view?

• What is asceticism?

 

CHAPTER 10: EXCHANGE WITHIN SOCIETY

1. AUTISTIC EXCHANGE AND INTERPERSONAL EXCHANGE

• Autistic exchange: when action is performed by an individual without cooperation

• Interpersonal exchange: cooperation

• Autistic exchange: the donor acquires satisfaction

• Interpersonal exchange: actual exchange happens.

1. CONTRACTUAL BONDS AND HEGEMONIC BONDS

• Cooperation by contract: “John has the same relation to Tom as Tom has to John”

• Cooperation by command: Pawn of the director

• Hegemonic Bonds: Family, state

• Contractual bonds: at the mercy of a director

• What is autarky? Economic independence

• There must be peace

• Hegemonic world à DICTATOR

• Contractual: Right and Law

1. CALCULATIVE ACTION

• “Man can never comprehend something which would be neither action nor non action”

• Cardinal number – arithmetical use- human mind

• Action is computable and calculable

• “Economic calculation is the fundamental issue in the comprehension of all problems commonly called economic

 

CHAPTER 11: VALUATION WITHOUT CALCULATION

1. THE GRADATION OF THE MEANS

• Gradation of the means: process of preferring A to B

• We value means because we value the ends

1. THE BARTER FICTION OF THE ELEMENTARY THEORY OF PRICES

• “Money is nothing but a medium of interpersonal exchange”

• “The main task of economy was conceived as the study of direct exchange”

• “Value was considered objective”

• “The basis of modern economics is the congnition that it is precisely the disparity in the value attached to the objects exchanged that results in their being exchanged”

1. THE PROBLEM OF ECONOMIC CALCULATION

• “A citing man uses knowledge provided by the natural sciences for the elaboration of the technology”

• “Modern technology is essentially the applied art of quantitative predication of the outcome of possible action”

1. ECONOMIC CALCULATION AND THE MARKET

• Process of measurement: the establishment of the numerical relation of an object with regard to another object.

• “It cannot free itself from Euclidean geometry and from the notion of an unchangeable standard”

 

Chapter 14: 

 

 

• The Delimitation of Catallactic Problems

 

• “In order to conceive the market fully one is forced to study the action of hypothetical isolated individuals on one hand and to contrast the market system with an imaginary socialist commonwealth on the other hand”

• What is a motive?

• “Every action is motivated by the urge to remove a felt uneasiness”

• Manifold ideal urges?

• Action — material and ideal ends

• Catallactics: the analysis of those actions which are conducted on the basis of monetary calculation. 

 

The Denial of Economics

 

• Scarcity according to Marx: Feature of the primeval history of mankind which will be forever liquidated by the abolition of private property. 

• Who is Proudhon and Ernest Solvay?

• Economics deals with the problems man has to change. 

• Acting and thinking man is the product of a universe of scarcity in which whatever well-being can be attained is the prize of toil and trouble, of conduct popularly called economic.

 

2. The Method of Imaginary Constructions

 

• Economics has been the best developed part of praxeology

• An imaginary construction: Is a conceptual image of a sequence of events logically envolved from the elements of action employed in its formation. 

• They are inconceivable, self contradictory or unrealizable. 

• The method of imaginary construction is indispensable for praxeology

 

3. The Pure Market Economy

 

• "The imaginary construction of a pure or unhampered market economy assumes that there is division of labor and private ownership (control) of the means of production and that consequently there is market exchange of goods and services."

• The market is free!!!

• What is interventionism?

• Socialism: A system of the division of labor entirely controlled and managed by a planning authority. 

 

The Maximization of Profits

 

• A higher price means for the seller a better satisfaction of his wants. 

• The amount saved in buying the commodity concerned enables him to spend more for the satisfaction of other needs. 

• “A man is a servant of the consumers”

• Some economists believe that it is the task of economics to establish how in the whole of society the greatest possible satisfaction of all people or of the greatest number could be attained.

• “The value judgements of an individual differentiate between what makes him more satisfied and what less"

 

 

4. The Autistic Economy

 

• Socialist think that an autistic economy is the most desirable and most perfect system for economy. Why?

 

5. The State of Rest and the Evenly Rotating Economy

• Natural Price: The price corresponding to the future state of rest. 

• Final state of rest will never be attained. 

• The market price is a real phenomenon; it is the exchange ratio which was actual in business transacted.

• The evenly rotating economy is a fictitious system in which the market prices of all goods and services coincide with the final prices. There are in its frame no price changes whatever;  there is perfect price stability.

• Action is change!! Making choices and coping with an uncertain future. 

-  State of Rest- Point where need is SATISFIED! 

• For it is IMPOSSIBLE to eliminate the entrepreneur from the picture of a market a economy. 

• In eliminating the entrepreneur one eliminates the driving force of the whole market system.

 

6. The Stationary Economy

 

• The stationary economy is an economy in which the wealth and income of the individuals remain unchanged. 

• Progressing Economy vs. Retrogressing Economy

• "In the stationary economy the total sum of all profits and of all losses is zero. In the progressing economy the total amount of profits exceeds the total amount of losses. In the retrogressing economy the total amount of profits is smaller than the total amount of losses.”

 

7. The Integration of Catallactic Functions.

 

• Living and acting man by necessity combines various functions. He is never merely a consumer. He is in addition either an entrepreneur, landowner, capitalist, or worker, or a person supported by the intake earned by such people.

• Entrepreneur: Acting man exclusively seen from the aspect of the uncertainty inherent in every action. 

• Functional Distribution: Entrepreneur earns profit — Owners earn interest —Workers earns wages. 

• The driving force of the market, the element tending toward unceasing innovation and improve- ment, is provided by the restlessness of the promoter and his eagerness to make profits as large as possible.

The Entrepreneurial Function in the Stationary Economy

 

 

Chapter 15: The Market

 

 

• The Characteristics of the Market Economy

 

• The market economy is the social system of the division of labor under private ownership of the means of producion. 

• Marxian slogan: “Anarchic Production”. 

• The forces determining the star of the market are the value judgements of the individuals. 

• Prices:

  • Tell the producers what to produce

  • how to produce

  • what quantity to produce\

• ""The market economy must be strictly differentiated from the second thinkable—although not realizable—system of social cooperation under the division of labor; the system of social or governmental ownership of the means of production. This second system is commonly called socialism, communism, planned economy, or state capitalism."

• “There is no mixture of two sisters possible or thinkable"

• "It is the operation of the market, and not the government collecting the taxes, that decides upon whom the incidence of the taxes falls and how they affect production and consumption.

• Socialization: transfer from private to public ownership. 

• Monetary economic calculation is the base of the market economy. 

• The market economy is real because it can calculate

 

2. Capital Goods and Capital

• Capital is the starting point of economic calculation

• What is income?

• What is capital consumption? 

• What is saving? 

• The term capital goods refers to the physical objects that man produces and can be used to augment future production.

 

3. Capitalism

• Private property goes hand in hand with civilisation. 

• Economic calculation is only possible in capitalism. 

 

4. The Sovereignty of the Consumers. 

• The Entrepreneur is not in charge

• The entrepreneur hires, laborers, purchases raw materials and equipment, and decides how many factories to build, but if the factories create products that are useless, the entrepreneur loses his AUTHORITY. 

• Competition- Entrepreneurs must compete with each other for scarce factors of production. 

• The Consumers will determine which business will expand the most. 

 

5. Competition

• I really liked how Mises say stat there are no loser from this social competition in the mark. Different from the biological competition in nature where someone wing. 

• Win- Win exchange. 

• What is it for? Gain control of scarce resources. 

• Competition is referred most of the time as the opposite of monopoly, but Mises says that even monopolists have to compete with other producers. 

• True restrictions on competition come from the government. 

 

6. Freedom

• There is no freedom in nature. It only has true meaning in society. 

• In relation to personal relations, to be free means to live without being at the mercy of arbitrary decisions of other people. 

• Why did the socialists contrasted political and economic freedoms?

 

7. Inequality of Wealth and Income

• People are not born equal. 

• Since people are not equal, in a market economy, the wealth and income will constantly change. 

• Inequality is necessary!

• What is freedom of occupation? 

• Incentives of higher pay will prevent the use of force. 

 

8. Entrepreneurial Profit and Loss

• What is a subjective value scale? 

• Why are profit and loss psychic phenomena?

• In a market economy, a monetary profit and loss is used in order to know that appraisal and/or refusal of an individual.

• Entrepreneurial profit and loss ultimately stem from the uncertainty of the future. COOL!

• An Entrepreneur earns true profits when he forecasts the future better than others. YEAH!!!

 

9. Entrepreneurial Profits and Losses in a Progressing Economy

• What is a progressive economy? One which the quote of capital pero person is increasing