Redefining Economics: Intellectual Capitalism
Every science is defined by the questions it asks. According to a sampling of websites three of the major questions economics asks are:
1) What goods will be produced?
2) How will the goods be produced?
3) For whom are the goods produced?
These questions and answers are pretty boring and provide no great insight into the world.
1) What goods will be produced?
2) How will the goods be produced?
3) For whom are the goods produced?
These questions and answers are pretty boring and provide no great insight into the world.
Great deal for the corporate welfare looters.
We just have to kill 20 million socialist sympathizers in NY, DC, CA, and steal their property.
With all the destruction we'd have full employment, too.
(Attention NSA, that's sarcasm.)
They have substituted a utilitarian definition of property rights
"No, the 'Austrian approach' has not 'helped to mold' my philosophy. It is one of the many approaches to capitalism which I oppose, though I do agree with many of its purely economic ideas." -- In letter by Ayn Rand to economics professor W.H. Hutt, August 28, 1968, in Letters of Ayn Rand, p. 642.
Sowell goes on to explain:
" What does "scarce" mean? It means that people want more than there is.
...
"Not only scarcity but also "alternative uses" are at the heart of economics. If each resource had only one use, economics would be much simpler. But water can be used to produce ice or steam by itself or innumerable other mixtures and compounds in combination with other things. A virtually limitless number of products can also be produced from wood or from petroleum, iron ore, etc. How much of each resource should be allocated to each of its many uses? Every economy has to answer that question, and each one does, in one way or another, efficiently or inefficiently. Doing so efficiently is what economics is all about."
There are only two basic choices in how an economy runs: free or by command. All other forms are “mixed.” The free market is not only philosophically superior because it respects individuals who trade with each other, it selects which good real people want, and produces those goods more efficiently than a command economy.
For a complete explanation of the phenomena of the free market, I recommend Sowell’s book: “Basic Economics.”
I ended up using that knowledge on the "efficiency" side because I didn't want to work for governments, Insurance companies or investment companies.
I established "economies of movement" in areas not considered lines of assemblies.
That is a great book, which gets longer in each addition!
In case you don't know, the author of this post is also the author of a breakthrough new book on economics called The Source Of Economic Growth. In TSEG, he offers a complementary and improved set of fundamental questions in economics. As a long time Sowellian, I found it insightful, compelling, and almost revolutionary.
As a thought, if property rights are the basis of capitalism and its exponential wealth growth, how does property around ideas/innovation drive that? This book answers that question a significant order of magnitude.
Make sure you purchase, read, and digest it. For someone who can rip off your last post, it will be 100x worth the cash/time/effort.
For other examples see http://hallingblog.com/2015/02/12/the...
Hume committed the Fallacy of the Stolen Concept frequently, as did most philosophers in history, including those today.
Aristotle, the father of reason, has greatness not because he said the last word in logic, but because he said the first.
My point is to stress thinking is a process, not a conclusion.
Of course economics is not science in the sense of mathematics because it deals with how to use scarce resources in a world of virtually unlimited uses. The allocation, in my opinion, should be based upon what people want (free market) and not upon what they are told they can have (command market). However, it is a science when combined with the science of thought.
In addition, this was his definition of economics
The philosopher Adam Smith (1776) defines the subject as "an inquiry into the nature and causes of the wealth of nations," in particular as: a branch of the science of a statesman or legislator [with the twofold objective of providing] a plentiful revenue or subsistence for the people ... [and] to supply the state or commonwealth with a revenue for the publick services.
Notice that it is inherently collectivist in nature.
It can't be based upon how it is used and studied today. Actually, the more I think about it, the more I realize that if economics were a science, it wouldn't be economics.
People learn new things all the time. They gain skills, lose skills, gain knowledge, and lose knowledge every second of every hour of every day. Those losses and gains affect individuals' values - even assuming they were rationally-based decisions in the first place (and we know that's an unreliable assertion). As values change, so do peoples' perceptions and evaluations of value, which then translates into differing behaviors in the market.
In order to predict with any accuracy or specificity any economic activities, one would have to not only have an understanding of the history of every individual in a particular decision pool, but the history of any in the potential decision pool, AND they would have to account for the irrationality in human decision-making. Science deals only with the rational - the concrete. Thus, the very definition of the subject matter (dealing with personal choice) makes the study of economics to be a study of morals and values as much as the interchange of goods and money. Is there a scientific side to the matter? Absolutely. Can it be rendered solely as science? Not as long as humans are agents.
Economics is about how we obtain the things we need to live. What we need to live (there is no difference between living and thriving) is objective. In fact that is what objectivist ethics is all about
epistemology, and much more are or should be sciences.
Can we approach it scientifically? To a degree. But to argue that economics can ever be a purely scientific endeavor is to deny the uniqueness of human beings.
"What we need to live (there is no difference between living and thriving) is objective..."
From a purely physical aspect, I might agree. From a human aspect which includes desires, emotions, and intellectual needs, there is a huge difference from one person to the next. It is why some buy the red widget and some the blue. It is why some buy Saks Fifth Avenue and others Wal-Mart. It is why some are on this forum and others not.
Attempts to put everyone in the same box as far as needs and wants is the same tack taken by progressives and it is empirically false. Would you put yourself in the same box as the looter? I think not.
1) What competition is out there currently?
2) What new innovations do I anticipate? And from whom?
3) What is the market demand as a function of price?
4) How will such innovation affect the market demand vs. price curve?
Marx's whole theory was based on the (rubbish) idea that when a product was created, the person doing the physical work was entitled to the entire proceeds -- that in other words it was only the physical work that counted; the inputs of creative thought, and of capital (in building the factory and/or machines that make the product) were dismissed as unimportant and didn't count for anything, because (paraphrased) the capital was merely the creation of earlier physical laborers, and inventing things wasn't really "work." (And the Soviet economy reflected these misconceptions -- they invented very little, and never bothered updating any of their factories or building new ones.)
Your theory is similar except that you would have only the creative thought count, and dismiss the physical work and the capital investment, saying the capital was merely the creation of earlier inventors. (I don't think you explained why the physical work doesn't count.)
I insist that all three inputs should count. And that's the way capitalism works in the real world -- all three input-providers get paid.
And in my opinion, this comic explains how capital is created. http://freedom-school.com/money/how-a...
Where does the "extra"come from?
When you look at the meteoric growth in wealth that started with the American/Enlightenment revolution, what causes THAT extra?
That is the question (and answer) of Dale/DBKhalling's book.
However, profit must be possible, or no motive for production exists. Note the difference between production and creation. Chester Carlson could have kept his invention to himself, making copies for himself alone. He chose.
Moreover, entrepreneurship can be bringing existing goods to new markets, lowering inefficiencies, or lowering risks, or, of course, accepting risk and making a profit on it. None of those is invention in the primary sense.
However, taking an existing object or process that is not being produced, not "commercialized" and bringing it into production - for profit - is, indeed, the only way that real per capita increases.
Von Mises and Rand's observation that invention is often independent of the market was a remarkable observation. Most people think that "necessity is the mother of invention". While usually true, there are some exceptions to that rule, as you, von Mises, and Rand noted.
I would love a cite that Rand observed that inventions are often independent of the market. I have read almost very thing Rand wrote and watched almost all of her public appearances and never heard any such thing
Regardless the economist B.. Zorina Khan and the economist Jacob Schoomkler overwhelming showed that most inventors invent in the largest market. Once again Mike M is ??????
Science is an approach valid regardless of whether human players act logically (as judged by whom?)
Irrespective of whether humans are logical or otherwise in groups or as individuals, the study of human behavior lends itself to the scientific method, or at least if understanding is to be enhanced. Therefore dbh's approach is correct. Economics should make use of the usual science methods of postulation, data, evidence, analysis, interpretation, there is a good quote of Richard Feynman about this.
Irrespective of whether humans are logical or otherwise in groups or as individuals, the study of human behavior lends itself to the scientific method, or at least if understanding is to be enhanced.
Agreed. That is why utilitarian economics is correct. People don't have to make the choices you consider rational for it to work.
It produces tenets such as money without connection to value, consumption without acknowledging the precondition of production, and investment without regard to saving.
1) How does the cost of capital influence the cost of goods?
2) How does that cost of labor influence the cost of goods?
3) How does the cost of raw materials influence the cost of goods
4) How do taxes influence the cost of goods?
5) How do you determine the amount of profit on goods to be sold?
Answer: They are all added together with a profit margin (big business from 2 - 15%) and from there a cost of the product is determined.
Last Question:
What will finally determine whether or not this product is brought to market (this one I leave to you to answer)?
You cannot have capital before you invent, because without inventions you are by definition living in the Malthusian Trap, which means the edge of starvation, which means you have no surplus.
There can be merit sometimes in re-distribution, from some to others. But to increase total capital requires technology (invention, productivity, innovation maybe).
Unfortunately, destroying capital is easy, it is a skill possessed by the political mind.