The difference between the capitalist-entrepreneur is that he doesn't 'just' risk opportunity cost, but also capital. (A worker gets his wage, a capitalist-entrepreneur get's interest with entrepreneurial profit/loss. (*insert necessary caveats as discussed by Rothbard in MES*)
The worker is risking capital, as well. Labor is a capital good. But, yes, you can distinguish between capitalist and entrepreneur (not all entrepreneurs are capitalists; some entrepreneurs risk other people's capital).
Jonathan M. F. Catalán:Labor is a capital good.
It may be in Reisman's framework, but not in Mises' and Rothbard's.
What is it in Mises's framework (which has three types of goods: consumer, producer, medium of exchange)?
Labor is a producers' good, but producers' good is not synonymous with capital good. Capital goods are just one kind of producers' good (factor of production).
Jonathan M. F. Catalán: "Seizing opportunity", in my opinion, is implicit in the concept of bearing uncertainty. In the same sense, the laborer who sells his labor is seizing an opportunity when selling his labor, and is also acting against uncertainty, which makes that action entrepreneurial. He may not be a capitalist in the sense of distributing capital, but that action is entrepreneurial in nature.
"Seizing opportunity", in my opinion, is implicit in the concept of bearing uncertainty. In the same sense, the laborer who sells his labor is seizing an opportunity when selling his labor, and is also acting against uncertainty, which makes that action entrepreneurial. He may not be a capitalist in the sense of distributing capital, but that action is entrepreneurial in nature.
Agreed, than we call entrepreneurial the act of seizing an opportunity, within the all-present framework or risk. Than I really find it improper to hold Kirzner’s definition as improper.
It is fully appropriate, as he who risks yet does not seek opportunities in no entrepreneur: the beaurocrat who seeks lifetime secure employment still faces the uncertainty of seeing his job cut, yet as he is not seeking to exploit any opportunity at all, I relay canto say that in his ‘bearing of risk’ (i.e. doing nothing at all) he is acting as an entrepreneur.
It's a very specific criticism. It's sort of similar to the 'chicken and the egg' paradox. Is the primary function of the entrepreneur being a discover, or is discovery a corollary of the entrepreneur's role as a risk bearer. Rothbard would argue that the latter is true. You can come to similar conclusions from Salerno's essay. Salerno argues that discovery is a corollary of competition, and therefore the entrepreneur wouldn't necessarily need to discover, but is only driven to discover for the sake of competing with fellow entrepreneurs.
In regards to the example of the bureaucrat, I repeat: entrepreneurship is an activity, or action, and it does not describe an individual.
Danny,
Labor is a factor of production. I don't understand your differentiation between 'producers's good' and 'capital good'. For example, in Prices and Production Hayek uses 'producers's good' to describe factors of production. A producers's good is a good which is used towards the production of other products, which is exactly what a capital good is.
Again, if you agree that there are three types of goods (producers's, consumers's, and medium of exchanges) then you can't differentiate between capital goods and producers's goods, because that would imply that the two have different roles.
I'm not making this up. For Mises and Rothbard, capital goods are distinct from land and labor. And all three are producers' goods/factors of production.
True; but Rothbard defines Capital good as a 'reproducable means of production'; labor seems to be reproducable; so you might make the argument that the distinction needs something else.
It also doesn't invade the theory that capital goods are reducible to labor and land and earn no net profit.
Let me think about this so more.
The state is not the enemy. The idea of the state is.
You can try to argue that Rothbard should regard labor as a capital good by his definition of the latter, but the fact of the matter is that he does not.
Where does Mises make the differentiation between capital goods and labor? I thought Mises rejects the differentiation between the concepts of land, labor, and rent.
...Rothbard defines Capital good as a 'reproducable means of production'; labor seems to be reproducable
I've never read Man, Economy, and State. Could you provide a page number so I can read that in context? That seems like a really strange definition of 'capital good'.
Daniel James Sanchez: You can try to argue that Rothbard should regard labor as a capital good by his definition of the latter, but the fact of the matter is that he does not. ...nobody is saying that he is. But I don't think the point of arguing is to repeat what others have said per se. The state is not the enemy. The idea of the state is. | Post Points: 20
...nobody is saying that he is. But I don't think the point of arguing is to repeat what others have said per se.
Jonathan M. F. Catalán: Where does Mises make the differentiation between capital goods and labor? I thought Mises rejects the differentiation between the concepts of land, labor, and rent.
It is true that he did not think the land, labor, capital triad was useful for value and price theory, and thus he, unlike Rothbard (the ownership of land and labor played distinct roles from the ownership of capital goods in Rothbard's production theory, whereas Mises, as far as I know, never really elucidated his production theory), downplayed the importance of the land/labor (original factors of production) vs. capital good (produced factor of production) distinction, especially as less important than the higher-order vs. lower-order and producer's vs. consumers' good distinction...
The modern theory of value and prices is not based on the classification of the factors of production as land, capital, and labor. Its fundamental distinction is between goods of higher and of lower orders, between producers' goods and consumers' goods. When it distinguishes within the class of factors of production the original (nature-given) factors from the produced factors of production (the intermediary products) and furthermore within the class of original factors the nonhuman (external) factors from the human factors (labor), it does not break up the uniformity of its reasoning concerning the determination of the prices of the factors of production.
and that he warned that, if misinterpreted, the definition of "capital good" as "produced factor of production" can possibly result in confusion regarding "real capital"...
Capital goods have been defined also as produced factors of production and as such have been opposed to the nature given or original factors of production, i. e., natural resources (land) and human labor. This terminology must be used with great caution as it can be easily misinterpreted and lead to the erroneous concept of real capital criticized below. (...)
We may acquiesce in the terminological usage of calling the produced factors of production capital goods. But this does not render the concept of real capital any more meaningful. But, of course, no harm can result if, following the customary terminology, one occasionally adopts for the sake of simplicity the terms "capital accumulation" (or "supply of capital," "capital shortage," etc.) for the terms "accumulation of capital goods," "supply of capital goods," etc.
We may acquiesce in the terminological usage of calling the produced factors of production capital goods. But this does not render the concept of real capital any more meaningful.
But, of course, no harm can result if, following the customary terminology, one occasionally adopts for the sake of simplicity the terms "capital accumulation" (or "supply of capital," "capital shortage," etc.) for the terms "accumulation of capital goods," "supply of capital goods," etc.
But when he did use "capital good" as a term, he either went ahead and used the "produced factor of production" definition that excludes original factors of production (labor and land)...
I. As a result of the providential care of our forebears we have at our disposal an ample stock of intermediate products (capital goods or produced factors of production) and of consumers' goods. II. The intermediary products or capital goods, the produced factors of further production, change hands in the course of events; they pass from one plant to another until finally the consumers' goods reach those who use and enjoy them.
I. As a result of the providential care of our forebears we have at our disposal an ample stock of intermediate products (capital goods or produced factors of production) and of consumers' goods.
II. The intermediary products or capital goods, the produced factors of further production, change hands in the course of events; they pass from one plant to another until finally the consumers' goods reach those who use and enjoy them.
or, he used a more sophisticated definition, which still clearly excluded labor. This is his more refined definition of capital good...
"At the outset of every step forward on the road to a more plentiful existence is saving--the provisionment of products that makes it possible to prolong the average period of time elapsing between the beginning of the production process and its turning out of a product ready for use and consumption. The products accumulated for this purpose are either intermediary stages in the technological process, i.e. tools and half-finished products, or goods ready for consumption that make it possible for man to substitute, without suffering want during the waiting period, a more time-absorbing process for another absorbing a shorter time. These goods are called capital goods. "
And this is how he defines labor...
"The employment of the physiological functions and manifestations of human life as a means is called labor."
"The employment of physiological functions and manifestations of human life" is not a "product" one can "accumulate" for the purpose of prolonging the period of production.
AdrianHealey: Daniel James Sanchez: You can try to argue that Rothbard should regard labor as a capital good by his definition of the latter, but the fact of the matter is that he does not. ...nobody is saying that he is. But I don't think the point of arguing is to repeat what others have said per se.
Daniel James Sanchez: You can try to argue that Rothbard should regard labor as a capital good by his definition of the latter, but the fact of the matter is that he does not. ...nobody is saying that he is. But I don't think the point of arguing is to repeat what others have said per se.
I'm just trying to make sure that people reading this who are interested in mastering Austrian economics as it has already been developed before trying to improve it don't get confused.
FYI but we've kind of sidetracked from a discussion on termonology and discovery/risk to one on what is labor. Dont get me wrong, all of this is fascinating but it would be nice to have closure on the previous topics as well before moving to the next!
Jonathan M. F. Catalán: ...Rothbard defines Capital good as a 'reproducable means of production'; labor seems to be reproducable I've never read Man, Economy, and State. Could you provide a page number so I can read that in context? That seems like a really strange definition of 'capital good'.
Chapter 7, Section 4.
I can see the distinction between original factors of production and produced factors of production. I guess I never really soaked that part of Human Action when I read it. Since I usually distinguish between producers's goods, consumers's goods, and media of exchange (from Mises's The Theory of Money and Credit) I never found it useful to dinstinguish between original factors and produced factors of production.
You make an interesting argument,
This is going to take us back to a debate I've had on this forum before on what labor is and what it means to be employed. I think both Rothbard and Mises are moderately ambiguous when it comes to this topic. It's hard to define what type of action actually constitutes employing one's labor (and, this leads me to disagree with the notion that labor is the 'employment of physiological functions', since what you're employing is the labor, labor is not the employment of itself).
Labor is a product, and while it may be difficult to compare the accumulation of labor with the accumulation of other goods, it nevertheless stands that you do need to accumulate energy in order to be able to carry out certain tasks.
Anyways, it might be fair not to categorize a laborer as a capitalist, but I think a laborer can be an entrepreneur when selling his labor.
For those interested, here is the first post for the General Theory live blog: Opening Comments on Keynes.
Why at all bother giving names to things and happenings in the real world? Like capital, good, production and others. Is this just a meaningless name-giving act of boredom or intellectual game playing? What are worth these names if they are not employed in a theory that properly explains real world phenomena? I believe these are very appropriate questions.
Then what is the point of making a distinction beetween factors of production and what is the point of making a distinction between class goods? Doesn't there exist only one factor of production and doesn't there exist only one class of goods? I believe the first distinction was introduced in economic theory as 1) an attempt to explain the origin and nature of the income of different individual owners of things that are all brought together for the purpose of a (capitalistic) production conduct , i.e., the landowner, the labour, the capitalist. The latter distinction is useful for explaining the pointless at first glance 2) act of production of goods that are not for direct consumption (that is do not yield direct want satisfaction, i.e. intermediate goods) but are used to produce what does yield direct want satisfaction, and the 3) act of exchanging something with easier to determine direct relationship to an individual's want for something that has got an obscure indirect relationship to an individual's want (medium of exchange).
There are several things that must be considered: i) are these acts even worth exploring. is the knowledged gained from their study useful? ii) are the names of the distinctions proper or they are messed up? (is labour also capital or not? and does this bring down the theory or not) iii) capital is present in both demarcations
These are some of my thoughts. I have noticed that there are a lot of definitions for capital. The term is used to explain different things by different authors.
It is not like I am trying to be a moderator, but I think if the postings about this topic are separated to form another thread would be useful. We could discuss this matter there without spamming this thread.
The purpose of distinguishing between goods is to know that good's place within the means-end framework of the individual; i.e. the purpose of the good relative to the individual's action.
I'm currently reading The Meaning of Ludwig von Mises: Contributions in Economics, Sociology, Epistemology, and Political Philosophy edited by Jeffrey M. Herbener.
So far, it's quite good. Herbener declares, "Mises is the crucial figure in the historical return to a rationalist epistemology." I would add Kurt Gödel to that 20th-century roster. However, if we were to return to rationalism, Mises would loom large. His aprioristic foundationalism is much more carefully articulated (and substantiated philosophically) than Rothbard's.
Ludwig von Mises? Still one cool gangsta.
"I'm not a fan of Murray Rothbard." -- David D. Friedman
I fired up Man, Economy, and State again. So happy to read it.
Just finished Natural History of Religion and Dialogues Concerning Natural Religion, thus completing my project to read all the major philosophical works of David Hume. The latter is a masterpiece of the form; it puts Plato's dialogues (which so often resolve into simply a treatise interuppted by "yes, Socrates" and "indeed, Socrates") to shame. In Hume's dialogue, all 3 disuptants, although they avidly disagree, each have an ample and edifying position. And the sparring of the three positions makes an abstruse subject a delight to explore. It is a splendid 18th century sequel to Cicero's On the Nature of the Gods, and is not only fully worthy of its forebear, but it probably surpasses it.
It looks like this thread has enjoyed impressive longevity.
As for me, I've been re-reading the Ten Commandments. "Verily, i say unto you" God cannot lie through omission. Hence ordering christians to have no other gods before Him is to acknowledge other deities exist in the universe. Now perhaps they have their own universes to run and God claims this one and perhaps his personal creations, to be His alone. I believe He did also mention being a bit jealous Certainly, if God was the only god in existence, why would He allude to any other's and just command us, I am God, worship Me or else!.
Ron Marquis: It looks like this thread has enjoyed impressive longevity. As for me, I've been re-reading the Ten Commandments. "Verily, i say unto you" God cannot lie through omission. Hence ordering christians to have no other gods before Him is to acknowledge other deities exist in the universe. Now perhaps they have their own universes to run and God claims this one and perhaps his personal creations, to be His alone. I believe He did also mention being a bit jealous Certainly, if God was the only god in existence, why would He allude to any other's and just command us, I am God, worship Me or else!.
Zack Sitchin knows, and will even tell if one can but bear seven books of repetitions.
Some quotes from Matt Ridley's not quite libertarian, yet definitely awesome The Rational Optimist (read with pauses between the lines):
Though we no longer coerce men for their spiritual good, we still think ourselves called upon to coerce them for their material good: not seeing that the one is as unwarrantable as the other.
I find that my disagreement is mostly with reactionaries of all political colours: blue ones who dislike cultural change, red ones who dislike economic change and green ones who dislike technological change.
Merchants and craftsmen make prosperity; chiefs, priests and thieves fritter it away.
The great drive to universal suffrage, religious tolerance and female emancipation began with pragmatic enthusiasts for free enterprise, like Ben Franklin, and was pressed forward by the urban bourgeoisie as a response to economic growth.
By 1500 BC you could argue that the richest parts of the world had sunk into the stagnation of 'palace socialism' as the activities of merchants were progressively nationalised.
The Malthusian crisis comes not as a result of population growth directly, but because of decreasing specialisation.
In that sense, the decline of the Roman empire turned consumer traders back into subsistence peasants. The Dark Ages were a massive experiment in the back-to-the-land hippy lifestyle (without the trust fund).
As they spilled out of their homeland, Arabs brought luxury and learning to an area stretching from Aden to Cordoba, before the inevitable imperial complacency and then severe priestly repression set in at home. Once the priesthood tightened its grip, books were burned, not read.
In the past, when societies gorged on innovation, they soon allowed ... their bureaucrats to write too many rules, their chiefs to wage too many wars, or their priests to build too many monasteries.
China went from a state of economic and technological exuberance in around AD 1000 to one of dense population, agrarian backwardness and desperate poverty in 1950. ...it was the only region in the world with a lower GDP per capita in 1950 than in 1000. The blame for this lies squarely with China’s governments. ... China’s best moments came when it was fragmented, not united.
The greatest beneficiaries of European political fragmentation were the Dutch. By 1670, uncommanded by emperors and even fragmented among themselves, the Dutch so dominated European international trade that their merchant marine was bigger than that of France, England, Scotland, the Holy Roman Empire, Spain and Portugal – combined.
The message from history is so blatantly obvious – that free trade causes mutual prosperity while protectionism causes poverty – that it seems incredible that anybody ever thinks otherwise. There is not a single example of a country opening its borders to trade and ending up poorer.
They could find no evidence that aid resulted in growth in any countries. Ever.
In 1978 China was about as poor and despotic as Africa is now.
the birth rate was more than twice as high in countries with little economic freedom (average 4.27 children per woman) compared with countries with high economic freedom (average 1.82 children per woman)
Wind turbines require five to ten times as much concrete and steel per watt as nuclear power plants, not to mention miles of paved roads and overhead cables. To label the land-devouring monsters of renewable energy ‘green’, virtuous or clean strikes me as bizarre.
Some things are finite but vast; some things are infinitely renewable, but very limited.
The science of ecology has an enduring fallacy that in the natural world there is some perfect state of balance to which an ecosystem will return after disturbance.
Few of the inventions that made the industrial revolution owed anything to scientific theory.
Though they may start out full of entrepreneurial zeal, once firms or bureaucracies grow large, they become risk-averse to the point of Luddism.
Tomorrow’s largely self-employed workers, clocking on to work online in bursts for different clients when and where it suits them, will surely look back on the days of bosses and foremen, of meetings and appraisals, of time sheets and trade unions, with amusement. I repeat: firms are temporary aggregations of people to help them do their producing in such a way as to help others do their consuming.
we may soon be living in a post-capitalist, post-corporate world, where individuals are free to come together in temporary aggregations to share, collaborate and innovate
Yet if innovation is limitless, why is everybody so pessimistic about the future?
I cannot recall a time when I was not being urged by somebody that the world could only survive if it abandoned the foolish goal of economic growth.
The pessimists’ mistake is extrapolationism: assuming that the future is just a bigger version of the past. As Herb Stein once said, ‘If something cannot go on forever, then it will not.’
The premise on which much of the environmental movement had grown up – that cleaning up pollution would prevent cancer – proved false.
Take the year 1830. Northern Europe and North America were much richer than they had ever been. They had enjoyed more than a decade of peace for the first time in more than a generation and they were brimming with novel inventions ... Yet was the mood of 1830 optimistic? No, it was just like today: fashionable gloom was everywhere.
Throughout the half-century between 1875 and 1925, while European living standards shot up to unimaginable levels ... intellectuals were obsessed with imminent decline, degeneration and disaster.
The generation that has experienced more peace, freedom, leisure time, education, medicine, travel, movies, mobile phones and massages than any generation in history is lapping up gloom at every opportunity.
Campaigners ... took precisely the same approach to threshing machines in 1830 as their 1990s equivalents would take to genetically modified crops: they vandalised them.
Some of the vociferous and numerous opponents of the Liverpool to Manchester Railway, which opened that year, forecast that passing trains would cause horses to abort their foals. Others mocked its pretensions to speed: ‘What can be more palpably absurd and ridiculous than the prospect held out of locomotives travelling twice as fast as stagecoaches!’ cried the Quarterly Review. ‘We trust that Parliament will, in all rail ways it may sanction, limit the speed to eight or nine miles an hour.’
Robert Southey ... would have been at home in the modern environmental movement, lamenting world trade, tutting at consumerism, despairing of technology, longing to return to the golden age of Merrie England when people ate their local, organic veg, danced round their maypoles, sheared their own sheep and did not clog up the airports on the way to their ghastly package holidays.
The endless modern laments about how texting and emails are shortening the attention span go back to Plato, who deplored writing as a destroyer of memorising.
the models that predict rapid global warming take as their assumption that the world will prosper mightily, and that the poorest countries on the planet ... will by the end of this century be about nine times as rich as they are today. Unless they are, carbon dioxide emissions will be insufficient to cause such rapid warming.
The Copenhagen conference of December 2009 came worryingly close to imposing a corruptible and futile system of carbon rationing, which would have hurt the poor, damaged ecosystems and rewarded bootleggers and dictators.
I own and have read his book "Genome", it was very good. At least I remember it being so in '02 when I read it a couple of times.
Currently reading The Fountainhead and The Six Pillars of Self-Esteem by Nathaniel Branden.
I'm currently reading Patricia S. Churchland's Braintrust: What Neuroscience Tells Us About Morality.
Is the answer "nothing"?
Started to read Oppenheimer's "The State". I actually began to read it a few months ago and stopped at Chapter IV "The Maritime State" realising that completely lost the thread of reasoning. So I've decided to read it from the beginning. So far Oppenheimer's view on State as the result of subjugation of peasants by nomads seems quite plausible to me.
Anton: Started to read Oppenheimer's "The State". I actually began to read it a few months ago and stopped at Chapter IV "The Maritime State" realising that completely lost the thread of reasoning. So I've decided to read it from the beginning. So far Oppenheimer's view on State as the result of subjugation of peasants by nomads seems quite plausible to me.
There’s no such thing as a state held together by force of arms, I’m afraid.
If you actually read Oppenheimer you'll find that he's well aware of that.
I have and I find his full explanation less than satisfactory. It would be rather difficult for a population to not only forgive the foreigners who’re stealing form them daily, but even to begin idolatrizing them. But perhaps things where a lot different back than.
I finally sat down, read, and studied Hayek's essay "Economics and Knowledge" at the beach. Some of the most enlightening 23 pages I've read in a while.
Just finished reading A Christian Philosophy of Education by Gordon H Clark and am now starting A Clockwork Orange by Anthony Burgess.
I finished Shadow of the Torturer by Gene Wolfe a while back and that is an excellent fantasy novel. I'm looking forward to reading the next three books which complete the quadrilogy. Btw it's only 300 pages so it's not a huge investment unlike other fanatsy works.
The atoms tell the atoms so, for I never was or will but atoms forevermore be.
Yours sincerely,
Physiocrat
Jonathan, are you planning to write something about that article? If so, I for one would love to read it.
I bought a paper copy of Rothbards Ethics of Liberty and just trying to find the time to read it, probably about 3/4 way through. I struggle to read an entire book on a pc.
I downloaded that big mises torrents a while ago. So i have almost 6gb of books (430+) that were available on the mises book torrents. What i have done is download the application calibre which is a free book library application. Then i have been downloading the covers and collecting all the meta data as i go along. I have about 80% of covers done now and I have been sourcing some "summaries" from around the internet, most from mises and amazon and other book review sites. If anyone wants the 6gb collection let me know i will try and upload it.
It looks greats with the calibre because i can finally see all the covers of the books and the software has a nice book cover carousel. I have also been searching for the original covers of some of the books and found a few via google images from rare book auction websites. The covers are not the highest quality but they work. I just need to buy a kindle now so i can sync it with the software etc.
Merlin:There’s no such thing as a state held together by force of arms, I’m afraid.
Merlin: It would be rather difficult for a population to not only forgive the foreigners who’re stealing form them daily, but even to begin idolatrizing them. But perhaps things where a lot different back than. As I understand Oppenheimer, It didn't happen within a day. In the course of time peasants could accept conquerors as a force that protected them against other invaders, and thus payed a tribute for the service. As time passed conquerors engaged in blood relations with local people which facilitated the process of assimilation.and their recognition as rulers by peasants. | Post Points: 35
It would be rather difficult for a population to not only forgive the foreigners who’re stealing form them daily, but even to begin idolatrizing them. But perhaps things where a lot different back than.