Economics Questions

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Tue, 25 Jan 2011 00:17:00 GMT

AdrianHealey:
You are aware of the fact that marginal utility, as Rothbard explains it, is completely different than the Gossen's laws as they are explained in introduction to economics, right? You are aware that utility necessarily goes down and that there is no such thing as a increase in marginal utility?

The difference, in my opinion, is negligible. If I remember Rothbard's counterpoint, then he claimed that a recipe might need four eggs to produce a dessert, but that the fourth egg doesn't increase the marginal utility, but rather that it's a different good entirely. This might interest those more inclined to doctrinal quibbling, but not me.

Other than that argument, though, I fail to see how Rothbard's version is "completely different" from the mainstream (but perhaps I am failing to notice the fuller discrepancy).

Re: The Best Exposition of ABCT I've Encountered.

AdrianHealey — Tue, 25 Jan 2011 00:02:18 GMT

StrangeLoop:

I'm not sure I've read one original idea in Rothbard, yet. Frankly, he is excessively repetitive and dumbed-down for my taste (although, I'm sure MES is incredibly clear and helpful to econ newcomers). I mean, marginal utility is "a well settled idea" and look how long he discusses that! I would almost call MES a "Principles of the Principles of Economics" book (if that makes sense).

The more I read him, the more I want him to express relationships in an equation and then move on (now that is what I would call an application of Occam's razor, not his claim that verbal logic is simpler).

But, to Rothbard's credit, it is obvious that he will not release a concept until he has looked at it from every angle and attempted to dissolve any predictable misunderstandings. I appreciate that, even though it is making the book many times longer than it might need to be.

You are aware of the fact that marginal utility, as Rothbard explains it, is completely different than the Gossen's laws as they are explained in introduction to economics, right? You are aware that utility necessarily goes down and that there is no such thing as a increase in marginal utility?

If you are aware; good! When Rothbard wrote MES the idea was that this was a general rule, and not a praxeological truth. That's, probably, why he explains it so exhaustive.

The idea of 'putting it into an equation' totally misses the point. It doesn't help to say; well, utility is marginal, so let's take the derivate of his utility function and be done with it! It doesn't explain the process of why and how.

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Mon, 24 Jan 2011 23:22:22 GMT

I read about it in chapter 2, so I knew it must be in the index somewhere. I found it under Law -> economic -> comparative costs.

AdrianHealey:
Yes, yes, Ricardian law of association makes society possible, but when Rothbard wrote MES comparative advantage was a well settled idea. No need to go on and on and on about the reason why it is true. (As opposed to his chapters on production.)

I'm not sure I've read one original idea in Rothbard, yet. Frankly, he is excessively repetitive and dumbed-down for my taste (although, I'm sure MES is incredibly clear and helpful to econ newcomers). I mean, marginal utility is "a well settled idea" and look how long he discusses that! I would almost call MES a "Principles of the Principles of Economics" book (if that makes sense).

The more I read him, the more I want him to express relationships in an equation and then move on (now that is what I would call an application of Occam's razor, not his claim that verbal logic is simpler).

But, to Rothbard's credit, it is obvious that he will not release a concept until he has looked at it from every angle and attempted to dissolve any predictable misunderstandings. I appreciate that, even though it is making the book many times longer than it might need to be.

Re: The Best Exposition of ABCT I've Encountered.

Student — Mon, 24 Jan 2011 18:01:03 GMT

Solid Chock, word.

i think pk says it best in his essay "ricardo's difficult idea".

"The idea of comparative advantage -- with its implication that trade between two nations normally raises the real incomes of both -- is, like evolution via natural selection, a concept that seems simple and compelling to those who understand it. Yet anyone who becomes involved in discussions of international trade beyond the narrow circle of academic economists quickly realizes that it must be, in some sense, a very difficult concept indeed."

http://www.pkarchive.org/trade/ricardo.html

Re: The Best Exposition of ABCT I've Encountered.

AdrianHealey — Mon, 24 Jan 2011 18:00:48 GMT

Solid_Choke:

And comparative advantage, all though important, really isn't that big of an idea.

WTF?! The law of comparative advantage is probably the most surprising and important conclusion reached in all of the social sciences let alone economics. It is kind of a big deal.

Subjective value statement versus subjective value statement?

Yes, yes, Ricardian law of association makes society possible, but when Rothbard wrote MES comparative advantage was a well settled idea. No need to go on and on and on about the reason why it is true. (As opposed to his chapters on production.)

Re: The Best Exposition of ABCT I've Encountered.

Solid_Choke — Mon, 24 Jan 2011 17:54:34 GMT

And comparative advantage, all though important, really isn't that big of an idea.

WTF?! The law of comparative advantage is probably the most surprising and important conclusion reached in all of the social sciences let alone economics. It is kind of a big deal.

Re: The Best Exposition of ABCT I've Encountered.

abskebabs — Mon, 24 Jan 2011 17:20:19 GMT

StrangeLoop:

but I was surprised to see "comparative advantage" missing (I find this idea instrumental when discussing protectionism, etc., but I never articulate it convincingly).

It might be under the title "Law of Association", which was what Mises also referred to the law as. Admittedly, I did find Rothbard a little shallow on comparative advantage. What do you think of the following as an exposition of the law?

http://mises.org/daily/4635

Re: The Best Exposition of ABCT I've Encountered.

liberty student — Sun, 23 Jan 2011 18:33:51 GMT

Now that you're reading the material though, your critiques and issues will have a quality to them. I don't expect people to agree with Mises and Rothbard, but only to be knowledgeable enough to make a critique based on their work than a second hand perception or regurgitation of it.

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Sun, 23 Jan 2011 15:11:32 GMT

I. Ryan:
Didn't that already happen (with Human Action)?

Well, I have always had admiration for Ludwig von Mises. Reading HA can only affirm his brilliance. But, after sifting through mainstream economics, I lost more and more appreciation for Austrian economics. At this point, though, I'm more willing to give Austrians credit on their scholarship. (But don't count me as a convert just yet.)

Re: The Best Exposition of ABCT I've Encountered.

I. Ryan — Sun, 23 Jan 2011 06:17:59 GMT

StrangeLoop:

I'm learning to respect Austrian theory.

Didn't that already happen (with Human Action)?

Re: The Best Exposition of ABCT I've Encountered.

AdrianHealey — Sun, 23 Jan 2011 06:15:25 GMT

Chapter 2.

And comparative advantage, all though important, really isn't that big of an idea. Rothbard's main contributions are in chapter 5 through 10.

I can't judge on 11 and 12. 12 seems more like a copy of Mises (besides introducing his own typology) and I'm not familiar enough with the economics of money and banking to judge if chapter 11 is new or a good repetition of other people's works.

Re: The Best Exposition of ABCT I've Encountered.

I. Ryan — Sun, 23 Jan 2011 06:15:11 GMT

StrangeLoop:

I can already tell that my fundamental beef with Austrianism holds: verbal logic isn't more "meaningful," but rather more inexact than mathematical formulae. When Rothbard invokes "uncertainty," for instance, I expect more rigorous treatment, but he always leaves these concepts at their most commonsense level.

Any comments on this?

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Sun, 23 Jan 2011 06:10:37 GMT

I. Ryan:
StrangeLoop:

Between that and me finishing the first chapter of Rothbard's MES, I'm learning to respect Austrian theory.

What did you like so much about the first chapter of MES?

I believe Rothbard is very deliberate and very thorough in his exposition of Austrian economics; for instance, I'm not sure anyone could fail to understand what the law of diminishing marginal utility is after finishing chapter 1 of MES. However, he also glosses over other topics or too easily presumes higher ground in scholarly debates (e.g., his appendix bashing mathematical economics was incredibly weak).

But, it's easy to see that Rothbard has mastered his field, and he conveys that knowledge skillfully. In fact, I checked the index to see what other topics he addresses, so that I could copy sections of his book to help others understand key economic concepts. I figured Rothbard would be the source for the ultimate "dumbed-down" explanation (and I mean that as a compliment), but I was surprised to see "comparative advantage" missing (I find this idea instrumental when discussing protectionism, etc., but I never articulate it convincingly).

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Sun, 23 Jan 2011 06:05:29 GMT

Student:
Oops. I re-read your original post and noticed you said you were finishing the *first chapter* of the MES. I thought you said the whole thing. :P

Well, be sure to post when you finish chptr 2. I would like to hear your opinion on Rothbard's description of how partial equilibrium in a single market is accomplished. it is actually nothing at all like mainstream equilibrium process stories (walrasian auctioneer, cobweb model, etc). so it would be neat to hear your thought.

Unfortunately, I'm entirely autodidactic in my learning of economics, so while I've read about the Walrasian auctioneer, I've never heard of the cobweb model. The mathematics I've learned for economics (e.g., linear programming, etc.) is, likewise, entirely self-learned. So, I'm sure I miss out on plenty of worthwhile content available through commonplace lectures, etc.

I can already tell that my fundamental beef with Austrianism holds: verbal logic isn't more "meaningful," but rather more inexact than mathematical formulae. When Rothbard invokes "uncertainty," for instance, I expect more rigorous treatment, but he always leaves these concepts at their most commonsense level.

Re: The Best Exposition of ABCT I've Encountered.

Lagrange multiplier — Sun, 23 Jan 2011 05:57:51 GMT

Esuric:
good ol' Roger Garrison

You must read this paper, it's awesome:

http://www.auburn.edu/~garriro/fm3bellante.htm

Thanks! I filed the link away for when I can print it off and dedicate some attention to it (later this week).