Section 4 of Chapter 15 of Mises’s Human Action is called “The Sovereignty of the Consumers.” Mises talks about the unhampered market economy and how that democracy, in which “every penny gives a right to cast a ballot,” might be more democratic than any government could ever hope to be. This passage got me thinking about these concepts, and how the state impedes them.
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The Enemy Is Scarcity!
Breaking down a really economically illiterate article by Caitlin Johnstone, who has some good positions (on say, censorship and government surveillance) but economics apparently isn’t one of them…
I read Menger’s Principles of Economics a few months ago, and I’m currently re-reading Mises’s Human Action, and I’ve noticed both of them introduce the concept of the “order” of goods, that is, the number of production steps a good is from consumption.
For example, if the path to making bread is: seed -> wheat -> flour -> bread, then flour is a second-order good, wheat is a third-order good, etc.
Both Menger and Mises introduce this concept, but both dismiss it as effectively meaningless. Their reason, I suppose, is that in complicated production pathways, one good might be fourth-order in one pathway, and fifth-order in another.
But I think they might have missed something–something where understanding the order of goods allows us to make a clear example of the usefulness of a medium of exchange or money.
A recent article at the Mises Institute got me thinking about the concept of “passive investments.” The article was written by Daniel Moule, and is called “Taxing Capital Leads to Capital Consumption.” Setting aside the general argument Moule is trying to make, I find his concept of “passive investment” to be a possible source of confusion.
Paul “the Internet is not a big deal” Krugman has stated that it’s paranoid to worry about Central Bank Digital Currencies. See the article at this link.
Considering his track record, did he not realize that his statement makes it more likely that concern is justified?
A video version of part 1 (of 3) of my short essay series on money.
For the text version with links and citations, visit here.
Cryptocurrency is a contentious topic even among die-hard anarchists. Fans of gold argue that a return to the gold standard is key. Others argue that crypto has no commodity value and is therefore worthless. Crypto enthusiasts argue about which particular coin or coins are best, and even adherents to a single coin’s philosophy disagree about how its transactions should be handled.
Why did the market choose gold as an international standard for money? In his classic book The Theory of Money and Credit, Ludwig von Mises developed a beautiful and comprehensive philosophy of what money is and how it comes about, starting from barter and working all the way through the international gold standard. One of the valuable insights from the book is Mises’s concept of what characteristics are vital to the money function. He focused on five aspects in particular, and understanding them is still valuable today, even in a world of pure fiat money.