Economics Reasoning

Only available on StudyMode
  • Download(s) : 46
  • Published : December 10, 2012
Open Document
Text Preview
g An Introduction to Economic Reasoning

David Gordon

Ludwig von Mises Institute 518 West Magnolia Avenue Auburn, Alabama 36832-4528

Copyright © 2000 Ludwig von Mises Institute. All rights reserved. Published by the Ludwig von Mises Institute, 518 West Magnolia Avenue, Auburn, Alabama 36832-4528. (www.mises.org) ISBN: 0-945466-28-5

edicated to Quintin E. and Marian L. Ward, with deepest gratitude.

D

Acknowledgements

I

am first of all indebted to Mr. and Mrs. Quintin E. Ward, whose generous support made this book possible. Mr. Ward’s career and achievements exemplify the free market in action. For very helpful comments on the manuscript, Ithank Hans Hoppe, Jeffrey Herbener, Joseph Salerno, and Mark Thornton. They bear no responsibility for any remaining mistakes. At the Mises Institute, Judy Thommesen and Kathy White handled editorial work in the manuscript with great skill. I thank Mises Institute Member Richard Perry for preparing the index. Pat Barnett, as always, was a constant source of encouragement. She also provided me with helpful comments and corrections. The president of the Mises Institute, Lew Rockwell, not only commissioned the project: he nudged it along through gentle prodding. To all of these, many thanks.

Table of Contents
INTRODUCTION................................................................................i 1 2 3 4 5 6 7 8 9 10 THE METHOD OF ECONOMICS..........................................................1 ACTION AND PREFERENCE, PART 1................................................15 ACTION AND PREFERENCE, PART 2................................................35 DEMAND AND SUPPLY...................................................................55 THE LABOR THEORY OF VALUE......................................................83 PRICE CONTROLS........................................................................103 MINIMUM WAGES AND WAGE CONTROL.......................................117 MONEY, PART 1..........................................................................131 MONEY, PART 2..........................................................................147 THE GOLD STANDARD.................................................................161 CONCLUSION..............................................................................175 GLOSSARY..................................................................................177 RECOMMENDED READINGS.........................................................185 INDEX........................................................................................187

Introduction
WHY STUDY ECONOMICS?

W

hy, indeed? A good short answer is that you can’t get away from it. Almost everything you do involves economics. Why do people have to earn a living? Why do some people—heavyweight boxers, rock stars, and movie producers, for example—earn vastly more than bus drivers or policemen? What determines the price of a Big Mac, or, for that matter, a Mack truck? Whenever you have to deal with money or prices, you are talking about economics. To paraphrase Monsieur Jourdain, a character in a play by the seventeenth-century French writer Molière, you have been speaking economics all your life. But granted the pervasiveness of economics questions, why study them systematically? After all, we are all governed by the law of gravity—try jumping off a cliff sometime if you don’t think so— but does it follow that we have to study physics? If people don’t understand the basic laws of economics, we are headed for disaster. You don’t have to understand much physics to know why it’s not a good idea to jump off a cliff; but an economy that runs well depends on enough people grasping some simple truths about how the price system works. As we’ll see throughout this book, a sound economy depends on allowing people to act freely. If politicians interfere with the free market, or attempt to replace it entirely with socialism, we are in...
tracking img