As indicated at the end of this post, April will see a study of Rothbard's Man, Economy and State.
A sympathetic review of the book in 1962:
The publication of a standard book on economics raises again an important question, viz., for whom are essays of this consequence written: only for specialists, the students of economics, or for all of the people?
The main virtue of this book is that it is a comprehensive and methodical analysis of all activities commonly called economic. It looks upon these activities as human action, i.e., as conscious striving after chosen ends by resorting to appropriate means. This cognition exposes the fateful efforts of the mathematical treatment of economic problems.
Murray's Study Guide is a wonderful resource and supplement. Of the 10 chapter 1 questions that Murray offers I found two particularly helpful to thinking about my reading.
3. Suppose a man is strumming his guitar while sitting on the sidewalk in a large city, and that his only purpose is to listen to the enjoyable music.
How should the guitar be classified? What if passersby begin giving the man loose change, so that he now views the guitar as a means to earning money? (pp. 8–9)
4. Suppose that a boy, on June 4, is offered the choice of seeing a fireworks show that day, or in exactly one month.
If the boy chooses the show in the future, has he violated the law of time
preference? (pp. 15–16)
In preparing for this study (chapter 1 will be the source for the initial discussion}, I encountered a very useful observation by Rothbard on time preference which, I think anticipates the central role played by interest rates in the Austrian Perspective.
Rothbard's assertion that the present is preferred to the future by consumers of goods seems, in general reasonable. However, I wonder if this gives consumers too little credit for valuing savings. While Rothbard certainly will address this, it seems to me that, based upon my own experience there is a not insignificant set of goods that consumers may value in the future:
1. Leisure in the future. This is retirement and I wonder if a cultural stimuli to retirement has evolved in developed economies that is the inverse of Weber's work ethic. That is, retirement is to be delayed for middle age or later?
2. Learning in the future. This innovative book study exemplifies what I am trying to articulate here. That is, we value higher learning - in the future. I wonder what the average age is of the participants here. In a recent Mises University class (that actually required monetary payment and time as opposed to merely time) there were well over 100 participants and I sensed from the discussion, most were in my age bracket *(mid 50s). Now learning in this sense may merely be a subset of leisure, but is worth breaking out to my way of thinking.
3. Cultural activities such as bris, marriage, leadership in voluntary organizations. All of these would represent, for consumers, goods - yet they tend to be valued in the future.
A fundamental and constant truth about human action is that man prefers his end to be achieved in the shortest possible time. Given the specific satisfaction, the sooner it arrives, the better. This results from the fact that time is always scarce, and a means to be economized. The sooner any end is attained, the better. Thus, with any given end to be attained, the shorter the period of action, i.e., production, the more preferable for the actor. This is the universal fact of time preference. At any point of time, and for any action, the actor most prefers to have his end attained in the immediate present. Next best for him is the immediate future, and the further in the future the attainment of the end appears to be, the less preferable it is. The less waiting time, the more preferable it is for him
( http://mises.org/rothbard/mes/chap1b.asp#_ftn4 )
Rothbard goes on to link develop the role of time and time preference in human action. Rothbard's analysis is one that places exchange at the center of human action. This exchange is, if I am readin correctly, both the cause and result of the inherent drive to improve ones' state of being. If I am on track with this reading it helps to clarify for me Adam Smith's assertion that the drive to truck, barter and exchange is also inherent in human nature. I wonder if this drive developed from evolutionary sources or is in fact genetic. Matt Ridley's work would suggest it is both - that the link between genetics and evolution makes both the source of "inherent" behaviors.
All action is an attempt to exchange a less satisfactory state of affairs for a more satisfactory one. The actor finds himself (or expects to find himself) in a nonperfect state, and, by attempting to attain his most urgently desired ends, expects to be in a better state. He cannot measure the gain in satisfaction, but he does know which of his wants are more urgent than others, and he does know when his condition has improved. Therefore, all action involves exchange—an exchange of one state of affairs, X, for Y, which the actor anticipates will be a more satisfactory one (and therefore higher on his value scale). If his expectation turns out to be correct, the value of Y on his preference scale will be higher than the value of X, and he has made a net gain in his state of satisfaction or utility. If he has been in error, and the value of the state that he has given up—X—is higher than the value of Y, he has suffered a net loss. This psychic gain (or profit) and loss cannot be measured in terms of units, but the actor always knows whether he has experienced psychic profit or psychic loss as a result of an action-exchange.[18]
"Starting the first week of April, this group will read a few chapters weekly from Murray Rothbards "Man Economy and State with Power and Market" (MESwPM), then review and discuss them. The study guide by Robert Murphy contains clarifications and small quizzes which we will answer individually then select a "best answer".
I'm going to set up two or three sets of "office hours" throughout the week so we can meet in the "group chat" and help answer questions or clarify the weeks readings.
I'll be live blogging my thoughts on the book, and the study group process at JimObject.com I have done this before and it's a great way to increase your understanding of economics, liberty and the world around you.
Please invite or suggest any friends who are interested in Austrian or free market economics, libertarian political theory, or Murray Rothbard. Feel free to send me a private message or leave any questions, concerns, or comments on the group wall,\.
The book is available free here
http://mises.org/rothbard/mes.asp
The study guide here http://mises.org/books/messtudy.pdf."
The 1962 review outlines the rationale and underlying purpose for Rothbard's book. In reflecting on the assertion below I wonder first how true this remains today. The reviewer is recalling Hayek's description of the role of intellectuals in society and anticipates Sowell's recent polemic on the topic. Clearly intellectuals represent an elite faction and, while the intelligensia is not homogeneous Klein and others have research that suggests the majority of elite are interventionists if not full on statists. The review -
It is quite different in the field of economics. The fact that the majority of our contemporaries, the masses of semi-barbarians led by self-styled intellectuals, entirely ignore everything that economics has brought forward, is the main political problem of our age. There is no use in deceiving ourselves. American public opinion rejects the market economy, the capitalistic free-enterprise system that provided the nation with the highest standard of living ever attained. Full government control of all activities of the individual is virtually the goal of both national parties. The individual is to be deprived of his moral, political, and economic responsibility and autonomy, and to be converted into a pawn in the schemes of a supreme authority aiming at a "national" purpose. His "affluence" is to be cut down for the benefit of what is called the "public sector," i.e., the machine operated by the party in power. Hosts of authors, writers, and professors are busy denouncing alleged shortcomings of capitalism and exalting the virtues of "planning." Full of a quasi-religious ardor, the immense majority is advocating measures that step by step lead to the methods of administration practiced in Moscow and in Peking.
My replies to the study guide questions
3. Guitar - first situation a first order capital good, the second situation a second order capital good.
4. Time preference - great question. I'd love to know how old the boy is. My 10 year old son would not wait, I would. In general this is marginal thinking coupled with a view of shared rather than individual utility. The shared benefit of a 4th of July fireworks for some (many?) would exceed the individual benefit of a 4th of June fireworks display. This question asks us to think about methological individualism and the subjective nature of utility. Moreover, this situation integrates individual planning and decision making within the context of society. I wonder how many of you also pondered the role of the state - in shaping the 4th of July as the preferred fireworks date through direct (national holiday) and indirect (education) means.
Finally, a major benefit of this first set of readings is a thoughtful foundation to distinguish free decision making from centralized:
. . . we must distinguish between "free-market capitalism" on the one hand, and "state capitalism" on the other. The two are as different as day and night in their nature and consequences. Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government — the State — to accumulate capital for themselves by expropriating the production of others by force and violence.
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