Third lecture home study course

The third lecture in the Mises University home study course is called 'Mises in one Lesson - history of Economic Thought' given by Murray Rothbard. Total time is 56:38.

He starts out with a very brief history of the Austrian school, mainly that while the founders of the Austrian school of economics were, very naturally, Austrian, there are not so many now. Most 'Austrian' economists are now of course, from many other countries.

He then talks about Human action. Austrian school is based on individuals doing things, most other schools of thought focus on groups or aggregates.

When Carl Menger was working, the predominant school then was the classical school, Smith, Ricardo, etc. He gives examples of their thinking.

Rothbard then gives an analysis of the main points of Austrian economic thought. (This is not complete, just the points I wanted to remember.)

1. Purpose of production is consumption
2. Start with consumer demand and work backwards to factors of production
3. Make value judgements in marginal units
4. Not quantative, but value is subjective
5. Time preference - we want things now, not later
6. Earlier phase of production = higher order of goods
7. Entrepreneurs are very important

He then talks about Mises Theory of Money and Credit (Note: I have not read this book yet). Again, Rothbard covers the main points of this book.

1. It integrated micro and macro economics
2. applied marginal theory to money and credit
3. only real use of money is exchange
4. fractional reserve banking is basically fraudulent
5. increases in money and credit causes price increases and messes up the capital structure
6. increases in money supply increases interest rates
7. results of recession (a natural process) washes out imbalance between capital and consumer goods
8. necessary liquidation process, if government interferes, this prolongs the recession

These last points are obviously applicable to our current financial situation.

This was another excellent lecture, with a lot of information.

Human Action

Today I'm going to be writing about Human Action by Ludwig von Mises. This is the big one, laying out the fundamentals of the Austrian school of economics. It's big insomuch as it is very important and big as in about 900 pages long. This book is not light beach reading. But it is very worthwhile.

Some background first. Dr von Mises wrote a version of this in German, but unfortunately it was published in 1940. Not a good time for German economics books. After he came to the United States he translated and expanded upon it for the 1949 publication of Human Action.

The first time I ever heard of Human Action was from this piece in the Daily Reckoning. It made me want to read the book. You might want to read this article first for the background and the inspiration to start reading it.

This book is not the best to start out with, unless you are able to comprehend at a graduate level. It is not for casual readers, but will pay great dividends to those who work through it step by step.

So, as usual, mises.org has extensive free resources for Mises' Human Action. They have a resource page, which contains links for the text in online versions, pdf versions and a complete audiobook reading of it. That page also links to chapter by chapter study guide pdfs.

And something I just found today, an interactive index of the whole book, linked to the online version.

Monday, I'll get into Murray Rothbard's Man, Economy and State with Power and Market.