Can you please substantiate this? Professional economists seem to disagree with you.
Most professional ‘economists’ are nothing of the sort.
Grayson,
Can you please stop quoting Human Action? I know what Mises’s argues (I did reference it for my recent article on unemployment). This entire discussion arises out of the fact that more recent Austrian economists, including Huerta de Soto, have expressely disagreed with Mises on this point. However, I don’t think Mises would disagree. I think Mises was being necessarily general. For all intents and purposes, generally speaking, all unemployment would be voluntary. But, markets are never in equilibrium, so there is a large probability that few people will be involuntarily unemployed at any given time, even if the time that they are involuntarily unemployed is irrelevantly miniscule. It is a technicality.
So, quoting Human Action is not particularly useful, and doesn’t develop the debate. Maybe you can offer your oown critique of Huerta de Soto, but Mises’s words don’t help (indeed, Mises is not alive to respond to Huerta de Soto).
By that reasoning, an investment that results in a loss is, technically speaking, not an investment.
Lilburne, please, this is not what I said at all. I never said that an investment in growing tomatoes is not an investment.
Capital is employed on a market when an actor uses it to seek interest and profit. Labor is employed on a market when an actor uses it to seek wages and profit. Whether either kind of employment ultimately bears fruit is immaterial with regard to the catallactic character of these actions.
Taking this to its most absurd conclusion, your claim is tantamount to saying that a cyclically unemployed person would technically become employed if he decided to dig holes in his garden, thinking that this would reap him some benefit. He is, after all, employing labor towards some intended end. At some point, this notion becomes ridiculous. Anybody could become employed by applying minimal labor and capital towards some project at home. Practically speaking, this is not employment. What wage is being earned? What profit is being earned? To put it more specifically (practically speaking), while an entrepreneur who makes a bad investment may get a return, even though this return may not cover his costs, a random person who plants a tomato plant in his house, but with no hope of meeting anybody’s desires, is not receiving a return at all.
EDIT: Here is what I wrote in my recent article, with the sources:
Free-market economists adamantly disagree with the notion that mass unemployment is possible in a completely free labor market. Ludwig von Mises went as far as to claim that in a free market such thing as involuntary unemployment is impossible, since if one offers his labor for low enough a price he will always find a buyer.[17] Of course, knowing that the market is in constant disequilibrium, one recognizes that involuntary unemployment is not necessarily impossible but simply rare and based only on imperfect information.[18] In short, outside of the existence of imperfect information, in a free-market the only limitation to employment is an individual’s reservation wage.
Footnote 17 and 18 read, respectively:
Ludwig von Mises (1998), Human Action: A Treatise on Economics (Auburn, Alabama: Ludwig von Mises Institute); p. 595.
and,
Jesús Huerta de Soto (2008). The Austrian School: Market Order and Entrepreneurial Creativity (Cheltenham, United Kingdom: Edward Elgar); p. 99. Jesús Huerta de Soto corrects what he considers a neo-classical error of assuming equilibrium, “Nevertheless the real market is in a constant state of disequilibrium and, even in the absence of institutional restrictions (minimum wage laws, union intervention and so on), it is certainly quite possible that numerous workers who would be delighted to work with certain specific entrepreneurs (and vice versa) remain unemployed and never actually meet these entrepreneurs, or if the two do meet, they fail to seize the mutually beneficial opportunity to enter into an employment contract, simply due to a lack of sufficient entrepreneurial alertness.”
Most professional ‘economists’ are nothing of the sort.
Are you going to give a serious argument, at all?
It is easy to say. We’re not going to get past this problem re:unemployment until we start recognizing entrepreneurship as a job and one that is omnipresent. Like Georgists fixated on land, people who are fixated on classes of people who cannot employ themselves are perpetuating a myth.
One can always consume their own production.
Liberty Student,
It’s not easy to say. We’re not going to get past this problem re:unemployment until we start recognizing entrepreneurship as a job and one that is omnipresent. Like Georgists fixated on land, people who are fixated on classes of people who cannot employ themselves are perpetuating a myth.
Are you saying that everyone is self-employable? I consider entrepreneurship a job, but I don’t believe that every unemployed individual can become an entrepreneur.
One can always consume their own production.
Only as far as it is desired, and only as far as it sustains that person. If I become unemployed and decide to pit my labor towards the replacement of my balcony, despite the fact that I built myself a new balcony with my labor, it doesn’t mean that I can consume that production in any meaninful or sustainable way (I can, of course, use the balcony to my pleasure).
Ultimately, Mises, Huerta de Soto, and myself are talking about employment and unemployment in a practical way. For example, Mises agrees that cyclical unemployed and unemployment caused by government distortion and intervention is involuntary. Technically speaking, according to your logic, that person could become employed by producing something (no matter what). Practically speaking, this isn’t true.
"Similar to how a wage-earner may be earning an income, but it also may be below his expenses. "
Again, there’s no such thing as negative wages. A self-employed man is also a self-employING man. Any loss incurred by a self-employed man is incurred by the man qua capitalist-employer.
this seems to be tottering on the edge of a ridiculous distinction between unemployment and employment, where technically it is impossible for anybody to be unemployed.
Nobody’s defining away unemployment. Any person who is not actively seeking money for his labor is unemployed. It just so happens to be that in an unhampered market in which labor is more scarce than land and capital, such a person is unemployed voluntarily.
Jonathan M. F. Catalán
Isn’t that self evident?
Why?
What?
What? You just said you can’t consume it, and then you said that you can use the improved balcony to provide more utility/pleasure. Which is it?
Economic theorizing that ignores praxeology is not practical in any way whatsoever.
I’m not really familiar with Mises’ arguments, I think they are irrelevant, just as you thought they were irrelevant when Lilburne was citing H.A.
What is the substantive difference between these technical and practical [sic] distinctions you have created?
I am.
A farmer who grows food for himself is unemployed rather than self-employed?
A farmer who grows food for himself is unemployed rather than self-employed?
I don’t think that’s what Grayson means. I think he means that some people will engage in leisure for extended periods of time rather than work, whether it be for themselves or others. Certainly you don’t think leisure is employment?
I think yourself, Lilburne and I all agree that there is no involuntary unemployment under a regime of free enterprise. But that doesn’t mean everyone would be constantly employed.
Is this praxeologically sound?
If self-employment is a type of action, and employment by definition is a broader category of action encompassing self-employment, then how can unprofitable action not be action?
Profit is not necessary for employment, just as money remuneration is not necessary for employment.
Can you please stop quoting Human Action? I know what Mises’s argues (I did reference it for my recent article on unemployment).
First of all, I only quoted it once in this thread. Secondly, I will quote it as much as I deem it serviceable to in this discussion. You made a claim about what Mises would disagree with which I believe was directly controverted by the passage I quoted.
But, markets are never in equilibrium, so there is a large probability that few people will be involuntarily unemployed at any given time
Why does your conclusion follow from your premise?
“By that reasoning, an investment that results in a loss is, technically speaking, not an investment.”
“Lilburne, please, this is not what I said at all. I never said that an investment in growing tomatoes is not an investment.”
You missed the “by that reasoning” part. I’m not saying you made that proposition. I’m saying that your line of reasoning regarding labor, if consistently applied, would result in that obviously untenable proposition regarding investment. It’s called a reductio ad absurdum. And you must not be particularly against such an argument, since you yourself try to formulate one in your very next paragraph…
Taking this to its most absurd conclusion, your claim is tantamount to saying that a cyclically unemployed person would technically become employed if he decided to dig holes in his garden, thinking that this would reap him some benefit.
If that person really thought that, then yes he is a (really bad) entrepreneur-laborer. Just as someone who erroneously invested in garden-hole-digging business is a (really bad) entrepreneur-capitalist.
Of course, knowing that the market is in constant disequilibrium, one recognizes that involuntary unemployment is not necessarily impossible
This is the same argument you offered earlier in the post. Again, you haven’t established why the conclusion follows from the premise.
it is certainly quite possible that numerous workers who would be delighted to work with certain specific entrepreneurs
For a laborer to find an entrepreneur they’d be delighted to work for, generally involves speculative waiting. But speculative waiting is still voluntary, and is chosen willfully, in an unhampered market, over the option of working, even if at a very low wage, for the first entrepreneur-capitalist he finds (even if that entrepreneur-capitalist is himself), even if he’s NOT delighted to work for that person.
By that reasoning, an investment that results in a loss is, technically speaking, not an investment.
Lilburne, please, this is not what I said at all. I never said that an investment in growing tomatoes is not an investment.
We’ll see.
As types of action, could you please articulate the difference between leisure and work?
If one defines profit narrowly, sure. But profit in the praxeological sense is very broad, n’est pas?
Well, even if you classified “autistic exchange” like subsistence farming (even though it’s a non-market action) as employment, that wouldn’t entail defining unemployed labor completely away, since leisure is, by definition not labor. So anyone engaged in solely leisure all his days is unemployed.
As types of action, could you please articulate the difference between leisure and work?
Leisure is done for its own sake, work is done for gain. This is not differentiated by the external title (you may lay around all day and somehow be paid for it, thus it would just be remunerative leisure. But work is never done for itself to the extent that it is work.
Yeah, basically what Lilburne said.
Surely we could have subsistence employment, right? I guess the fact it is non-market is what people get hung up on. But my point is that one doesn’t have to engage in exchange in order to realize a profit from action. It can be very profitable psychologically to subsistence farm.
But can we agree that leisure is not a unique category of action vs. labor? If one plays football for a wage, or one plays football for fun, one is still performing the same action.
What is solely leisure though? We don’t have a distinction between leisure action and labor action except this semantic issue arising from labeling.
Well yes, there’s “psychic profit”, which is the total subjective benefit of any action that is not measured in money terms. But, I think in general, what people mean when they refer to “unemployment” is “labor that is not employed on a market”. And employment on a market, by definition, involves seeking money wages.
Well yes, there’s “psychic profit”, which is the total subjective benefit of any action that is not measured in money terms. But, I think in general, what people mean when they refer to “unemployment” is “labor that is not employed on a market”. And employment on a market, by definition, involves seeking money wages.
The difference between praxeology generally and the more narrow field of catallactics is what you are invoking, I believe?
Praxeologically speaking, isn’t all action done for gain?
Sounds arbitrary to me.
Sure it is. I do it all the time. I work because I enjoy it, I take particular pleasure in doing it if it is hard. I gain immense psychological profit from solving problems. My idea of downtime, is doing more of the types of work I like. Someone else might think leisure is lying about, for me, it is producing in a slightly different fashion.
I think the entire argument is silly, and arguments by economists about labor are like Dwight and Stanley discussing the exchange of Schrute Bucks for Stanley Nickels, where Stanley defines the rate as the “ratio of leprechuans to unicorns.”
This ^^ model doesn’t fit people who take less money to do work they enjoy more.
I believe monetary exchange is also a psychological phenomenon. Our concept of profit doesn’t exist absent our minds.
Lilburne..
Unsatisfactory because now we’re discussing semantics.