Menger contra Mises on economics predicting the future and telling people what to do?

Economics Economics Questions
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praxeology is actually pretty useless to the investor and entrepreneur by its very nature

Neodoxy, why not let the market decide?

http://en.wikipedia.org/wiki/Charles_G._Koch - "As of October 2012, Charles was ranked the 6th richest person in the world with an estimated net worth of $34 billion… In the book, Koch attempts to apply… Austrian entrepreneurial theory, such as that of Mises and Israel Kirzner, to organizational management.[17][18] T. Boone Pickens argues that Koch’s business success lends credibility to the book’s concept… especially influential upon Koch’s philosophy are Ludwig Von Mises’ Human Action"

22

@Gotlucky

Once again, I don’t think that we really disagree here. I’m not saying that economics is entirely useless to the entrepreneur, only that generally it’s not all that helpful and a knowledge of things like the inner-workings of an industry or a knack for understanding how prices in an industry shift will serve him much better.

@Dave

“Have you heard of “ceteris parebis”?”

Have you bothered to read what you’re responding to?

“2. When has this actually happened? Are you arguing from something imaginary?”

My professor who deals heavily with environmental economics (some of his students in particular are involved in the production of “environmentally friendly” goods) has students working in certain fields where they often have the problem that because their products are cheap and environmentally friendly. Because they have both these qualities consumers assume that the product itself is lying to them and that it’s not environmentally friendly (something most consumers find more desirable) and it is low quality, so they have a hard time selling these things.

Once upon a time I was at the grocery store with my mother. She told me to go and purchase tomato spaghetti sauce with no further instructions. I knew nothing about the various brands and qualities of tomato spaghetti sauce, so when I went to the appropriate aisle and I saw many different types of tomato spaghetti sauce I didn’t know what to do. I didn’t choose the cheaper kinds of spaghetti sauce because I assumed it was of a lower quality. I chose something in the middle in terms of price because I assumed that it was of a high enough quality without being unnecessarily expensive. In this case the producer of that type of spaghetti sauce would have decreased their demand if they had decreased their price. Behavioral economics shows that people tend to make decisions in these kinds of ways when confronted with limited information on a large number of brands. It often makes sense to be in the middle.

Finally, let’s go with the fact that Mises seemed to pin down the death of mixed-economic capitalism not too long after the 1950’s. This would indicate that the number of praxeological possibilities that could have been taken were very high. Either the interventionist policies could have had an especially large or rather small affect on overall capital accumulation and growth depending upon the exact conditions of the day. The latter seems to have occurred

“Like Mises? Do you have a quote, something, anything, to back up that assertion? I provided 6 quotes in this very thread where he says the exact opposite.”

Off of skimming what you posted I count 3 times where Mises seems to write that it’s useful politically and zero times where he seems to say that it’s useful in any other context.

Economics isn’t very useful for businesspeople:

When the businessmen finally learned that the boom created by credit
expansion cannot last and must necessarily lead to a slump, they realized
that it was important for them to know in time the date of the break. They
turned to economists for advice.
The economist knows that such a boom must result in a depression. But
he does not and cannot know when the crisis will appear. This depends on
the special conditions of each case. Many political events can influence the
outcome. There are no rules according to which the duration of the boom or
870 HUMAN ACTION of the following depression can be computed. And even if such rules were
available, they would be of no use to businessmen. What the individual
businessman needs in order to avoid losses is knowledge about the date of
the turning point at a time when other businessmen still believe that the crash
is farther away than is really the case. Then his superior knowledge will give
him the opportunity to arrange his own operations in such a way as to come
out unharmed. But if the end of the boom could be calculated according to
a formula, all businessmen would learn the date at the same time. Their
endeavors to adjust their conduct of affairs to this information would
immediately result in the appearance of all the phenomena of the depression.
It would be too late for any of them to avoid being victimized.
If it were possible to calculate the future state of the market, the future
would not be uncertain. There would be neither entrepreneurial loss nor
profit. What people expect from the economists is beyond the power of any
mortal man.
The very idea that the future is predictable, that some formulas could be
substituted for the specific understanding which is the essence of entrepreneurial activity, and that familiarity with these formulas could make it
possible for anybody to take over the conduct of business is, of course, an
outgrowth of the whole complex of fallacies and misconceptions which are
at the bottom of present-day anticapitalistic policies. There is in the whole
body of what is called the Marxian philosophy not the slightest reference to
the fact that the main task of action is to provide for the events of an uncertain
future. The fact that the term speculator is today used only with an opprobrious connotation clearly shows that our contemporaries do not even
suspect in what the fundamental problem of action consists.
Entrepreneurial judgment cannot be bought on the market. The entrepreneurial idea that carries on and brings profit is precisely that idea which did
not occur to the majority. It is not correct foresight as such that yields profits,
but foresight better than that of the rest. The prize goes only to the dissenters,
who do not let themselves by misled by the errors accepted by the multitude.
What makes profits emerge is the provision for future needs for which others
have neglected to make adequate provision.
Entrepreneurs and capitalists expose their own material well-being if they
are fully convinced of the soundness of their plans. They would never
venture to take their economic life into their hands because an expert advised
them to do so. Those ignorant people who operate on the stock and commodity exchanges according to tips are destined to lose their money, from
THE PLACE OF ECONOMICS IN LEARNING 871whatever source they may have got their inspiration and “inside” information.
In fact reasonable businessmen are fully aware of the uncertainty of the
future. They realize that the economists do not dispense any reliable information about things to come and that all that they provide is interpretation
of statistical data referring to the past. For the capitalists and entrepreneurs
the economists’ opinions about the future count only as questionable conjectures. They are skeptical and not easily fooled. But as they quite correctly
believe that it is useful to know all the data which could possibly have any
relevance for their affairs, they subscribe to the newspapers and periodicals
publishing the forecasts. Anxious not to neglect any source of information
available, big business employs staffs of economists and statisticians.
Business forecasting fails in the vain attempts to make the uncertainty of
the future disappear and to deprive entrepreneurship of its inherent speculative character. But it renders some services in assembling and interpreting
the available data about economic trends and developments of the recent
past.

Economics is primarily political:

Economics must not be relegated to classrooms and statistical offices and
must not be left to esoteric circles. It is the philosophy of human life and
action and concerns everybody and everything. It is the pith of civilization
and of man’s human existence.
To mention this fact is not to indulge in the often derided weakness of
specialists who overate the importance of their own branch of knowledge. Not
the economists, but all the people today assign this eminent place to economics.
All present-day political issues concern problems commonly called economic. All arguments advanced in contemporary discussion of social and
public affairs deal with fundamental matters of praxeology and economics.
Everybody’s mind is preoccupied with economic doctrines. Novels and plays today treat all things human—
including sex relations—from the angle of economic doctrines. Everybody
thinks of economics whether he is aware of it or not. In joining a political
party and in casting his ballot, the citizen implicitly takes a stand upon
essential economic theories

Not only in the countries ruled by barbarian and neobarbarian despots,
but no less in the so-called Western democracies, the study of economics is
practically outlawed today. The public discussion of economic problems
ignores almost entirely all that has been said by economists in the last two
hundred years. Prices, wage rates, interest rates, and profits are dealt with
as if their determination were not subject to any law. Governments try to
decree and to enforce maximum commodity prices and minimum wage rates.
Statesmen exhort businessmen to cut down profits, to lower prices, and to raise
wage rates as if these matters were dependent on the laudable intentions of
individuals. In the treatment of international economic relations people
blithely resort to the most naive fallacies of Mercantilism. Few are aware of
the shortcomings of all these popular doctrines, or realize why the policies
based upon them invariably spread disaster.

The significance of this fundamental epistemological difference becomes
clear if we realize that the practical utilization of the teachings of economics
presupposes their endorsement by public opinion. In the market economy the
realization of technological innovations does not require anything more than
the cognizance of their reasonableness by one or a few enlightened spirits. No
dullness and clumsiness on the part of the masses can stop the pioneers of
improvement. There is no need for them to win the approval of inert people
beforehand. They are free to embark upon their projects even if everyone else
laughs at them. Later, when the new, better and cheaper products appear on the
market, these scoffers will scramble for them. However dull a man may be, he
knows how to tell the difference between a cheaper shoe and a more expensive
one, and to appreciate the usefulness of new products.
But it is different in the field of social organization and economic policies.
Here the best theories are useless if not supported by public opinion. They
cannot work if not accepted by a majority of the people. Whatever the system
of government may be, there cannot be any question of ruling a nation
lastingly on the ground of doctrines at variance with public opinion. In the
end the philosophy of the majority prevails. In the long run there cannot be
any such thing as an unpopular system of government. The difference
between democracy and despotism does not affect the final outcome. It
refers only to the method by which by which the adjustment of the system
of government to the ideology held by public opinion is brought about.
Unpopular autocrats can only be dethroned by revolutionary upheavals,
while unpopular democratic rulers are peacefully ousted in the next election.
The supremacy of public opinion determines not only the singular role
that economics occupies in the complex of thought and knowledge. It
determines the whole process of human history.
The customary discussions concerning the role the individual plays in
history miss the point. Everything that is thought, done and accomplished is
a performance of individuals. New ideas and innovations are always an
achievement of uncommon men. But these great men cannot succeed in
THE NONDESCRIPT CHARACTER OF ECONOMICS 863

"In this sense we may say that economics is apolitical or nonpolitical,
it is the foundation of politics and of every kind of political action"

… All this from the section “The place of economics in society”. A whole lot of talk about politics, very little talk of, well, not politics.

Are you satisified, Mr. Dave?

23

Also, and I should have clarified this:

I probably agree with Jargon, Neo, and maybe Dave in this case of prediction - I said something, rather awkwardly, about it without refering to it as prediciton.

There is a form of “prediction” due to the casual-genetic nature of AE for example,

If govt is at the same time, with the same plan, trying to reduce the cost of living and create a surplus - it will fail

I think Horowitz called this a “negative predicition”, so that’s fine: and would be an / the important function of an economist in the public life.

If that is all that was meant, no problem I eagerly misread something. I think I wanted to go in a different direction, and I was fishing for something else.

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Are you satisified, Mr. Dave?

Wrote a long reply, got erased. So this is short version.

http://www.newworldencyclopedia.org/entry/Ideology

http://dictionary.reference.com/browse/ideology

From there it is very clear that Mises did not consider his life’s work an “ideology”. All my quotes show that. Maybe you meant some other word.

About your quotes. I refer to sections you bolded.

  1. Talks about specific bit of economic info, that there will be a bust in the future. Is not talking about all of economics in general.

  2. Talks not about Austrian E. and praxeology [which uses no formulas], but about mainstream econ. When he says “the idea that future is predictable” [implying it’s not], is talking about the precision a phony formula would pretend to give. Quntitative. But qualitattive predictions are certainly possible, and are the whole point of studying econ, as he says in many places.

  3. Let’s make sure we do not conflate neccessary, sufficient, and helpful. He is saying it is not suff., not that it is not helpful. Many businessmen have said that knowledge of AE helped them in their business pursuits.

  4. and 5. Talks not about Austrian E. and praxeology [which are not about interpretation of statistical data referring to the past], but about mainstream econ.

Now you may have meant that AE has more application to politics than business, because politicians have the ability to destroy a whole economy for decades, and would profit by learning how not to do it, with which I take no issue.

25

Dave,

It was perfectly clear that Mises was saying there is very little (not nothing) that economics can actually contribute to those running a business. He showed over and over that ideological and social issues have economics at their heart. That is the real application of economics, that is what Mises spends the vast majority of Human Action talking about. Originary interest, the consumer’s democracy, the importance of capital goods, economic methodology, and the effects of socialism are next to useless for an entrepreneur while everything written in Human Action is absolutely essential to the intellectual who is attempting to discover the true nature of capitalism, socialism, and interventionism. That’s 100 percent of the book that’s useful for the politically inclined individual, and something like 20 to 30 that is not entirely useless to the business person.

Mises was interested in ideas and how they impacted the political realm much more than he was interested in the inner workings of businesses and how to help them. This is obvious from how he outlined the role of economics in society, which was primarily to help “society choose” its system. It’s clear from the quote I gave above, which was almost all (maybe all I forget) of the section of how economics relates to business that the business person is generally alone, and ABCT is clearly one of the most applicable areas of economic theory to running a business in the real world.

However, you’re free to interpret Mises however you’d like to in the face of direct contradiction.

When I called Mises’ system “ideology” I was going for this definition:

“a system of ideas and ideals, especially one which forms the basis of economic or political theory and policy”

Mises’ system is a collection of very specific ideas and methods that represent how one should approach political economy, and it has to do specifically with political ideologies and belief systems.

26

Well stated neo, I’ll varify that answer: even though this thread is virtually about nothing. I was kind of hoping to critique what I thought may have been a strange view of subjectivism (which you may have critiqued in your shrimp example while speaking of things like expectations), and maybe - if I was lucky -even take a small dig at ABCT. This is what I thought the whole “predictions” thing may have meant.

Anyway,

yes what you say about Mises and ideology I would think is uncontroversial - but I was willing to give Dave all the intrepretive rights on him in this thread.

Though could you elaborate why you brought up psychology in particular, and behavioral psych in particular in the shrimp post?

27

Vive,

“Though could you elaborate why you brought up psychology in particular, and behavioral psych in particular in the shrimp post?”

The more we know about individual actions the more we can make predictions and understand how the world will actually work. For instance if I know that the older one is generally shorter one’s time preference will be, I can make better general predictions about the future (so long as I am careful about doing so). For instance, there is nothing praxeologically that says peoples’ expectations are extremely realistic and therefore prices will adjust exceedingly rapidly, often taking only a few days and a month would be considered a long adjustment period. This could be true, and an understanding of how individuals generally make decisions helps us to know whether this, or something else will occur.

Through behavioral economics we can get a better grasp on how individuals in general will act under certain situations. This means, if it is done appropriately, we know more about the actors in our economy and we gain a greater understanding and predictive power. This is not outside the praxeological method. Mises claimed that an understanding of the world and how people work would aid one in actually understanding things. Remember that praxeology is what is always true. By knowing what is generally true, or more true in a specific case, we know more. If I know that a country has a very low time preference then I can make more accurate predictions than if I did not know their time preference at all.

I rambled a little bit, but does this make sense?

28

Yes it makes sense - I’m short on time, but I may want to talk about this more later.

29

No one mentioned it so far, but Neodoxy’s non-cheap shrimp sounds something like a Veblen good: http://en.wikipedia.org/wiki/Veblen_good

Through behavioral economics we can get a better grasp on how individuals in general will act under certain situations

I am not too familiar with behavioral economics. Is there a “bible” on behavioral economics, like say Human Action might be for AE?

I’m guessing it would be a mistake to make predictions solely based on behavioral science, or based solely on AE. Empirical evidence shows that forecasts that combine different methods work best:

“Compared with errors of the typical individual forecast, combining reduces errors. In 30 empirical comparisons, the reduction in ex ante errors for equally weighted combined forecasts averaged about 12.5% and ranged from 3 to 24 percent. Under ideal conditions, combined forecasts were sometimes more accurate than their most accurate components.” - http://repository.upenn.edu/cgi/viewcontent.cgi?article=1005&context=marketing_papers

30

Baxter,

While that would be a case where the law of demand is trumped and where ceteris paribus conditions wouldn’t hold, what I’m talking about is uncertainty where consumers are ignorant as to the quality of a good. I’m sure that there’s a name in behavioral economics for this, but it’s not coming to mind right now. I’m saying that because consumers are in some cases ignorant of the quality of a good that they will base predictions of quality off of price. This means that in some cases an increase in price will increase the perceived cost of the good, but also the perceived quality of a good. A single shift causes a double shift in demand (that is to say that demand moves to the right and we move along the demand curve at the same time). Ceteris paribus doesn’t hold.

“I am not too familiar with behavioral economics. Is there a “bible” on behavioral economics, like say Human Action might be for AE?”

Definitely not. I can reccommend some popular books on the subject, but “mainstream” econ tends to be pretty decentralized anyway and since behavioral economics is pretty new there’s nothing I know of that comes close to filling that role. This is part of why Austrians get in trouble many times when approaching academia. Austrian econ has a few normal tomes: HA, Prices and Production, MES. Marxism has the same: Capital and the Manifesto. Early Keynesianism had the General Theory and Samuelson’s work, but many branches of economics (and that’s really what behavioral econ is more than a “school”) have no “bibles”. A few central works perhaps, but nothing that summarizes the whole or event the brundt of the conclusions of the branch, field, or school. Economics has become more decentralized as a science. The opposite of what Mises wanted.

“I’m guessing it would be a mistake to make predictions solely based on behavioral science, or based solely on AE.”

I agree with behavioral it would be impossible to make many predictions without bringing in information from other sources, be it AE or anywhere else. Austrian I do feel that one could make accurate predictions with it, but my whole thesis here is that one will be much more accurate if one brings in informations from other sources, especially behavioral econ.

31

Economics has become more decentralized as a science.

No offense, but it sounds like behavioral economics is more of an art. I’m guessing there are no fixed relations, apodictic theorems, or universal constants in behavioral economics. Facts would vary with the period in time and geographical region, for example.

whole thesis here is that one will be much more accurate if one brings in informations from other sources, especially behavioral econ.

Yes, I think you should incorporate many methods. Another example of the value of combining forecasts: “Polly always predicted Obama to win since her first forecast on January 1st of 2011, more than 22 months prior to Election Day. In comparison, other methods such as polls or prediction markets at times predicted the Republican candidate to win. This is similar to 2004 and 2008, when Polly never strayed from Bush (8 months prior to Election Day) or Obama (14 months) - The task of predicting U.S. presidential elections is ideal for demonstrating the usefulness of combining forecasts” - http://pollyvote.com/

A thymological analysis of Bernanke the Genius would be good too.

And there’s always the insight of experienced day traders to take into account: “Typically, a small improvement in a trading algorithm gives you an advantage for a day – maybe less” - http://adtmag.com/Articles/2011/07/29/Why-HFT-Programmers-Earn-Top-Salaries.aspx?Page=2

One thing I wonder, is if the predictions of AE are bound to come true over long time periods. If non-“ceteris paribus” errors occur and accumulate randomly, then the total error in AE’s predictions would grow as the square root of the number of such errors; i.e. AE’s predictions will become continually worse. On the other hand, the economy is continually approaching the equillibrium of a constantly rotating economy. Perhaps it’s a case of “reversion to the mean” where the total error will be near zero out in the long run.

32

“No offense, but it sounds like behavioral economics is more of an art. I’m guessing there are no fixed relations, apodictic theorems, or universal constants in behavioral economics. Facts would vary with the period in time and geographical region, for example.”

There’s a lot of truth to this, although you can’t justify calling behavioral economics an artform. Behavioral economics is about applying psychology to economics. This means that some of its discoveries will be more “permanent” and universal than others. This does not make it an artform, just a branch of study with highly dynamic variables… A human science.

I’m highly skeptical of psychology, and this is why there are definite limits on the scope and possibilities for behavioral economics.

“One thing I wonder, is if the predictions of AE are bound to come true over long time periods. If non-“ceteris paribus” errors occur and accumulate randomly, then the total error in AE’s predictions would grow as the square root of the number of such errors; i.e. AE’s predictions will become continually worse. On the other hand, the economy is continually approaching the equilibrium of a constantly rotating economy. Perhaps it’s a case of “reversion to the mean” where the total error will be near zero out in the long run.”

I think it depends entirely upon the time period and in what way you’re talking about. Some relationships will be more volatile and more prone to “non-ceteris-paribusness” than others would be. It should also be pointed out that praxeological predictions tend to be extremely general, part of what protects them on this front, but it actually also means that some predictions in the real world are impossible. Country A has a lower time preference than country B, but you cannot say that country B is going to have a higher rate of growth than country B since there are always other factors involved. Praxeology will help you get there, but ultimately it may well be guesswork.

33

OK,

after skimming the wikipedia article and reading skimming a couple Boettke articles that were favorable towards behavioral economics (just do a search for behavioral econ on the coordination problem blog, they’ll show up - they looked interesting) here’s my thoughts now that I am an expert in behavioral econ:

  1. Yes, I can see why someone would be drawn to behavioral econ for it’s “irrationalism” and / or different view than a classical/neoclassical homo economius

  2. At first I thought it was linked with behaviorism - which would probably not be compatible with AE

  3. I still don’t think psych should be in econ - it may be a type of “bridge” subject to show how social sciences function different than natural sciences, at least in certain regards. I am always half - tempted to argue that psychology is purely therapeutic if it is to make sense, if that were the case that alone should disqualify it as a social science - but we’ll leave that be for now.

  4. the main concern on the anti-psychologism:

I don’t think it is accurate to accuse one of being overly methodologically rationalistic, particularly when expectations and a certain attitude towards time are considerd, to say that we are still in a “logic of action” / a “logic of success” in an Austrian model: the logic which we think is the logic with which one acts. What then remains, is the course of action.

In other words, it is not the psychological conditions or causes but the logical consequences which are the basis for an analytical social science.

34

Vive,

I agree that behavioral economics cannot be the “base” for economic research. Attempting to make psychology the center of economic inquiry would be foolish, although I think that this is something we can look forward to in the future. Rather I think that if properly utilized behavioral economics can magnify our actual knowledge and predictive power. It is not a replacement to praxeology, but something to be used in conjunction with it.

35

However, you’re free to interpret Mises however you’d like to in the face of direct contradiction.

Nice try, but nothing you quoted contradicts anything I wrote.

And it’s either meaningless due to vagueness, or else just false, to say “Mises was interested in ideas and how they impacted the political realm.” He was interested in how the theories of quantum mechanics will influence the 1948 presidential election?

You have everything backwards. Even if there was no political movement called socialism, Mises would be interested in it as an economic system, meaning a possible way of running an economy. It has nothing to do with politics, and everything to with economics. His interest in politics was a subset of his interest in economics per se, not the other way around. You notice he didn’t write about political issues that were not rooted in economics. But he did write about economic topics that have nothing to do with politics.

In any case, let’s not conflate “what Mises was interested in” with “economics”.

If that’s what you meant by ideology, you are way off base thinking AE is an ideology. Would you say geometry is an ideology? That chemistry is an ideology? They have ideas and methods, right? A science [meaning a body of knowledge] is not an ideology. Economics is a science.

and it has to do specifically with political ideologies and belief systems.

So totally wrong. It has to do with economics. I am guessing you haven’t read Theory and History, which should set you right about these matters.

But I tire of this discussion. Think what you like, that’s fine.

36

When I say “political” I mean relating to social issues and how society should be organized as well as governed. This includes direct economic organization. There’s a reason why Mises starts ranting about liberalism and anarchism out of the blue earlier within the book, it’s because he sees them incredibly relevant to the matter of securing the economic system, which they are. Mises argues against economics for high-brow theorizing and specifically for what is useful: understanding how economics affects society. I can understand if this could be misinterpreted as talking about “elections” per se. Nonetheless this one’s obvious misunderstanding:

“He was interested in how the theories of quantum mechanics will influence the 1948 presidential election?”

If I just threw in the word “economic” into the passage you quoted then I assume you’d be satisfied and be that much closer to actually understanding someone else’s position.

“Nice try, but nothing you quoted contradicts anything I wrote.”

Correct. It doesn’t because you have awful reading comprehension and you’ll interpret most anything in the way you want to. You’re a fascist reading the Communist Manifesto and thinking that Marx agreed with him. What I’ve been saying here is the simple interpretation of what Mises wrote. You are aware of where those quotes came from, right? They came from the section “The Role of Economics in Society”. The single instance where Mises mentions business he shows how economics isn’t that useful to them and could even be misleading. This is the ONLY explicit time in the entire book Mises fully deals with the connection between business and economics (although he does mention it in passing elsewhere). In the same section he keeps talking about politics, society, and the economy as a whole and the importance of economics to these areas. There were several more quotes I could have pulled, just short of quoting the entire damn section. This is where Mises explains “The Role of Economics in Society”, and he applies it almost soley to the matters of society re

“You have everything backwards. Even if there was no political movement called socialism, Mises would be interested in it as an economic system, meaning a possible way of running an economy. It has nothing to do with politics, and everything to with economics. His interest in politics was a subset of his interest in economics per se, not the other way around. You notice he didn’t write about political issues that were not rooted in economics. But he did write about economic topics that have nothing to do with politics.”

There’s a reason that Mises wrote a book on socialism and devoted decently large sections of all his other books, (besides his first) to the matter of socialism; it’s because he saw it as the largest threat to society. Meannwhile Syndicalism got merely a section of HA and a few mentions in socialism, it is because it is much less of a threat. At any rate, the fact that Mises… And you… talk against abstract theorizing and Mises wrote again and again about social and economic affairs IN HIS SECTION OF HOW ECONOMICS ACTUALLY APPLIES TO SOCIETY AND IS USEFUL. This is how economists help their fellow men and why economics is worthwhile.

“a system of ideas and ideals, especially one which forms the basis of economic or political theory and policy”

If I am right about why Mises wrote about economics then this certainly applies… Particularly the part about economics

“I am guessing you haven’t read Theory and History, which should set you right about these matters.”

I read T&H twice. You won’t be able to find where it contradicts me because it doesn’t. Mises says very specifically that economics is value free, but he says that in all his work. Yet he takes up a huge portion of Human Action arguing against doctrine after preexisting doctrine, that is almost always political with political ramifications, and explaining why it is fallacious. If Mises wasn’t interesting in how things applied to society and how should organized HA would have looked hella different, and Mises wouldn’t have kept talking about the importance of economics in political affairs when he talked about how economics applies itself to society.

37
  1. Here’s a little quote from Roger Garrison in Time and Money about usefulness of economic knowledge to businessmen.

Oddly enough, he gives the exact example I did.

All [=stuff like this] is mine. Also, emphases are mine.

Undoubtedly, the extent to which policy-makers and market participants
make use of both kinds of knowledge [=business knowledge and knowledge of economic theory]

is dependent on the institutional
setting and the policy regime. A change in the direction of increased policy
activism on the part of the central bank, for instance, will increase the
benefits to entrepreneurs and other market participants of their under-
standing the short- and long-run relationships linking money growth
to interest rates, prices, and wages.

Stated negatively, entrepreneurs who
experience a sequence of episodes in which the central bank is implementing
stabilization policy or attempting to “grow the economy” may face a high
cost of not understanding how money-supply decisions affect the market
process.

Thank you, Mr Garrison.

  1. Neo, I won’t enjoy replying to you if you keep up that tone.

So don’t consider my silence an admission of anything.

You are still wrong, and I stand by what I wrote earlier.

I hope the reader will have no problem seeing where you err.

38

"2. Neo, I won’t enjoy replying to you if you keep up that tone.

So don’t consider my silence an admission of anything.

You are still wrong, and I stand by what I wrote earlier."

I really don’t care about what you have to say Dave. Your ability to misread very straightforward pieces of information already makes for a bad understanding of actual economic relationships, so dogmatism and a misunderstanding of the purpose of economics itself, as well as a straw-manning of the economist whose words you hold so dear are traits which I am not at all surprised to see from you.

As for the quote you included, it doesn’t contradict what I’ve been saying which is not that economics is useless to businesspeople, merely that it is not very useful and that there are many more useful skills to have. Mises agreed with this notion and he said so. For whatever reason you are just too dim to acknowledge this. As someone who adheres to a school of economic thought that is heavily against over-aggregation and homogenizing economic data it should be clear that a knowledge of specific investment is a lot more valuable than knowledge of what the economy as a whole is doing, and furthermore a knowledge of how two different variable shifts will play out, how intense or which one will rule one another out is an infinetely more useful skill for the entrepreneur than merely a wide view of economics. Economics aids him, but it’s only the beginning of the battle, and in many cases it is wholly irrelevant to him because he is dealing with his own industry, not the economy as the whole or the sum of all markets and firm that relate to his own firm.

Meanwhile the matter of society and its organization relies massively on economics. If you’re actually interested in knowing what Mises had to say about the place of economics within society I would start with the “Crisis of Interventionism” onwards into “The Place of Economics in Society”. It’s not long, only about 30 pages. I’ll give you a little spoiler alert though, by my count there’s 15 sections that deal with the matter of how economics applies to society and political systems, while only 1 even mentions the importance of economics in business, and even then he says directly that economics doesn’t alleviate the fundamental function of the entrepreneur. In the section “Economics and the Citizen”, what does Mises say?

There is no means by which anyone can evade his personal responsibility.
Whoever neglects to examine to the best of his abilities all the problems involved
voluntarily surrenders his birthright to a self-appointed elite of supermen. In
such vital matters blind reliance upon “experts” and uncritical acceptance of
popular catchwords and prejudices is tantamount to the abandonment of selfdetermination and to yielding to other people’s domination. As conditions are
today, nothing can be more important to every intelligent man than economics.
His own fate and that of his progeny is at stake.
Very few are capable of contributing any consequential idea to the body
of economic thought. But all reasonable men are called upon to familiarize
themselves with the teachings of economics. This is, in our age, the primary
civic duty

He doesn’t say anything about how the common man needs to know economics for knowledge of his own wages and investments, no, he says that it is the citizens primary civic duty to understand economics. That is where the primary use of economics is. Not with businesses. What is primarily at stake for the common citizen, what he sacrifices when he does not understand economics, is not his personal economic wellbeing in the market economy, but rather he submits his rights to a group of political elite.

If this is not convincing to you then you are a fool.

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This section reminded me that everyone on this forum is a nerd.

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Et pourquoi est-ce?