Economics
Peace and not war is the father of all things.
Ludwig von Mises
ABSTRACT
Aims: To demonstrate the efficacy of this model in the realm of calculable quantities, specifically those of macroeconomics.
Study design: Philosophic presentation of the necessary principles underlying economics. .
Place and Duration of Study: Library research.
Methodology: Using the work of Ludwig von Mises we explore the uses of the foregoing patterns and their connections with the first five essays. In oarticular the mathematic constants pi and phi are demonstrated in the context of this discussion Conclusions: We conclude that the model presented is persuasive in the realm of economics
Introduction.
If the logical distinctions made in the previous essay on Oppositional Analysis actually exist in the world around us, we should be able to notice their operation. In order to demonstrate the efficacy of this approach we turn to the highest level of reality laid out in the Introduction, the world of global economics. In particular we look at the categories, interrelationships and phenomena explored by well-known and competent professional economists as these pertain to a field which engulfs us all, the world of trade.
In short, in this essay we apply the approach of Oppositional Analysis directly towards and understanding of Economics. We do this through an exposition of the chief proponent of the Austrian school of economic thought, Ludwig von Mises and his book Human Action.
I propose that the System of Movement pattern explored to this point may be understood more thoroughly, and be made more useful, if we approach Economics from the point of view of biologic complexity. My aim in this section is not to endorse any particular economic point of view. I aim solely to take the ideas presented by von Mises and place them in the patterns described in this book. I then demonstrate that the essential ratios which were explored in the first five essays of this collection are entirely consistent with the arguments put forward by von Mises.
1. Ludwig von Mises and Human Action
If we look for texts in economics which might support our approach we might consider the work of Ludwig von Mises. In his book Human Action: A Treatise on Economic von Mises presents economics as the outgrowth of inevitable types of human activity.
Von Mises divides economics into two psychologically opposing "orbits." These orbits are (1) the production and distribution of goods and services via a market, and (2) the valuation of these goods and services via money prices. He searches for the laws controlling prices and markets in a general theory of human action or "praxeology." These "orbits" might be viewed as the opposing poles of a Primary Opposition, not unlike the Principle of Non-Contradiction.
Market Prices
That is, an object can not exist in a market and be priced with certainty simultaneously.
Once purchased in a market at a price agreed upon between persons buying and selling the object, the good or service disappears from the market.
So long as the good is purchased at a price set, it is no longer on the market. So long as the good is on the market awaiting purchase, or sought within the market for purchase, its price can not be known with certainty. These two aspects of any economic object are closely related however. Von Mises summarizes the study of economics as follows:
All that can be contended is this: Economics is mainly concerned with the analysis of the determination of money prices of goods and services exchanged on the market. In order to accomplish this task it must start from a comprehensive theory of human action. Moreover, it must study not only the market phenomena, but no less the hypothetical conduct of an isolated man and of a socialist community. Finally, it must not restrict its investigations to those modes of action which in mundane speech are called "economic" actions, but must deal also with actions which are in a loose manner of speech called "uneconomic."
The scope of praxeology, the general theory of human action, can be precisely defined and circumscribed. The specifically economic problems, the problems of economic action in the narrower sense, can only by and large be disengaged from the comprehensive body of praxeological theory.
... Market exchange and monetary calculation are inseparably linked together.
The demands of consumers for goods and services make themselves felt over time.
Likewise over time the prices of various goods and services evolve in the market. This second
"time" element creates a second dichotomy, a Secondary Opposition similar to that of the Principle of Contradiction. That is, a basic tension exists between the markets and the price structures of any group or nation as these adjust themselves to one another over time.
Market Prices
Evolving Market
Evolving Prices
Von Mises writes:
The economic process is a continuous interplay of production and consumption. Today's activities are linked with those of the past through the technological knowledge at hand, the amount and the quality of the capital goods available, and the distribution of the ownership of these goods among various individuals. They are linked with the future through the very essence of human action; action is always directed toward the improvement of future conditions. In order to see his way in the unknown and uncertain future man has within his reach only two aids: experience of past events and his faculty of understanding.
Knowledge about past prices is a part of this experience and at the same time the starting point of understanding the future.28
Under the principles discussed in earlier chapters, these basic dichotomies result in the creation of four essential "activities" within the realm of economics. These are the actions of buying, selling, saving and borrowing.
The fundamental drive of any economic system is the desire to buy. The opposite of buying is selling. The negation of buying - "not-buying" - is saving. And the opposite of saving is borrowing.