I really enjoyed the discussion following last weeks post, so let me attempt to get the ball rolling again by offering a few quotes. As before, feel free to make comments on these quotes or any others you found interesting. Questions, particularly since this section deals with the choice-theoretic foundations of the Austrian school, would be great as well.
From pages 82-83:
The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable. They want the way left open to further economic improvements. They are the spokesmen of material progress.It amazes me that people still believe only the rich and powerful benefit from free markets (and, as a result, that free-market economists are puppets for the wealthy). As Mises points out, these are often the very individuals interested in deviating from free markets!
From page 89:
Judicious rationalists do not pretend that human reason can ever make man omniscient. They are fully aware of the fact that, however knowledge may increase, there will always remain things ultimately given and not liable to any further elucidation. But, they say, as far as man is able to attain cognition, he must rely upon reason.Is this true? Or are there in fact hyper-rationalists in economics? Maybe, of course, Mises is qualifying his statement by referring only to "judicious rationalists."
From page 103:
The attempt has been made to attain the notion of a nonrational action by this reasoning: If a is preferred to b and b to c, logically a should be preferred to c. But if actually c is preferred to a, we are faced with a mode of acting to which we cannot ascribe consistency and rationality. This reasoning disregards the fact that two acts of an individual can never be synchronous. If in one action a is preferred to b and in another action b to c, it is, however short the interval between the two actions may be, not permissible to construct a uniform scale of value in which a precedes b and b precedes c. Nor is it permissible to consider a later third action as coincident with the two previous actions. All that the example proves is that value judgments are not immutable and that therefore a scale of value, which is abstracted from various, necessarily nonsynchronous actions of an individual, may be self-contradictory.I take this to mean that, in accordance with neoclassical choice theory, preferences must be logically consistent (a>b and b>c implies a>c). However, temporality renders testing this claim in the real world impossible.
I have a few more quotes I'd like to discuss but will save them for the comments if conversation doesn't take off. I have deliberately avoided quotes from the uncertainty chapter since we discussed subjective probability at length last week. Feel free to bring it up if you have questions or comments though.
Next week, we will cover chapters 8-11 (again, roughly 70 pages). Happy reading!