Study Guide to Man, Economy, and State with Power and Market

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Chapter 1: Fundamentals of Human Action 3 Chapter Outline 1. The Concept of Action The distinctive feature of the study of man is action, which is purposeful behavior. (A falling rock is not “acting” because it doesn’t “wish” to get closer to the ground.) But the social scientist (including the economist) must impute subjective intentions to the objects of his study (i.e., acting human beings). Action must exist; if beings did not behave purposefully, they would not be human. Praxeology is the scientific study of action. It begins with the obvious truth that action exists, because human beings exist. (If things did not behave purposefully, so that the observer could ascribe motives to the things, then they would not be classified as human.) Praxeology consists of all the propositions that can be logically derived from the action axiom. Economics is the best developed subdivision of praxeology. (NOTE: Some economic propositions require supplementary assumptions besides the action axiom.) 2. First Implications of the Concept Only individuals can act. When people say things such as, “The group went to the park,” or “Germany attacked France,” this is really just a shorthand for saying that certain individuals performed these actions. This is purely a methodological point; it does not (as many critics falsely assert) mean that economists deny the existence of social collectives, or that economists think individuals always behave “atomistically.” Of course, a person may act differently when he is in a mob. But nonetheless even “mob behavior” is still the sum total of the behavior of each individual comprising the “mob.” A chemist can say that all
4 Study Guide to Man, Economy, and State with Power and Market matter is composed of atoms without thereby denying the existence of molecules. A person will act only if he desires a particular state of affairs and only if he believes he has the capacity to bring this about. For example, a man may desire sunshine on a cloudy day, but this desire alone will not lead to any action, because the man has no idea how to change the weather. A man uses means to (attempt to) achieve his ends. When a man uses a certain means for one end, then he cannot use it for some other possible end; we thus say that the means is scarce. In contrast, if a particular item or condition is so abundant that man is not faced with a choice in its disposal, then it is not a means but a general condition of the environment. (For example, air is certainly necessary for action, but we would not normally classify it as a means to an end.) All action takes place in time. For any given action, we can conceive of the time before the action, the time absorbed by the action, and the time following the action. Time is scarce. The future itself is uncertain, and hence acting man must engage in entrepreneurship by speculating about future conditions and the results of various possible actions. Acting man must rank the possible ends in order of desirability. Because means are scarce, acting man must allocate them to fulfill his most highly ranked ends; i.e., acting man must economize the means. Even though a man will always dispose of his means in an attempt to achieve his most highly ranked ends, because of uncertainty the man may err. 3. Further Implications: The Means The means to satisfy wants are called goods. Those goods that directly satisfy wants are consumers’ goods or goods of the first order. Those goods that are useful only indirectly in satisfying wants are producers’ goods or factors of production or goods of higher
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Chapter Summary Entrepreneurial pro
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Chapter Summary Consumer preference
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Chapter 10: Monopoly and Competitio
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Chapter Summary Like all goods, the
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Chapter Summary Economists often ta
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Chapter 1: Defense Services on the
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Chapter Outline 1. Types of Interve
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Chapter Summary Society is composed
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Apriorism, 1, 9 Ability-to-pay prin
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Index 251 Equilibrium, 47, 104 macr
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Index 253 Medium of exchange, 27, 3
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Index 255 See also Economy, Evenly
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