Economics Dictionary of ArgumentsHome
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| Measurements, philosophy: A) the problem of measuring is discussed in the context of interpretations of quantum mechanics. B) the comparison of D. Davidson's attribution of linguistic meanings to measurement is taken up in other theories._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Measurements - Dictionary of Arguments
Rothbard III 311 Measurements/value/marginal utility/economics/Rothbard: (…) suppose that it takes 60 ounces of gold to buy an automobile. Then the acquisition of the 60th ounce, which will enable [the buyer] to buy an automobile, will have considerably more value than the acquisition of the 58th or of the 59th ounce, which will not enable him to do so. RothbardVs: This argument involves a misconception identical with that of the argument about the "increasing marginal utility of eggs" (…). (…) it is erroneous to argue that because a fourth egg might enable a man to bake a cake, which he could not do with the first three, the marginal utility of the eggs has increased. (…) a "good" and, consequently, the "unit" of a good are defined in terms of whatever quantity ofwhich the units give an equally serviceable supply. Service unit: This last phrase is the key concept. The fourth egg was not equally serviceable as, and therefore not interchangeable with, the first egg, and therefore a single egg could not be taken as the unit. The units of a good must be homogeneous in their serviceability, and it is only to such units that the law ofutility applies. The situation is similar in the case of money. The serviceability of the money commodity lies in its use in exchange rather than in its direct use. Here, therefore, a "unit" of money, in its relevance to individual value scales, must be such as to be homogeneous with every other unit in exchange-value. >Utility/Rothbard, >Value/Rothbard, >Indifference curve/Rothbard, >Action/Rothbard, >Marginal utility/Rothbard. Rothbard III 843 Measurements/economics/Rothbard: In olden times, before the development of economic science, People nafrely assumed that the value of money remained always unchanged. >Value/Rothbard, >Money/Rothbard. "Value" was assumed to be an objective quantity inhering in things and their relations, and money was the measure, the fixed yardstick, of the values of goods and their changes. The value of the monetary unit, its purchasing power with respect to other goods, was assumed to be fixed.(1) Human action: The analogy of a fixed standard of measurement, which had become familiar to the natural sciences (weight, length, etc.), was unthinkingly applied to human action. >Action/Rothbard, >Mises, >Austrian School. Purchasing power: Economists then discovered and made clear that money does not remain stable in value, that the PPM (purchasing power of money) does not remain fixed. The PPM can and does vary, in response to changes in the supply of or the demand for money. These, in turn, can be resolved into the stock of goods and the total demand for money. Individual money prices (…) are determined by the stock of and demand for money as well as by the stock of and demand for each good. >Demand for money, >Money supply. It is clear, then, that the money relation (demand and supply) and the demand for and the stock of each individual good are intertwined in each particular price transaction. >Purchasing power/Rothbard. Exchange ratios/Problem: The fact that the use of money as a medium of exchange enables us to calculate relative exchange ratios between the different goods exchanged against money has misled some economists into believing that separate measurement of changes in the PPM (purchasing power of money) is possible. Thus, we could say that one hat is "worth," or can exchange for, 100 pounds of sugar, or that one TV set can exchange for 50 hats. It is a temptation, then, to forget that these exchange ratios are purely hypothetical and can be realized in practice only through monetary exchanges, and to consider them as constituting some barter-world of their own. In this mythical world, the exchange ratios between the various goods are somehow determined separately from the monetary transactions, and it then becomes more plausible to say that some sort of method can be found of isolating the value of money from these relative values and establishing the former as a constant yardstick. Actually, this barter-world is a pure figment; these relative ratios are only historical expressions of past transactions that can be effected only by and with money. Cf. >Price level/Fisher, >Equation of exchange/Fisher, >Inflation. Rothbard III 844 Economics: Now what can economics say has happened to the PPM over e.g., two periods? All that we can legitimately say is that now one dollar can buy e.g., 1/20 of a hat instead of 1/10 ofa hat, 1/300 of a TV set instead of 1/500 of a set, etc. Thus, we can describe (if we know the figures) what happened to each individual price in the market array. Price level: But how much of the price rise of the hat was due to a rise in the demand for hats and how much to a fall in the demand for money? There is no way of answering such a question. We do not even know for certain whether the PPM has risen or declined. Purchasing power: All we do know is that the purchasing power of money has fallen in terms of sugar, hats, and legal services, and risen in terms of TV sets. Even if all the prices in the arrayhad risen we would not know by how much the PPM had fallen, and we would not know how much of the change was due to an increase in the demand for money and how much to changes in stocks. Rothbard III 845 If the supply of money changed during this interval, we would not know how much of the change was due to the increased supply and how much to the other determinants. Indices: The index-number method of measuring changes in the PPM attempts to conjure up some sort of totality of goods whose exchange ratios remain constant among themselves, so that a kind of general averaging will enable a separate measurement of changes in the PPM itself. We have seen, however, that such separation or measurement is impossible. Cf. >Equation of exchange/Fisher._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Rothbard
> Counter arguments in relation to Measurements
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