Economics Dictionary of ArgumentsHome
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| Renting: The concept of means and ends in economics involves using limited resources (means) to achieve desired goals or objectives (ends). Ends represent individual or societal needs and wants, while means are the tools or methods employed to fulfill them. Efficient resource allocation is crucial to maximize utility and minimize scarcity. See also rent, Service, Intangible Goods._____________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. – Dictionary of Arguments. | |||
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Murray N. Rothbard on Renting - Dictionary of Arguments
Rothbard III 291 Renting/rent/durable goods/Rothbard: In the case of the durable good and its services, there is an equilibrium-price relation, which the market tends to establish. The market price of the good as a whole is equal to the present value of the sum of its expected (future) rental incomes or rental prices. Time/future: The expected future rental incomes are, of course, not necessarily a simple extrapolation of present rental prices. Indeed, since prices are always changing, it will almost always be the case that rental prices will change in the future.(1) >Capital value/Rothbard. Rothbard III 293 Demand/renting: The demand for the durable good (…) will now be, not only for direct use, but also, on the part of others, demand for investment in future renting out. Similarly, the reserved demand for the good as a whole will be not only for direct use or for speculative price increases, but also for future renting out of the good. Rothbard III 294 Stock keeping: The capital value of the good will be such as to clear the total stock, and the total of all these demands for the good will be in equilibrium. The reserved demand of the buyers will, as before, be due to their reserved demand for money, while the sellers of both the good as a whole and of its unit services will be demanding money in exchange. Market: (…) for any consumers’ good, the possessors have the choice of either consuming it directly or selling it for money. In the case of durable consumers’ goods, the possessors can do any one of the following with the good: use it directly, sell it whole, or hire it out - selling its unit services over a period of time. Supply/Equilibrium: The shape of the supply curves in both the capital and rental markets will be either rightward- and upward-sloping or vertical, since the greater the expected income, the less will be the amount reserved for direct use. It is clear that the supply schedules on the two markets are interconnected. They will tend to come into equilibrium when the equilibrium-price relation is established between them. >Equilibrium price/Rothbard. Rothbard III 295 Renting contract/price/capital value: (…) in some cases the renting contract itself takes on the characteristics of a capital contract and the estimating of future return. Such is the case of a long-term renting contract. Suppose that A is planning to rent a house to B for 30 years, at a set annual price. Then, instead of continual changes in the rental price, the latter is fixed by the original contract. Here again, the demand and supply schedules are set according to the various individual estimates of the changing course of other varying rents for the same type of good. Thus, if there are two identical houses, and it is expected that the sum of the varying rents on house A for the next 30 years will be 300 ounces, then the long-term renting price for house B will tend to be set at 10 ounces per year. Here again, there is a similar connection between markets. The price of presently established long-term rents will tend to be equal to the present value of the sum of the expected fluctuating rents for identical goods. Rothbard III 297 Time preference: (…) the time-preference factor does not, as does relatively correct forecasting of an uncertain situation, confer monetary profits or losses. If the time-preference rate is 10 percent, purchasing the aforementioned good for 59.4 ounces, holding it, and renting it out for 10 years to acquire 100 ounces does not constitute a monetary profit. Present money was at this premium over future money, and what this man earned was simply the amount of future income that the market had evaluated as equal to 59.4 ounces of present money. >Entrepreneurship/Rothbard, >Allocation/Rothbard. Rothbard III 316 Investments/Rothbard: Not only do the renting and selling of consumers’ goods rest on appraisement and on hope of monetary profits, but so does the activity of all the investing producers, the keystone of the entire productive system. (…) the term “capital value” applies, not only to durable consumers’ goods, but to all nonhuman factors of production as well—i.e., land and capital goods, singly and in various aggregates. The use and purchase of these factors rest on appraisement by entrepreneurs of their eventual yield in terms of monetary income on the market, and it will be seen that their capital value on the market will also tend to be equal to the discounted sum of their future yields of money income.(2) >Capital value/Rothbard. 1. It needs to be kept in mind that, strictly, there is no such thing as a "present" price established by the market. When a man considers the price of a good, he is considering that price agreed upon in the last recorded transaction in the market. The "present" price is always, in reality the historically recorded price of the most immediate past (say, a half-hour ago). What always interests the actor is what various prices will be at various times in the future. 2. On appraisement and valuation, cf. Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 328-30._____________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. "Vs" indicates differences in content, not necessarily the chronological progression of a controversy. 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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