Economic Foundations

by Don Boudreaux on September 1, 2009

in Economics

The late Arthur Seldon offered a darn good, and nicely concise, list of the important foundational tenets of economics:

Production takes place for consumption (derived from the Scot Adam Smith), not the other way round.  Value is measured not as an average but at the margin (the Englishman W. S. Jevons, the Frenchman Leon Walras, and the Austrian Carl Menger).  The cost of producing a commodity or service is not the labour required (the German Karl Marx) but the commodity or service thereby lost (the Austrian Friedrich von Wieser).  The instinct of man is to “truck and barter” in markets (Adam Smith).  He will find ways round, under, over or through restrictions created by government (the Austrian Eugen von Böhm-Bawerk).  There is no such thing as absolute demand (for education, medicine or anything else) or supply (of labour or anything else) because both vary with price (the Englishmen Alfred Marshall, Lionel Robbins and many before and since).  Not least, without the signalling device of price, man cannot spontaneously and voluntarily co-operate for prosperous co-existence (the Austrian Ludwig von Mises and the Austrian-born but voluntarily-British Friedrich Hayek).

(From page 6 of Vol. 7 of The Collected Works of Arthur Seldon.)

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