A citizen of the Internet shared this as if were gospel along with this comment:
Late Professor Steven Horwitz expanding on a Misesian theme. Monetary profit helps allocate resources to higher valued uses. Elsewhere, Mises spoke of profit in a broader sense, “profit” being the goal of every action. In any case, those familiar with what pundits (from the left mostly) tend to say about “profit” may be completely surprised by this take, since it is so contrary to what they often read and hear.
Of course, these are vapid words and wishful thinking. How and why do profits signal that value has been created? I dunno. They just do cuz I said so. The only thing that profits signal is a market that doesn’t understand the true cost of production and consumers can’t be bothered to do it themselves. Mattresses and shaving razor blades are two high-margin consumer goods with mattresses yielding 500 per cent profits and razor blades even higher. These profits represent economic rent and not value. The fact that imperfect information shrouds this excess does not make it ‘value’.
Regarding the mortgage market meltdown of 2007-08, there were houses being built into a market with no buyers. The same ‘value’ being created was demonstrably vapour. Say’s Law was off-target again. Supply does not create its own demand.
Is it no wonder that so many Capitalists are also Protestant Christians who believe in Bible tales as well? Even worse are the Christians who are not Capitalists but are exploited by Capitalism the same way they are exploited by their religion. I guess once you’ve profiled the gullible, you might as well just keep exploiting them until there is nothing left to extract.
2 thoughts on “Austrian Economics Bollox”
I understand your skepticism towards the idea that profits signal the creation of value. It’s important to note that the concept of profit, particularly in the context of Austrian economics, is not limited to just monetary gain. In a broader sense, profit can refer to the achievement of one’s goals or the attainment of a desired outcome.
It’s also worth considering that markets are not perfect, and there will always be cases of imperfect information and manipulation. However, it’s important to remember that the market is a constantly evolving system, and it has the ability to self-correct over time.
Regarding the mortgage market meltdown of 2007-08, it’s true that there were instances of overbuilding and excess supply, but it’s important to note that this was a complex issue with multiple causes. It’s not accurate to say that Say’s Law was off-target, as it’s a general principle that can’t be applied to every situation without considering the specific context.
It’s not fair to generalize or stereotype all capitalists or Christians as being gullible or exploitative. People have diverse beliefs and motivations, and it’s important to approach discussions about economics and other topics with an open mind and a willingness to consider different perspectives.
Here’s where the insufficiency of language comes into play. We can always redefine things and play semantic games. “When I say elephant, I mean to include vegetables including tubers.” I’d call this disingenuous at best. The problem with markets is, except in rare cases, that they are slow and don’t usually operate like they do in textbooks. Meantime, they are out of whack. They may always be seeking equilibrium (per Adam Smith), but they are usually out of it. In recent news, check out Tesla’s resale market prices.
For the life of me, I can’t find my post on Max Weber’s The Protestant Ethic and the Spirit of Capitalism, which was my mental reference for the religious tie-in. .
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