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I would just add that I have used the first 66 or so pages of MES to teach the derivation of the supply and demand curves in my Intro course for almost 20 years. Those of you who have been at the FEE summer seminars the last few years have seen me use it a bit there as well. It remains the best treatment of that in the Austrian literature. (Since I haven't taught Intro since the Boettke & Prychitko version of Heyne came out, I haven't tried theirs.) What's so good about it is that it integrates both ordinal marginal utility and monetary exchange into the derivation, making it much more realistic and understandable to new economics students.

As Pete has noted elsewhere, it's all very Wicksteedian.

Pete, on the issue of Approach to Economic Analysis, did Rothbard ever mention the position that Talcott Parsons reached in "The Structure of Social Action" (1937)? The action frame of reference that Parsons offered is as near as dammit to praxeology. Mises even gave Parsons a tick for historical studies in that book.

Of course Parsons was off the planet in economic policy (he supported the New Deal) but at the level of methodology , that book could have led the sociologists into a partnership with the Austrians. After that Parsons lost the plot in methodology as well, under the influence of general systems theory.

People like Swedberg are trying to get economics and sociology back together but he is light on the Austrians. Mises did better than anyone on bridging the gap but of course the sociologists never wanted to know about him. However it looks as though the Austrians never wanted to know much about Parsons either, even at the time when they were aligned. Given that Rothbard was US-based, he would have been better placed to relate to Parsons but I don't have any of his books on the shelf to check.

Dipping into my MES i find the discussion on p.85 to be very weak and not a patch on say Adam Smith's analysis of sympathy (or that provided by JS Mill).

Also, I find MNR's discussion of continuity to be relatively weak. The individual chooses on the basis of relative prices. Rothbard's Buridan's Ass analysis seems misplaced.

Is there anything in Rothbard of value which is not in, say, Friedman's Price Theory or even Varian?

Rafe,

Believe me, Dr. Boettke is familiar with the work of Talcott Parsons. See, e.g., Boettke and Storr (2000)---- this is an unpublished paper that was prepared for a presentation, however.

I agree with your assessment of how the Austrians dropped the ball on building an alliance with sociologists. In addition to your comments, I believe that the alliance was never formed because many scholars were stuck at loggerheads during the Schutz/Parsons debate; with supporters and opponents of Schutz not understanding his methodological starting points. Moreover, sociologists, by and large, seem comfortable without a coherent theoretical paradigm; and with their repudiation of rational-choice, the thought of their accepting praxeology, a priori, seems more far-fetched. But, if someone puts forward that praxeology is equally concerned with ontological considerations, Mises will get his hearing at ASA.

Btw, I am growing more confident that intellectual bridges will be erected between economists and sociologists. Why? Because sociologists are coming to acknowledge that an understanding of the social order cannot be understood without a working knowledge of economics.

Last, how can it be that a paper entitled "Mises as an Economic Sociologist" has not been written? If one was written - by Swedberg - on Tocqueville, one should be written on Mises. I think I think I need to do more writing than reading!!!

Rafe,

Rothbard actually cites Parsons.

Brian,

You are right, the Schutz-Parsons debate is pivotal, but it is also the case that some of us have tried to make the argument to sociologists about the Austrians --- Virgil and Emily Chamlee-Wright are pretty much focused on this right now. The next issue of the RAE is edited by Paul Lewis and Emily Chamlee-Wright and is on the issue of social capital. However, there are obvious tensions in the economists and the sociologists project as those discplines are currently understood and practiced. See the Meadowcraft and Pennington forthcoming book Rescuing Social Capital from Social Democracy --- I wrote the preface for the book.

My own work in the field these days is focused on the work of Peter Berger and the application to development economics. I have long had a professional relationship with Berger's center at BU --- just gave some lectures there again this past summer.

Max,

You obviously do not find Rothbard's discussion persuasive, nor are you convinced (it seems) that his conclusions are correct (even if you don't like the way he gets there), so it would seem unlikely that any argument would persuade you that Friedman and Varian have severe weaknesses due to inadequate subjectivism, and preoccupation with equilibrium end-states. So we would be back at square one trying to persuade you that these arguments are important.

I would recommend listening to Tyler Cowen's podcast with Russ Roberts on his Discover Your Inner Economist. At a critical juncture in the podcast, Tyler points out how the book has reconnected him to his Austrian roots. It is not just subjective value, but the subjective perception of opportunities, and the subjective beliefs about those opportunities.

Pete

"You obviously do not find Rothbard's discussion persuasive, nor are you convinced (it seems) that his conclusions are correct (even if you don't like the way he gets there), so it would seem unlikely that any argument would persuade you that Friedman and Varian have severe weaknesses due to inadequate subjectivism, and preoccupation with equilibrium end-states. So we would be back at square one trying to persuade you that these arguments are important."

MES is all about equilibrium states. Steve Horwitz has a nice discussion on Rothbard's equilibrium monetary theory in the context of deflation.


" It is not just subjective value, but the subjective perception of opportunities, and the subjective beliefs about those opportunities."

That leads to Lachmann and expectations. Rothbard, however, is Mr equilibrium writ large relative to Lachmann (market processes generate equilibrium).

Rothbard's book deserves all the praise it can get, but at the same time we must recognize its flaws and contractions. While it advocated simple, straightforward economics, it indulged in endless circumlocutions.

You want me to run out and buy a text?

Tell of one that tells us what curves are really all about, to set the profession apart from the hoi polloi.

I meant to say contradictions, not contractions.

"I would just add that I have used the first 66 or so pages of MES to teach the derivation of the supply and demand curves in my Intro course for almost 20 years. Those of you who have been at the FEE summer seminars the last few years have seen me use it a bit there as well. It remains the best treatment of that in the Austrian literature. (Since I haven't taught Intro since the Boettke & Prychitko version of Heyne came out, I haven't tried theirs.) What's so good about it is that it integrates both ordinal marginal utility and monetary exchange into the derivation, making it much more realistic and understandable to new economics students.

As Pete has noted elsewhere, it's all very Wicksteedian."

Posted by: Steve Horwitz | November 23, 2007 at 11:37 AM

Your problem is not just to teach "the deriviation of the supply and demand curves" but their purpose.

All I can see is that they make economics more abstract, remote, and inaccessible.

You have two different ways of saying the same thing:

a) Demand goes down as price goes up.

b) The demand curve always slopes rightward and downward.

Since a is briefer, more directly to the point, and more readily comprehensible, what do you gain by the circumlocution and obscuration, other than to obscure economics, and keep real economists out?

If you really want to make economics more understandable, why go out of your way to make it less so?


And, furthermore, how did Smith, Ricardo, Menger, and Mises ever manage without them?

"a) Demand goes down as price goes up.

b) The demand curve always slopes rightward and downward.

Since a is briefer, more directly to the point, and more readily comprehensible,"

a is also incorrect.

Yet again, you fail to understand the basic distinction between demand and quantity demanded (as Dr Boettke or Horwitz will no doubt readily attest)

Don't hold your breathe waiting for them to attest.

You are partially right.

As I had already pointed out in a previous posting here, there is a difference between quantity demanded and intensity or height of demand for the marginal unit. And it is furthermore true that that demand for the marginal unit does NOT go down as the price goes up.

So, yes, my "a" was incorrect so far as demand in that sense was concerned.

It was still right in the other sense of demand.

But that is irrelevant to this discussion.

The demand in the demand curve is that of the number of units demanded. That does go down as the price goes up, in real terms.

Otherwise, what is the demand curve telling us?

So, the question is still: what is it telling us that a non-curvilinear terminology would not?

What is its purpose other than to remove economics from the scrutiny of outsiders, and reserve it for an esoteric elite?

What I meant was that your whole objection was irrelevant to this discussion.

"The demand in the demand curve is that of the number of units demanded. That does go down as the price goes up, in real terms."

We all assume you will say quantity demanded rather than demand in future.

Prof. Horwitz has already attested that quantity demanded and demand are different I believe (an earlier thread).

"The demand in the demand curve is that of the number of units demanded. That does go down as the price goes up, in real terms."

Quantity demanded rather than demand. You are a very sloppy fellow.

"b) The demand curve always slopes rightward and downward."

always? I think you mean income-compensated demand curve in the remark above.

"a) Demand goes down as price goes up.

b) The demand curve always slopes rightward and downward.

Since a is briefer, more directly to the point, and more readily comprehensible, what do you gain by the circumlocution and obscuration, other than to obscure economics, and keep real economists out?"

Presumably Dr Horwitz spends so much time on deriving supply and demand schedules to protect his students against the kind of sloppy thinking represented by Lesvic's (a) above.

a & b are different statements. b (under certain conditions) is correct. a would not pass muster in an intro econ class.

Demand and quantity demanded are different. As indeed are Supply and quantity supplied. Mr Lesvic really ought to click on the amazon link for the Boettke-Heyne-Prychittko 'economic way of thinking' text on the right sidebar and thoroughly read his purchase prior to doing the exercises at the end of each chapter. I challenge him to do so.

You're right. I was sloppy in this whole business. But you're still vague and irrelevant.

Would you explain what you mean by "income-compensated demand curve."

You have already tried to send me out after one left-handed monkey-wrench, the difference between quantity supplied and quantity supplied. So, this time, you go out after whatever it is we need to look for, and bring it back to me. And then tell me what difference it makes in our discussion.

Why curves at all? Why not economics straight? This is science, not intellectual sport. The object is not to fool the other fellow, but to enlighten him.

You do not want to be enlightened. Your demonstrated preference is shown by your failure to purchase the Boettke-Heyne text.


"The demand curve always slopes rightward and downward."

If you want to know why this is incorrect buy and read a book. It is not my job to give you free lessons. What's in it for me? What is my inecentive to do so?

"You have already tried to send me out after one left-handed monkey-wrench, the difference between quantity supplied and quantity supplied. "

You still do not see the difference between supply and quantity supplied do you? Shame on you: Buy the Boettke-Heyne book instead of wasting your money on ads in Liberty magazine etc. You will be sure to learn a great deal from the text.

The difference is not between demand and quantity demanded, but between demand in one sense and demand in another.

There is no difference between quantity supplied and supply. There is no supply without a quantity. A supply without a quantity is not a supply. A supply is necessarily a quantity supplied, and your difference between quantity supplied and supply is simply between quantity supplied and quantity supplied.

And that is why your champions have never come riding to your rescue on this matter, and never will.

Or you could google 'income compensated demand curve' just as you googled quantity demanded and demand (and found an explanation that you still clearly have yet to comprehend - it is clear in your stumbling attempts to pretend you do understand it as provided above).
Please please please purchase the Boettke-Heyne text. Or maybe Dr Boettke will provide you with a gratis copy (I'm keeping mine - even after the final test - a great text!).

"There is no difference between quantity supplied and supply. There is no supply without a quantity. A supply without a quantity is not a supply. A supply is necessarily a quantity supplied, and your difference between quantity supplied and supply is simply between quantity supplied and quantity supplied."


Why not repeatedly demonstrate your failure to understand basic price theory. The above is hilarious. You really ought to write for the Wall Street Journal or a daily newspaper. As i said, the page you googled clearly did not enlighten you.


I dare you to by the Boettke-Heyne book. Do you deny that any difference between quantity demanded and demand is to be found there? How truly confident are you in your own ignorance and incomprehension of basic economics? If it is not in Boettke-Heyne then I will cede that you are truly the genius-heir of Von Mises and Hayek.

Dr Boettke in an earlier post to Mr Lesvic: "Boettke: "On the question of supply and demand and quantity supplied and quantity demanded, I would just point to my principles textbook (which I inherited from Paul Heyne), The Economic Way of Thinking"

We all second the good Dr's diagnosis. So please go buy & read the text.

Indeed Mr L, it is even possible to have supply when quantity supplied is equal to zero. I'll leave you to work through the basic intro test level reasoning. Draw the graph and provide the basic argument.

Drawing the graph will truly help you (especially if you have worked through the early chapters of Boettke-Heyne).

I really hope this thread doesn't continue in the current direction because comments may well get closed if it does. Can we at least stick to the context of MES rather than informing those who blog here what their "problems" are?

In the context of teaching principles students, one reason for carefully deriving the curves is indeed to clarify demand/supply and quantity demanded/supplied. (Rothbard actually uses the phrase "quantity exchanged" to describe the quantity of the good demanded and supplied at the equilibrium price, and he distinguishes this from the supply and demand schedules/curves.) The reason this clarification is important is that we end up saying two things to students that appear to be contradictory:

a) Demand goes down as price goes up
b) Price goes up as demand goes up

Intro students will rightly ask "wait a minute - if demand goes down when price goes up, how can price rise when demand goes up?" Their confusion is totally understandable and will impede their ability to understand correctly the nature of market processes and the difference between a change in preferences and a change in constraints. Using the language of quantity demanded and demand (or the equivalent with supply) to distinguish changes in constraints from changes in preferences is a way of making the nature of market processes clearer, not more obscure.

Obtuseness and obscurity are of course, like beauty and economic value, in the eye of the beholder, but anyone who has actually tried to teach introductory economics knows that the distinctions in question clarify more than they obscure.

MES lays this out very very carefully, stressing that changes in "demand" are due to changes in human valuation ("preferences") by buyers, while changes the quantity demanded that result from a change in price (to demanders, a constraint) come from changes in the valuations made by suppliers (i.e., changes in supply). It is this interaction of human valuation that comprises the unfolding of the market process. Understanding that, for example, an increase in supply decreases price which in turn increases the quantity demanded to clear the market is the only way to clearly understand how a change in valuation on one side of the market changes the constraints facing the other side, leading to market coordination *without the preferences of the other side (demanders) having had to change*. Absent the quantity/curve distinction, we cannot understand the most basic way in which markets clear.

My own belief (Rothbard's too, I might note) is that graphical presentations are a very effective heuristic to present these distinctions to students. One of the beauties of MES is that Rothbard integrated Austrian subjectivism (especially ordinal marginal utility theory) and the cash-balance approach to money holding into a textbook-like presentation of supply and demand. That, I would argue, is the best of both worlds for those of us who want to teach principles from an Austrian perspective.

Put to the market test, I'm willing to bet that the graphical presentations of MES or a really good principles textbook clarify much more than they obscure.

I thank Dr Horwitz for his (as usual) splendid post. I'd add, however, that demand also changes when certain constraints other than the own-price of the good in question change (the price of a complement or substitute good), so it is not just changes in preferences that change demand. The idea of preferences versus constraints is very helpful I think.

Also, please note that it was not I who told the bloggers "what to do".

Taking a class with the Heyne-Boettke book I think it and MES are good complements rather than substitutes.

Yes, intro student is correct of course that things other than preference changes can change the demand curve. Any change other than an own-price change will do it. But thinking in terms of preferences vs. constraints is a good first cut at it with intro students, then you can turn to talk about changes in income or the prices of other goods, etc..

Thanks again to Dr Horwitz for a great post. I wish I was taking my intro econ with him.

Incidentally, would Dr H please post on Rothbard's monetary theory. He seems to have a very different view of monetary equilbrium than say Selgin or Horwtiz

Prof Horwitz,

Apparently, we're half-way to agreement, you finally seeing that there is no difference between quantity supplied and supply, but I still unable to see the advantage of circumlocution over straightforward economics.

.

I'm sorry Mr. Lesvic but I simply do not see how you can seriously read my post as saying there is no such difference. Let me be crystal clear:

quantity demanded and demand are different

quantity supplied and supply are different

I have ridden to the rescue of intro student, contrary to your prediction.

And these will be my final words to you:

Earlier on you said: "The difference is not between demand and quantity demanded, but between demand in one sense and demand in another."

I would only ask how it is more "straightforward" to use the same word to mean two things and to continually have to say "I mean it in x sense rather than y sense" than it is to distinguish between demand and quantity demanded. Surely your strategy is unnecessarily complex and designed to confuse the layman, no? It seems to me that YOU are the one guilty of "circumlocutions" and obfuscation, while everyone else who has taken intro understands that using different terms to describe different phenomena is the path to "straightforward economics."

And with that, Mr. Lesvic, I'm through with this conversation. You are welcome to the last word - assuming you can explain thoroughly in which sense you are using it.

I will let you have the last word, since you have let me have the best.

And there you have it folks. Lesvic is too dumb to even know when an intellectual superior has just put him over his knee and given him a good spanking.

He *really* does think that he is a genius and that Hayek, Mises, Boettke, etc, etc are all dullards unable to see the genius that is Lesvic's idea.

From my post above:

"There is no difference between quantity supplied and supply. There is no supply without a quantity. A supply without a quantity is not a supply. A supply is necessarily a quantity supplied, and your difference between quantity supplied and supply is simply between quantity supplied and quantity supplied."

The expression "a supply of zero" is simply a figure of speech, and doesn't mean that zero is a supply. It is still a non-supply.

I could just imagine all of you lost in the wilderness, and the one in charge of the food supply announcing that you were down to a supply of zero, and the rest of you asking how long it would last.

If this is what the Austrian School has come to, Menger must be moaning in his grave.

"There is no difference between quantity supplied and supply. There is no supply without a quantity. A supply without a quantity is not a supply. A supply is necessarily a quantity supplied, and your difference between quantity supplied and supply is simply between quantity supplied and quantity supplied."

Ok. All leave Mr Lesvic alone now please. If you fall upon the childish nonsense above like a pack of nasty dogs I'll have no alternative but to assume you also beat up on little kids and small fluffy bunnies.

Max,Anon, Steve,

Just once, explain how there could be a supply without a quantity, how you could live, out in those wilds, with zero food.

I should have said:

how you could eat with zero food.

I should have put it this way:

give me an example of a supply without a quantity.

Mr. Lesvic,

I am sure that this has been mentioned by all of these economics wonks, but "supply" refers to a range of prices and quantities. It is all price-quantity pairs that compose the "supply curve" (i.e., the plot of quantity supplied at each supply price.)

Therefore, methinks, sellers would only be looking to supply "food," in those wilds, insofar as the selling price would cover the "cost of producing" "food." And, it seems to me, that the cost of food production will be very high in those wilds where there is zero "food."

Does this answer your question?

It sure helps.

It shows that I'm not the only one who can't conceive of a supply without a quantity.

If only dopey old Lesvic would display the very same diligence and persistence in studying basic price theory (the boettke-heyne text that 1001 posters have urged you to read) as he has repeatedly displayed here in demonstrating himself to be a truly ill-bred boorish ignoramus.

It sure takes one not to know one.

If this blog is not careful then Lesvic will huff and he'll puff and he'll blow your blog down.

"Just once, explain how there could be a supply without a quantity, how you could live, out in those wilds, with zero food."

Supply is a schedule of price-quantity pairs. Quantity supplied is a positive function of price, but at the vertical intercept for supply, quantity supplied is equal to zero. At a higher price, QS is positive. So, we have supply, but at a certain price (or below that price) quantity supplied is zero.

Quantity supplied will be zero assuming that the vertical intercept of the demand curve is below the price at which QS = zero.

It is a model Mr Lesvic. Please get the Heyne book (final call for the Heyne book - will Mr Lesvic please report to Gate Amazon for the departure of the Heyne flight) and carefully read it.

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