Principles of Economics

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Discussion seminar participation is available for members+. Regular members will be able to access recordings of the seminars. The second itself was defined as one 86400th of a day, but in 1967, a new and more precise definition was adopted by the International System of Units, relying on the Caesium standard, the most accurate and precise time and frequency standard to be discovered so far. According to this standard, the second is defined as the duration of 9,192,631,779 periods of the radiation corresponding to the transition between the two hyperfine levels of the ground state of the caesium-133 atom at a temperature of 0 Kelvin. Since 1983, the meter has been defined as the length of the path traveled by light in vacuum during a time interval of one 299,792, 458th of a second. This measurement can be determined, demonstrated, and verified through experimentation.

The second section of the book introduces the main actions humans carry out to economize individually. In each of the chapters of this section, a key concept is introduced and analyzed in terms of the reasons for humans to engage in it, the problem it solves, and how it helps humans economize on time. The first and most basic is labor, the topic of chapter 4. Chapter 5 explains the economics of property, why it emerges and the problem it solves, and applies it to the concept of self-ownership. Chapter 6 introduces a particular type of property, capital, which is used for the production of other goods. The cost of capital, its productivity, and its connection to time preference are discussed. Just because we are able to construct measures of unemployment, gross domestic production, consumption, investment, and other economic parameters does not mean that these factors have to be causally related to one another in scientifically ordained relationships based on quantifiable and testable magnitudes. In fact, since the actual drivers of this relationship are the actions of the individuals, there is no reason to suppose that the aggregate measures are any more than superficial epiphenomena unrelated to the causal mechanisms driving the relationships examined. Attempting to formulate such relationships is akin to scientists studying gases and attempting to formulate laws based on the color of different containers, the number of containers used, brand of manufacturer, first letter in the name of the experimenter, and various epiphenomena with no causative effect on the experiment. A scientist can indeed formulate relationships between these parameters, but it will be impossible for any meaningful such relationships to hold after repeated testing by independent parties. Repeating the same experiment with an experimenter with a different name, or a container of a different color will still yield the same results, making the original experimenter’s theorizing pointless. It is the gas inanimate gas particles whose temperature, pressure, and volume are the control knobs for the gas system being studied, and the container’s color and experimenter’s name are irrelevant. Similarly, it is the action of humans which shapes economic outcomes, not the aggregate measures constructed in government statistical offices. PDF / EPUB File Name: Principles_of_Economics_-_Saifedean_Ammous.pdf, Principles_of_Economics_-_Saifedean_Ammous.epubMises argues that philosophers had long attempted to analyze humanity’s evolution and destiny based on an understanding of what History, God, or Nature had intended for humans. Such analyses dealt with humanity as a whole, or analyzed collectivist concepts like nation, race, or church, and sought to find laws to explain the behavior of such entities and their consequences, as if history had ironclad laws to be discovered, akin to the natural sciences.

At the heart of the Austrian approach to economics is the goal of understanding the causal processes of economic activity, and their consequences. Logical deduction and thought experiments are employed to understand the logical implications of economic processes. Initially, this approach might appear banal and fruitless compared to the dominant approaches of mainstream economics today, which rely on mathematical analysis. But a closer look shows us why quantitiative analysis is unsuited for building an economic theoretical framework, and that quantitative analysis is meaningless and mute without logical deduction and conclusions to motivate it and understand its results. In keeping with the Austrian critique of quantitative approaches to economic analysis, this book will present and analyze economic acts in plain language, not with mathematical equations. Human action will be understood through logical deduction and thought experiments, not equations and quantitative analysis.Establishing such a relationship is possible in the natural sciences due to several factors which are not present in the study of human action. Most importantly, measurement are made in units that are constant, and clearly defined by the International System of Units, which has defined seven base units on which all scientific measurements are based: the second, meter, kilogram, ampere, kelvin, mole, and candela. From these seven units, many other units can be derived. Mises, Ludwig von. Human Action: The Scholar’s Edition. Ludwig von Mises Institute, 1998. Chapters XVII, XVIII The second reason we cannot formulate quantitiative laws in economics is the impossibility of conducting replicable experimentation on economic questions. The subjects of the natural sciences are the material objects which can be isolated and tested repeatedly until regularities are found and laws established. But the subjects of the social sciences are the ideas and actions of humans, immeasurable and non-quantifiable. Experimentation with ill-defined units cannot yield comparable and reproducible results, and so experimentation will fail to turn up quantitative regularities and laws, because there are no units in which these laws can be expressed. Without measurement and repeated experimentation, it is not possible to find regularities, derive constants, and formulate scientific relationships and laws. The entire book is divided into 5 parts and 18 chapters that resent the holistic approach on principle of economics. Contents of principles of economics saifedean ammous epub Bradley, Robert. Energy: The Master Resource: An Introduction to the History, Technology, Economics, and Public Policy of Energy. Kendall Hunt Publishing, 2004.

Ammous, Saifedean. The Fiat Standard: The Debt Slavery Alternative to Human Civilization. Saif House, 2021. Chapter 7 But accounting identities do not denote real world causality. There are no mechanisms in macroeconomics to experimentally establish causality in the same way as in natural sciences. Keynes’ equations attempting to predict the impact of one aggregate metric to another bears no relation to the actual causes in the world, because there is no way of measuring, testing and verifying any of it.DiLorenzo, Thomas. “The Myth of Natural Monopoly.” The Review of Austrian Economics, 1996, pp. 43-58. Mises defines human action as “purposeful behavior”, so as to distinguish it from instinctive, impulsive, or emotional acts. “Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life.” Rothbard, Murray. Man, Economy, and State with Power and Market. Ludwig von Mises Institute, 1962. Chapter 3 There can be no studies done to test this hypothesis, because one cannot experiment on entire economies made of millions of people who have other plans for their lives. However, the theory persists to this day, in spite of decades of accumulated evidence it is not an accurate representation of how the world works. In the 1970s, as inflation and unemployment both increased at the same time, and the Keynesian trade-off was comprehensively refuted beyond a shadow of doubt. But the advantage of economics having no systematic and replicable method of experimentation and testing is that theories can always be adjusted after their failure in a way that can justify non-compliant real world observations. The Bitcoin Standard was translated into 36 languages. In his upcoming book on Prinicple of Economics Saifedean gives antidote to the modern economics textbook.