Volume 2: The crown and the hat are all over the capital, and the spirit is full of energy and enter the foggy city Chapter 10: Masters (Part 2)
Chapter subtitle: The Big Three of the Austrian School
This master, Carl Menger, whose body is still warm, is so important to the Austrian School and neoclassical liberalism that neoclassical liberalism cannot be established without his marginal utility theory.
In short, the individual or individualism is the root of liberalism. Without the individual, what kind of freedom is there? Therefore, liberals oppose all forms of collectivism.
For liberal economists, the question of whether human economic activities are determined by individuals or by the collective is crucial. If economic activities are not determined by individuals but by the collective, liberalism has no basis in economics.
This is just like if there is no God, then creationism becomes a joke. There is no foundation at all, so what is the point of studying it ?
The marginal utility theory established by Menger uses individualism to provide an "organic" and "compositive" explanation of the social and economic system.
This explanation is that value is determined by individual subjective preferences, supply and demand also depend on various individual decisions, and economic activity decisions are made by individuals rather than collectives.
Continuing the deduction, the Austrian School believes that the entrepreneurial spirit is the dominant force in economic development, advocates that private property is indispensable for the efficient use of resources, and claims that government intervention in the market process will lead to adverse consequences.
That is: entrepreneurs represent advanced productivity, private property is sacred and inviolable, and there is a small government and a big market.
LOOK, what a great theory!
If it weren't for those damn economic crises, the Austrian School of political economics would be enough, and there would be no need for Marxism and Keynesianism.
Eugen von Böhm-Bawerk, another great figure of the Austrian School, also died six years ago. In addition to being an economics scholar, Böhm-Bawerk also served as a senior financial official in the Austrian government for a long time. Since 1895, he has served as Austrian Finance Minister three times until he resigned from this position in 1904.
In the 1880s and 1890s, Lao Pang wrote a large number of works criticizing Marxist economics. In 1896, he published "Karl Marx and the End of His System". Just look at the title of this book to know how rebellious it is. He replaced Marx's labor value theory with the marginal utility value theory, and negated and replaced Marx's surplus value theory with the interest time difference theory.
Böhm-Bawerk argued that capitalists do not exploit their workers. On the contrary, since capitalists must pay a portion of their total income to their employees as wages, they benefit their workers while making profits. The wages that capitalists give to their workers are actually higher than the value of their labor in the production process.
His interest theory is endless. To put it simply, he believes that Marxist economics ignores the factor of time.
The reason why interest is reasonable is because of time: when you lend money to others, it means that you give up the opportunity to use the money to meet your own needs or make it appreciate in value during the loan period, so it is reasonable to charge some interest. Then the capitalists invest capital to obtain profits, which can also be regarded as a special form of interest. Similarly, the rent collected by the landlord for renting out the house is actually the interest on durable goods.
In fact, the Austrian School was the first school of economics to criticize Marx's economic theory. Nikolai Ivanovich Bukharin, who later became a great traitor, once admitted that the Austrian School was the most powerful enemy of Marx's economic theory. He also wrote a pamphlet specifically targeting Böhm-Bawerk, The Political Economy of the Rentier.
Well, anyone who says this must be a traitor. And anyone who has seen the movie "Lenin in 1918" will remember the famous line: Go, save Lenin, Bukharin is a traitor...
Well, our Master Yuan wanted to take over this glorious torch and continue to fight with Bukharin, Lange, Hilferding, Kautsky, Bernstein, etc..
If he did this, he would definitely be worshipped by the public intellectuals of the future. However, this would generate a huge amount of S value, so he had to give up in dismay.
The dead are gone, and Yuan Yanshu can do nothing about it. Fortunately, one of the three great Austrian economists is still alive.
If nothing unexpected happened, Friedrich Freiherr von Wieser, now 70 years old, would have lived for another six years. He was also Böhm-Bawerk's good friend and brother-in-law, and served as the Minister of Finance of the Austrian government in 1917.
Master Wieser was the first economist to propose the term "marginal utility" , and he further deepened this theory, extending marginal utility from production and transaction to capital and distribution. In short, the wages obtained by workers, the interest obtained by capitalists, and the rent obtained by landlords are the benefits of labor, capital, and land production factors, and these benefits are ultimately the result of human subjective evaluation.
However, this master was nicknamed "The Great Misleader" in later generations because he pursued the concept of "balance" too much.
What is "balance"?
For example, there are two people, A and B: A has nine steamed buns, and B has only one steamed bun. They have the same appetite and eat five steamed buns. According to the marginal utility theory, the four extra steamed buns for A have only a small marginal utility for him, but on the contrary, they have a great marginal utility for B.
Therefore, for the same ten steamed buns, the sum of the marginal utilities of A's nine and B's one steamed bun must be less than the sum of the marginal utilities of A and B's five steamed buns each.
If we want to achieve the "equilibrium" of the maximum marginal utility between the two people, A must give four steamed buns to B. Of course, A is unwilling to do so. Then, we introduce C, who only has two steamed buns, and let the three of them make decisions and vote democratically. Guess what the result is?
That's right, ABC will divide the twelve steamed buns equally, four per person, so that the total marginal utility is indeed maximized and "equilibrium" is achieved.
It is conceivable that in a society, there are always more poor people with less steamed buns and fewer rich people with more steamed buns. If economic policies are formulated according to the "equilibrium" principle in marginal utility theory, then in a democratic society with the principle of one person, one vote, "tyranny of the majority" will definitely occur.
Therefore, Wiesel's theory is very dangerous, and if you are not careful, you will slip into the quagmire of extreme egalitarianism. But no matter what, Yuan Yanshu still wants to build a relationship with this master who is the only one left among the three giants.
Of course, our Master Yuan would not miss Mises. When he read Socialism, he found that this book was more complete than the one he was conceiving, but some parts were also very "weird".
Anyway, Yuan Yan sent 20 copies to the University of Vienna in one go. He even sent a copy to Schumpeter, the "Bat", and Hayek, who was only 22 years old.
Someone asked, why is he so concerned with the Austrian School, why doesn't he form his own school?
