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Austrian School

Austrian School
The Austrian School is a school of economic thought that is based on methodological individualism.[1][2][3][4] It originated in late-19th and early-20th century Vienna with the work of Carl Menger, Eugen von Böhm-Bawerk, Friedrich von Wieser, and others.[5] Current-day economists working in this tradition are located in many different countries, but their work is referred to as Austrian economics. Among the theoretical contributions of the early years of the Austrian School are the subjective theory of value, marginalism in price theory, and the formulation of the economic calculation problem, each of which has become an accepted part of mainstream economics.[6] Many economists are critical of the current-day Austrian School and consider its rejection of econometrics and aggregate macroeconomic analysis to be outside of mainstream economic theory, or "heterodox. Methodology[edit] In the 20th century, various Austrians incorporated models and mathematics into their analysis. Inflation[edit]

Subjective theory of value Overview[edit] According to the subjective theory of value, voluntary trades between individuals imply that both parties to the trade subjectively perceive the goods, labour or money they receive as being of higher value to the goods, labour or money they give away. The subjective-value theory holds that one can create value simply by transferring ownership of a thing to someone who values it more highly, without necessarily modifying that thing. Where wealth is understood to refer to individuals' subjective valuation of their possessions, voluntary trades may increase the total wealth in society. Individuals will tend to obtain diminishing levels of satisfaction, or marginal utility from acquiring additional units of a good. In a free market, competition between individuals seeking to trade goods they possess and services they can provide for goods they perceive as being of higher value to them results in a market equilibrium set of prices emerging. Diamond-water paradox[edit] Notes[edit]

Economic liberalism Economic liberalism is the ideological belief in organizing the economy on individualist lines, meaning that the greatest possible number of economic decisions are made by individuals and not by collective institutions or organizations.[1] It includes a spectrum of different economic policies, such as freedom of movement, but it is always based on strong support for a market economy and private property in the means of production. Although economic liberalism can also be supportive of government regulation to a certain degree, it tends to oppose government intervention in the free market when it inhibits free trade and open competition. However, economic liberalism may accept government intervention in order to remove private monopoly, as this is considered to limit the decision power of some individuals. Ideological basis[edit] Private property and individual contracts form the basis of economic liberalism. Position on state interventionism[edit] Position on public enterprise[edit]

Intrinsic value (ethics) It is contrasted with instrumental value (or extrinsic value), the value of which depends on how much it generates intrinsic value.[2] For an eudaemonist, happiness has intrinsic value, while having a family may not have intrinsic value, yet be instrumental, since it generates happiness. Intrinsic value is a term employed in axiology, the study of quality or value. Other names for intrinsic value are terminal value, essential value, principle value or ultimate importance. See also Robert S. Hartman's use of the term in the article Science of Value. Intrinsic value is mainly used in ethics, but the concept is also used in philosophy, with terms that essentially may refer to the same concept. End is roughly similar, and often used as a synonym, for the following concepts: This is a table which attempts to summarize the main intrinsic value of different life stances and other views, although there may be great diversity within them:

Paradox of hedonism The paradox of hedonism, also called the pleasure paradox, is a concept in ethics that focuses upon pleasure and happiness as strange phenomena that do not adhere to normal principles. The philosopher Henry Sidgwick was first to note in The Methods of Ethics that the paradox of hedonism is that pleasure cannot be acquired directly, it can only be acquired indirectly.[1] Overview[edit] It is often said that we fail to attain pleasures if we deliberately seek them. This has been described variously, by many: John Stuart Mill, the utilitarian philosopher, in his autobiography: But I now thought that this end [one's happiness] was only to be attained by not making it the direct end. Viktor Frankl in Man's Search for Meaning: Happiness cannot be pursued; it must ensue, and it only does so as the unintended side effect of one's personal dedication to a cause greater than oneself or as the by-product of one's surrender to a person other than oneself. What is good? Poet and satirist Edward Young:

Montesquieu Charles-Louis de Secondat, Baron de La Brède et de Montesquieu (/ˈmɒntɨskjuː/; French: [mɔ̃tɛskjø]; 18 January 1689 – 10 February 1755), generally referred to as simply Montesquieu, was a French social commentator and political thinker who lived during the Age of Enlightenment. He is famous for his articulation of the theory of separation of powers, which is implemented in many constitutions throughout the world. He did more than any other author to secure the place of the word despotism in the political lexicon,[1] and may have been partly responsible for the popularization of the terms feudalism and Byzantine Empire.[citation needed] Biography Château de la Brède Montesquieu was born at the Château de la Brède in the southwest of France, 25 km south of Bordeaux.[2] His father, Jacques de Secondat, was a soldier with a long noble ancestry. Montesquieu's early life occurred at a time of significant governmental change. Philosophy of history It is not chance that rules the world. See also

Paradox of value An image of water, a commodity that is essential to life. In the paradox of value, it is an apparent contradiction that it is cheaper than diamonds, despite diamonds not having such an importance to life. Labor theory of value[edit] In a passage of Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations, he discusses the concepts of value in use and value in exchange, and notices how they tend to differ: What are the rules which men naturally observe in exchanging them [goods] for money or for one another, I shall now proceed to examine. Furthermore, he explained the value in exchange as being determined by labor: The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it.[4] Hence, Smith denied a necessary relationship between price and utility. The labor theory of value has lost popularity in mainstream economics and has been replaced by the theory of marginal utility. Marginalism[edit]

List of liberal theorists Individual contributors to classical liberalism and political liberalism are associated with philosophers of the Enlightenment. Liberalism as a specifically named ideology begins in the late 18th century as a movement towards self-government and away from aristocracy. It included the ideas of self-determination, the primacy of the individual and the nation, as opposed to the state and religion, as being the fundamental units of law, politics and economy. Classical contributors to Liberalism[edit] Laozi[edit] Laozi (China, 6th century BCE) is the author of the classic Chinese text, the Tao Te Ching, and the founder of Taoist philosophy. Aristotle[edit] Aristotle. In addition, Aristotle was a firm supporter of private property. "Humanism"[edit] Niccolò Machiavelli[edit] Niccolò Machiavelli. Contributing literature: Il Principe, 1513 (The Prince, [1])Discorsi sopra la prima deca di Tito Livio, 1512-1517 (Discourse on the First Decade of Titus Livius) Desiderius Erasmus[edit] Desiderius Erasmus

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