"To defend the truth, to articulate it with humility and conviction, and to bear witness to it in life are therefore exacting and indispensable forms of charity."

H. H. Benedict XVI. Caritas in Veritate Encyclical. June 29, 2009

Friday, January 9, 2009

Science of money versus science of value

The essence of difference in such dichotomic terms as producer-consumer, income-expenditure, and the like has its very core in the use of (objetive) money. Such dichotomies cannot be valid in a science of (subjetive) value.

Maybe the most common and general false dichotomy in this sense is between "economic" and "non-economic". Assertions such as "Man has not just economic interests but he has social, politic, moral, sensual, and affectional ones." bluntly neglects the meaning of "economic" which the economist gives (or rather: should ideally give) to the term.

Given the particular realm of economics and its method, the qualificative "economic" can be validly given to any volitive action. The fact that you aren't choosing between an amount of money and a peach, but between saving your father from a fire or securing your life to watch over your baby son is beside the point from an economic point of view. The economist qua economist must acknowledge the same pattern of behavior in both phenomena and their susceptibility to be analized with economic theory.

Although there is a valid and huge domain of non-economic phenomena (including everything in which no volitive action is being analyzed), usually the qualificative "non-economic" is used for non-monetary, ultimately economic, phenomena.

Why doesn't economics limits itself to monetary phenomena? First of all: if you have a method (praxeology) which effectively allows you analyzing some sort of phenomena why should you reject ad portas such field of analysis? Second, and most important it's an argument due to the fact that much of the critique to free markets is based in the suposition that market only means fighting for exclusively and madly hoarding money in spite of love, peace of mind, etc. To reveal the inaccuracy of this critique, it's basic for economics to clearly explain that free markets are about better ways to pursue your goals, notwithstanding wheter they are more time with your family, enjoying the beauty of a dusk in the hills, or happiness for helping others.

It's a shame that even so prestigious (and deservedly so) as James Buchanan fall in the error of thinking that "economic motivation is not pervasive over all human behavior" (1). They don't seem to have understood Kirzner's essay (2) on what economics is about.

(1) Buchanan, James. What should Economists Do? 1979 -Liberty Press-. Page 66.
(2) Kirzner, Israel. The Economic Point of View. 1960 -Institute for Humane Studies, 1976-.

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