September 29 marks the 134th
anniversary of the birth of Ludwig von Mises, the tallest giant of the
“Austrian School” of economics. Although Mises is not a household name, Nobel
laureate Friedrich Hayek once referred to him as “the master of us all.” To
this day, professional economists and laypeople alike learn from the writings
of a man I consider to be the most important economist of the twentieth
century.
One of Mises’s earliest
achievements was to bridge the two fields we now call microeconomics and
macroeconomics. Originally, the classical economists of the eighteenth and
nineteenth centuries had embraced variants of a labor theory of value in their
teachings. Then, during the so-called Marginal Revolution of the 1870s,
economists replaced the labor theory with the modern subjective theory of
value, which sees all market prices as determined ultimately by the underlying
preferences of consumers. It doesn’t matter how many labor-hours it takes to
manufacture a product, according to subjectivism; if nobody really wants it, it
will fetch a low price……To Read More……
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