Fundamentals of Economic Analysis: A Causal-Realist Approach Joseph T. Salerno, Peter G. Klein

In this introduction to the basics of Austrian-school economic analysis, Joseph Salerno introduces a number of basic concepts including utility, exchange, psychic cost,  choice, value, and marginal utility. He also introduces a number of important topics such as Crusoe economics and the water-diamond paradox. Salerno lays the foundation for this series of lectures which will cover all the basics of Austrian analysis in more detail.  

The first in a series of ten lectures designed to introduce the layman to the basics of applied Austrian economics: Fundamentals of Economic Analysis: A Causal-Realist Approach.

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All action is really exchange. What the actor prefers less is exchanged for something he prefers more, including gift giving. It is a fallacy to say that the goods exchanged have equal value.

Salerno also covers elastic and inelastic demand.

The second in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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What determines market prices? Buyers and sellers must know of feasible trades. They can learn from their mistakes. They prefer higher profits to lower profits. They think in discreet terms. Both participants win in market exchanges.

Prices allocate resources to their highest uses. It is welfare-maximizing in any meaningful way. Prices are signals. Prices provide feedback to entrepreneurs about the quality of their forecasts.

The third in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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As with all government intervention, price controls do not achieve what their originators think they will. Trying to maintain a supply of milk by putting a price control on it will cause shortages, which are the very situations the price manipulators said they wanted to avoid.

Rent control seems great to the snug renter, but it will assure that no new building or renovations will be undertaken by entrepreneurs. Shortages follow. Agricultural subsidies, quotas and price support loans function as regressive taxes upon the poor. Sugar cane price controls are among long-standing interventions in the market.

The fourth in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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Factors of Production are economic goods: scarce means used to achieve an individual’s ends. They are land, labor and capital. Each is examined. Incomes are earned by factor owners as production takes place. There is no separated production and distribution.

Consumer goods and producer goods are subjectively determined by how they are used.

Factor pricing is by the Austrian theory of imputation.

To Austrians, all costs are opportunity costs.

The fifth in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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Causal-realist analysis allows imaginary constructs like the ERE — Evenly Rotating Economy — in order to isolate certain factors like interest.  There would be no profit or loss in the ERE, because those can only exist under conditions of uncertainty.

Klein explains profit as a category, not a line item. The entrepreneur’s function is to experiment with combinations of factors of production to find those that produce the greatest economic value.

The sixth in a series of ten lectures, from Fundamentals of Economic Analysis: A Causal-Realist Approach.

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