Mises Made Easier
Percy L. Greaves Jr.
Easy money. A loan market condition in which funds can be borrowed at lower interest rates than those that would prevail under free market conditions. Easy money policies lead to an expansion of circulation credit (q.v.) in that more funds are made available in the form of loans than savers have accumulated and set aside for that purpose.
Eclecticism. The policy, or advocacy of a policy, of constructing a composite system of thought or ideology by selecting different parts from different existing systems of thought or ideologies. In the case of economics, a science of thoroughly integrated and interdependent parts, this practice must result in policies, or the advocacy of policies, which, when properly analyzed, will be found to contain untenable contradictions and inconsistencies.
Econometrics. The attempts of statisticians and mathematicians to discover economic laws and solve problems of human action by the use of statistical data which necessarily relate to the past. Econometricians maintain that science is measurement and assume both a constancy and regularity in economic data that permits them to use precise mathematical measurement for testing and developing economic theory.
Actually, the only measurable magnitudes of human action are those related to historical facts. The ideas and value judgments which determine human participation in the market process are neither constant nor certain. All future human actions are thus uncertain variables which are incapable of either quantification or measurement. Consequently, the use of mathematics, as a means for determining economic theory applicable to future human actions, is futile. See Mathematical Economics
HA. 350-57; UF. 4, 62-63.
Economia politica e corporativa, (Italian). Literally, political and corporate (or corporativist) economy. Actually, the doctrine of Italian corporativism (q.v.) as taught at the Italian Universities under the regime of Fascism (q.v.).
Economic man. A concept developed by the nineteenth century epigones (q.v.) of British Classical Political Economy. It depicts man as if he were solely and constantly motivated by a desire for monetary gain to the exclusion of all other human desires. It is thus an attempt by these epigones to explain and justify the preoccupation of classical economics (q.v.) with the activities of businessmen and their neglect to pay sufficient attention to the activities of consumers.
EP. 179-81; HA. 62-64, 239-40,651.
Economic problem, the. How to employ the available means in such a way that no want more urgently felt should remain unsatisfied because the means suitable for its attainment were employed for the attainment of a want less urgently felt, i.e., wasted.
HA. 207; also PLG. 15-16, 68-69.
Economics. A theoretical science which provides a comprehension of the meaning and relevance of purposive (conscious) human actions. It is not about things and material objects; it is about the meanings and actions of men. Economics is a science of the means men must select if they are to attain their humanly attainable ends which they have chosen in accordance with their value judgments. However, the valuation and selection of ends are beyond the scope of economics and every other science. Economics enables men to predict the "qualitative" effects to be expected from the adoption of specific measures or economic policies, but such predictions cannot be "quantitative" as there are no constant relations in the valuations which determine, guide and alter human actions.
For Mises' comments "On Some Popular Errors Concerning the Scope and Method of Economics," including Macroeconomics, see Chapter 5 of The Ultimate Foundation of Economic Science.
HA. 1-3,6-10,64-69,92-93,647-48,651,653-54; TH. 203; UF.
67-69, 73; also PLG. 1-20, 23.
Egalitarianism. Equalitarianism; the untenable belief that all men are biologically equal and that all inequalities in income, wealth and opportunity are the results of unscrupulous usurpation and expropriation of the masses by the capitalists. Egalitarians contend that governments should use their coercive powers to restore and maintain the equality with which all men are supposed to be born. [Further reading see "Egalitarianism as a Revolt Against Nature" by Murray N. Rothbard Mises Institute: (2000)]
TH. 528, et al.
Ego, (Latin). Self; an individual's inner or mental consciousness. In psychoanalysis, the term applied to that part of the structure of the human mind from which conscious urges and desires arise.
?lan vital, (French). The urge or impulse that is an essential part of all human life; the fundamental source of human action. Term used by the philosopher, Henri Bergson (1859-1941), for the source of efficient causation and evolution of human life that passes from generation to generation.
Elasticity of demand. The extent to which the demand for goods or services is expected to react in response to changes in the prices or wages for such goods or services.
Electors. The high German princes who were entitled to vote in the elections of new King-Emperors of the Holy Roman (German) Empire from about 1257 to 1806. Originally seven in number, and never more than nine, they also formed the top college of the three-college Imperial Diet or Reichstag, the other two consisting of (1) lesser lay and spiritual princes, and (2) representatives of the towns.
Elysium, (from Greek mythology). Elysian Fields; the dwelling place of all noble and, virtuous persons after they have departed from this earth. It is a place where the inhabitants are presumed to enjoy eternal bliss, the highest kind of happiness.
Empathy. The ability to experience sympathetically the emotions of another; the emotional penetration of another person, frequently used in connection with the creator of a work of art.
Empirical. Depending on the existence of a regularity in the causality and succession of natural events which permits the acquisition of human knowledge from experiments or experience because identical natural or physical conditions and events always produce identical results or consequences. The natural sciences are empirical. The social or human sciences are not.
UF. 21, 27, 63, et al.
Empiricism. The theory that the only source of human knowledge is experience. Empiricism assumes a regularity in the flow of events and proclaims that experiments and observation are the main instruments for the acquisition of knowledge.
UF. 21, 27.
Enclosure movement. Under England's feudal system, most of the rural area consisted of open fields and forests with large sections set aside for workers to raise their own grain and graze livestock. With the rise of the cottage industry, private employment and both agricultural and industrial production for the market instead of the manor, more and more of the open fields (commons) were enclosed with fences for the exclusive use of their owners, usually the landed aristocracy, while many of the smaller holdings were consolidated into large ones. The movement required many Acts of Parliament and extended over the eighteenth and most of the nineteenth centuries. The lower classes were opposed to the movement. It resulted in an increase in agricultural production and the creation of a rural proletariat which then formed the labor force of the developing British manufacturing in the "Industrial Revolution" (q.v.).
English Revolution of 1688. See "Revolution of 1688, English."
Enlightenment, the. See "Age of Enlightenment."
Entbehrung, (German). Privation; abstinence; frugality.
Entrepreneur, (French). Literally, undertaker. In general usage, an entrepreneur is a businessman, one who plans, organizes and directs, i.e., undertakes, a business enterprise, primarily for his own gain or loss. In scientific economic theory, entrepreneur means acting man in the sense of the uncertainty inherent in every action, in that all human actions are undertaken in the flux of time and thus involve speculation in the anticipation of future events. The entrepreneur attempts to act so as to produce a more desirable future situation than he anticipates would result from either no action or any other possible action on his part. The entrepreneur, i.e., the acting man, is the one to whom the profits or losses of an action first redound.
AC. 64, 100, 107; B. 29, 100; HA. 252-56,291-300,649; PF. 111, 117, 146; also PLG. 67, 114-15.
Entrepreneurial component of interest rate. See "Interest rate, entrepreneurial component."
Entrepreneurial profit and loss. Profit or loss from market transactions calculated in monetary units. An increase (Profit) or decrease (loss) in the estimated monetary equivalent of the net assets (total assets minus total liabilities) of an individual or business unit over a specified period of time or resulting from specified business transactions. Entrepreneurial profits result from a better-than-others ability to anticipate and satisfy market demands. This is done by directing the use or combination of the factors of production available on the market in such a way that the goods or services produced bring a higher market price than other products made with the same factors of production.
Entrepreneurial profits and losses emerge due to the following ever present market factors: (1) The uncertainty of future consumer demand; (2) The ceaseless changes in the demand for and supply of the various human and physical factors of production, which constantly create new opportunities for better adjusting production to anticipated future consumer wants; (3) The fact that all production takes time; and (4) Differences in entrepreneurial ability to foresee, at the time production must start, what the most urgent wants of consumers will be at the various future times when the available alternative processes of production might be completed.
Entrepreneurial profits and losses are society's appraisal of the contributions of individuals and other business units to societal welfare or satisfaction. Entrepreneurial profits and losses are the means that consumers use to shift the control of capital, and the direction of production, into the hands of those who have demonstrated their ability to serve consumers best.
AC. 86; B. 20-39; HA. 212-14, 289-300; PF. 108-50.
Entropy. The mathematical measure of the unavailable energy in a thermodynamic problem concerning the transfer of heat into mechanical energy or vice versa at a given temperature.
Epicureanism. The Greek school of thought founded by Epicures (342-270 B.C.) that held that the joys of the mind are superior to the pleasures of the body.
Epigone. A follower, adherent or disciple, often with connotations of following in time and of lesser importance than the master or masters.
Epistemology, n. epistemological, adj. The theory of human knowledge; the basis of the sciences of man which is concerned with the origin, structure, methods and validity of human knowledge. It deals with the mental phenomena of human life: thinking, perceiving and knowing. It assumes that the logical structure of the human mind is unchanging. [Further reading see Epistemological Problems of Economics
Equation of exchange. An equation, first made popular by Irving Fisher (1867-1947) in his Purchasing Power of Money (1911), which states: The average amount of money outstanding (M) multiplied by velocity (V), i.e., total expenditures divided by the average amount of money outstanding, equals the sum of the average price paid for each good and service (p) multiplied by the quantity of each sold (q), or MV = (pq + p'q' . . . + p(n) q(n)), or more often MV = PT, in which P represents average prices and T the total physical volume of trade.
In short, the equation merely equates the sums spent to the total of prices paid, assuming an equality between the values of the prices paid and the goods bought. This is contrary to the subjective or marginal theory of value, wherein all voluntary exchanges are exchanges of unequal values. In using totals and averages, the equation of exchange also implies the fallacies inherent in the concepts of "price level" and the "neutrality of money" (q.v.).
Although designed as an explanation of the purchasing power of money, the equation of exchange is an holistic concept which fails to explain either how the purchasing power of money arises or how changes in it occur. The purchasing power of money is actually determined by the reactions of individuals to their ever changing individual situations and not by any mathematical formula.
Equilibrium. A state or condition where opposing forces or offsetting influences are exactly equal and thus in balance, i.e., a state of rest or inaction. Equilibrium can exist only so long as there are no new data, forces or influences capable of changing or disturbing existing conditions. Equilibrium is thus a state or condition which is impossible of achievement where market conditions or processes are constantly affected by the disturbing element of new human actions. See "Evenly rotating economy" and "Mathematical economics."
Equilibrium price. A price (quantity of money) at which there are no further sales because supply and demand are in balance.
Equity capital. Investments in the form of ownership titles, usually shares of capital stock, as distinguished from investments in loans, bonds or other forms of debt which represent claims which must be met and fully satisfied before any claims, dividends or other distributions to the owners or shareholders.
Equivocation. Use of a word or expression, open to more than one meaning, so as to mislead or confuse, either because the user intends to mislead or is himself confused. In a discussion or argument, the repetition of a basic term in another sense than that in which it was originally used.
Ergastulum, (Latin). The compound of ancient Roman villas and farms in which the slaves were kept when not working in the fields.
Ersatz, (German). Substitute. As a rule, the term implies that the Ersatz is inferior to the article for which it is a substitute.
Esoteric. Exclusive; restricted; erudite. The term implies being limited to specialists or an exclusive inner circle by a quality of being too complex, scholarly or profound for popular dissemination or understanding.
Esprit de corps, (French). Literally, "spirit of the body." Special spirit of a group or organized body implying exceptional loyalty, devotion or enthusiasm of the members for the cause for which the group was formed.
?tatist, n. and adj., (French). Statist, in the sense of an advocate of, or tendency toward, the concentration of all economic controls and planning in the hands of the government. See "Statism." ?tatism appears in two forms: socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.
OG. 5-11, 44-111, 267-71, 285-86.
?tats-G?n?raux, (French). States-General, an early French assembly of representatives. It first met in 1302 and met irregularly until 1789 at the call of the King. It consisted of the representatives of the three main ?tats, the high clergy, the high nobility and the Third Estate (q.v.). Its chief function was to approve the King's revenue proposals.
Ethnology. The science concerned with the origin, development, distinguishing characteristics and geographical distribution of human races.
Euclidian geometry. Geometry as first propounded in the axioms of Euclid about 300 B.C. Euclidian geometry is based on the concept of flat and endless space, as opposed to the concept of curved space, as used in plotting the longitudes of a spherical body. In the flat space concept, parallel longitudinal lines never meet as they eventually must in projections on the exterior of a sphere, as the earth's longitudes do at the North and South Poles.
Eudaemonism. The theory that the final goal of all human action is happiness.
Euphemistic. Pertaining to, or characterized by, the use of a pleasant sounding word or expression with agreeable connotations in place of a plainer, more accurate one, the meaning of which might be offensive, unpleasant or embarrassing.
Evanescent. Fleeting; transient; likely to vanish or disappear momentarily.
Evenly rotating economy. An imaginary economy in which all transactions and physical conditions are repeated without change in each similar cycle of time. Everything is imagined to continue exactly as before, including all human ideas and goals. Under such fictitious constant repetitive conditions, there can be no net change in any supply or demand and therefore there cannot be any changes in prices. The evenly rotating economy is a helpful device for studying the logical effects produced by the introduction of particular individual changes.
HA. 246-50; PF. 119, 147-48; UF. 42.
Ex definitione, (Latin). By definition.
Exegesis. Exposition, interpretation or explanation of a text; an elaboration on the significance of an idea or a passage in a written work.
Exorcism. The act or process of driving off an evil spirit by a solemn oath or magic rite.
Expatiate. Discuss without limits or restraint; enlarge upon almost without end.
External costs. Those burdens, damages or other costs of a human action which do not fall on the person or firm responsible for the action. Such costs are often neglected in the economic calculations which determine whether or not an action is or will be considered profitable. An example of an external cost would be the burden or expense of smoke and noise nuisances imposed on neighbors.
External drain. Withdrawal or outflow of gold from a country.
External economies. Those gains, benefits or other advantages of a human action which necessarily go to a person or firm that does not participate in the action. Such advantageous results are often neglected in the economic calculations which determine whether or not an action is or will be considered profitable. An example of such an incidental benefit would be the gain A's neighbors reap from a fence built by A on their boundary lines.
Extirpation. Total destruction by the rooting out or elimination of the cause or means of continuing.
Extroversive labor. Human exertion undertaken because one prefers the expected proceeds over and above the satisfaction obtainable from leisure. Extroversive labor contrasts with introversive labor (q.v.) which is human exertion undertaken for the satisfaction the exertions themselves provide. All work undertaken for compensation or for the final product is extroversive labor.