I recommend this as the first course to take on this website, and the foundation for the website’s curriculum.This course is taught through ten lectures and discussion sessions, lasting 1 hour each. Purchasing the course provides access to all these recorded lectures and seminars, in audio and video format, as well as detailed class notes. After purchasing the course, students are also welcome to join either of the two weekly live discussion seminars to discuss this material.
The course introduces the basic principles of economics as studied and explicated by the Austrian school. Based primarily on Carl Menger’s Principles of Economics, Ludwig von Mises’ Human Action, and Murray Rothbard’s Man, Economy, and State.
In the first lecture, we cover the fundamental basic building blocks of the Austrian school’s approach to economics. What is a good, what is utility, and what is value. The starting point of Austrian economics is the insight of economist Carl Menger that all value is subjective. There is no value without the individual making the valuation. We also discuss the concept of marginal analysis and what it means, how human economic decisions are taken at the margin, and how this can help us resolve the famous water-diamond paradox, which asks: if water is so essential and valuable to humans, how come it is so much cheaper than diamonds, which are not essential?
In the second lecture, we introduce Ludwig von Mises’s concept of human action, and how it is the basis for our analysis of economics. Human action is defined as purposeful behavior directed at the attainment of ends in the future. Only humans act, because humans are endowed with reason. The real mover in the affairs of the world is the action of humans, and according to the Austrians, economics can only be understood if the unit of analysis is individual action.
The third lecture focuses on understanding time, and using it to explain the concept of scarcity, which is the starting point of all economic analysis. And how humans make decisions about their time and labor. Based on the work of economist Julian Simon, I explain how the only real scarcity is the scarcity of human time. We are able to direct human time to make ever-larger quantities of all commodities, goods, and services imaginable. But human time is limited, and irreversible. No amount of resources can buy back time that has passed. Humans always prefer enjoyment in the presence to the future, which gives them a positive time preference, a very important concept which we discuss in-depth in this course and in the next course, ECO12. Human economizing of time is the basis of all economics, and we must constantly choose between dedicated our time to labor, or to leisure.
With the foundation laid with these three lectures, the rest of the course examines some of the most important economic tools humans use to increase the amount and value of our time on earth. In lecture 4 we discuss the concept of capital, and the economic choice it entails: the sacrifice of present enjoyment in exchange for an uncertain chance at acquiring goods that can increase the productivity of human time, and how capital accumulation is related to time preference. We also discuss the economics of technological advancement, and how powerful ideas are.
In the fifth lecture we discuss the concept of trade, and the economic rationale for engaging in trade. We discuss the concepts of absolute advantage and comparative advantage, and the benefits from specialization and the division of labor. We conclude this chapter by discussing the important concept of the extent of the market, and why the larger the market, the more opportunities for mutually-beneficial exchange exist.
In lecture 6 we discuss the concept of money, and how it emerges on the market as a solution for the problem of coincidence of wants. We discuss Menger’s concept of salability and why it is the most important property of money. We explain how money is different from all other goods in that its quantity does not matter. And explain how money helps us economize on our time: it increases the extent of the market, allows for complex economic calculation, and enhances our ability to save for the future.
With these fundamental economic acts explicated, we move on to explaining how they come together to constitute the market order in lecture 7. As each individual acts based on their preferences and possibilities, they influence the supply and demand of all economic goods, leading to the emergence of complex markets and prices.
Lecture 8 explains Mises’ conception of capitalism as an entrepreneurial system, and not a managerial system, by elaborating on the economic significance of profit and loss in a market system. Capitalism is predicated upon the ability of individuals to perform economic calculations of profit and loss on their capital and property, as it is these decisions which allow for the rational planning of production, and for the coordination of work among various factors of production.
Lecture 9 introduces the idea of violent intervention in the market. Whereas all participants in voluntary exchanges expect to benefit from them, with violent intervention, there must involve harm for someone involved. We discuss the different types of violent intervention in market operation and the expected consequences of some of the most common examples, such as price controls, subsidies, and stimulation of economic growth.
In the last lecture of the course, we look back at the concepts covered in this course and ask: what is the point of economic progress and constant economizing? We make the clear distinction between economic progress, as judged by individuals, and aggregate statistics, such as GDP.
If you purchased the course on the legacy (archive) website, you can still access the materials here.