2.1: Lecture
Before you watch the lecture below, think about all the actions you perform during your week with a purpose to obtain some future state that will be better than your current state. Your decision to go to work or study is considered a purposeful behaviour. We act purposefully because we have reason, and are able to direct it to the meeting of our ends. We may fail in meeting our ends because we made a mistake during our deliberation and an attempt, but our action was still based on reason, and therefore rational. It is important to note that the opposite of action is not irrational behavior, but a reactive response to stimuli on the part of the bodily organs and instincts which cannot be controlled by the volition of the person concerned. For example, humans are instinctively repulsed by venomous snakes, but are drawn to dog puppies. These instinctive behaviours are not considered human action. But taking steps and implementing a plan to protect our human settlement from snakes, and training a puppy to become a calm and well behaved dog are considered human action. As you watch the lecture, consider situations that can be categorized as human action or reactive responses to stimuli.
Every time we act with intention to change our current state for the better, we are engaging in human action, as defined by Ludwig von Mises, who believed human action needs: “a current state, an imagination of a more satisfactory state, and the expectation that purposeful behavior can alleviate uneasiness”. After you watch the lecture in its entirety, reflect on the quote from Mises as it applies to your economic choices. How does this reflect in your choices and valuations? Will you make choices based on your marginal valuation of possibilities, or based on a lifelong or aggregate valuation of the good?
- Goods that offer utility but are not scarce are non-economic goods
- Value is subjective, and subjective valuation happens at the margin.
- There is a difference between valuing in the aggregate and valuing at the margin.
- Humans act because we have the ability to discover causal relations
- Natural sciences contain restraints and social sciences do not.
- In the field of economics, there are no constant relations.
- The way humans act under scarcity is to engage in the process of production.
- There are four inputs into the production process: land, labor, capital, and technology.
- Law of returns explains that there is a scale of production at which efficiency is maximized.
- Humans are deciding on objects based on the least valuable use they fulfill for us.