Because we probably are all laymen in economics and yet want to understand the importance of Friedrich von Hayec,
we have to obtain some understanding what are the main concepts of economics. What are economic theories about?
The word "economy" can be traced back to the Ancient Greek words
but the first recorded sense of the word "economy" is in the phrase "the management of oeconomic affairs", found in a work possibly composed in a monastery in 1440.
The most frequently used current sense, denoting "the economic system of a country or an area", seems not to have developed until the 19th or 20th century.
Nowadays, I guess, 90% of all political decisions are justified by the phrase "It is good for our economy",
which seems to imply, that what is good for the economy is thence automatically good for the well-being of the people.
An economy consists of the economic system in a certain region, comprising the production, distribution or trade,
and consumption of limited goods and services in that region or country.
In other words, an economy is the total sum of product and service transactions of value between two economic agents in a region.
An economic agent, an economic tech word, can be individuals, organizations or states.
Transactions only occur when both parties agree to the value or price of the transacted good, commonly expressed in a certain currency.
An economy is not just controlling the flow of money in a country. It is the result of a set of processes that involves its culture, values, education,
technological evolution, history, social organization, political structure and legal systems, as well as its geography, natural resource endowment, and ecology, as main factors.
Nevertheless politicians often try to convince use with the argument "It is good / bad for the economy". where we are expected to think "It will cost / bring us money."
My personal experience is, that when they talk about the economy, they just talk about money, but as you see an economy consists of a lot more interacting processes.
And here we can observe an interesting parallel with sciences like sociology and psychology. They only became "true" sciences, when they based observations and conclusions on statistics.
The science of economics has shown the same development. First there were only theories, based on smart insights,
but today economics has a highly mathematical aura, strengthened by the science of econometrics,
the branch of economics concerned with the use of mathematical methods in describing economic systems.
Econometrics is interesting because it provides the tools to enable us to extract useful information about
important economic policy issues from the available data by using statistical techniques to understand economic issues and test theories.
We may conclude, that economics is a social science based on statistics. Despite its mathematics aura you could call it a soft science
and looking at what it has as its subject, it is based on a philosophical theory about man and his behavior. It is politics......
Thank you for your attention again...the floor is yours....
The Discussion
[13:15] Particle Physicist Bejiita (bejiita.imako): indeed the word economy make you think of only one thing - money
[13:15] herman Bergson: Happened to me too Bejiita....
[13:15] Particle Physicist Bejiita (bejiita.imako): but it is really a balancing act in general between ins and outs of any resource
[13:15] herman Bergson: Yes...for instance...
[13:16] herman Bergson: change a law...and it has economical consequences...
[13:16] Particle Physicist Bejiita (bejiita.imako): yes
[13:16] herman Bergson: improve the standard of living for workers...improve education...name it
[13:17] herman Bergson: I even have a feeling that this insight is a bit lost
[13:17] Particle Physicist Bejiita (bejiita.imako): well its same here
[13:17] herman Bergson: That economics mean...keep the shareholders satisfied :-))
[13:17] .: Beertje :. (beertje.beaumont): yes
[13:18] Particle Physicist Bejiita (bejiita.imako): today its just about maximizing profit and when we want more we sack everyone and move abroad shutting down everything here
[13:18] Alarice Beaumont: but I think that is not the meaning of economie.. that's what the entrepreneurs made of it
[13:18] herman Bergson: I learnt a few funny things today in preparing this lecture...
[13:19] herman Bergson: Yes yes,,, Alarice, quite right....but it seems that they have taken over
[13:19] Particle Physicist Bejiita (bejiita.imako): happened a while ago here with a company making hockey gear named JOFA, the company went good but the owners wanted more so they still clodes the place and now its mostly a ghost town cause it was the main employer there
[13:19] Particle Physicist Bejiita (bejiita.imako): sad development
[13:19] herman Bergson: Multinationals dictate politics sometimes it seems
[13:19] Particle Physicist Bejiita (bejiita.imako): i think it was owned by Adidas and they decided they wanted more
[13:20] CB Axel: Well, tax breaks should only go to companies that help the country giving them the break.
[13:21] Alarice Beaumont: I always wonder .. I think it works because the entrepreneurs spread fear and lure us that we think we need all what they produce
[13:21] herman Bergson: ~The belief that a company is not just a tool to make money but also has a social responsibility seems to have disappeared
[13:21] Particle Physicist Bejiita (bejiita.imako): indeed :(
[13:22] herman Bergson: You make me think of all this sickening advertising Alarice....
[13:22] Alarice Beaumont: yes :(
[13:22] herman Bergson: Google, Facebook, Instagram....they only make money by selling advertisement space
[13:22] Alarice Beaumont: and I'm not sure whether the individualization of every one of us just makes it work.. because an individual is not as powerful as a hole group
[13:22] CB Axel: I'm pretty good at ignoring all those ads.
[13:23] Alarice Beaumont: :)
[13:23] Particle Physicist Bejiita (bejiita.imako): the place i work for ex has responsibility not only to make money but to make sure that golf courses and similar places have the equipment they need to keep thm going
[13:23] Particle Physicist Bejiita (bejiita.imako): so i can have a good game now an then
[13:23] herman Bergson: Me too CB....my MeToo moment here :-)
[13:23] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:24] Particle Physicist Bejiita (bejiita.imako): it goes in both directions, now many companies either just drench us in spam and advertising (malware and viruses in worst cases) without giving anything back
[13:25] herman Bergson: Let me tell you about my economic discoveries of today.....:-)
[13:25] Alarice Beaumont: :)
[13:25] Particle Physicist Bejiita (bejiita.imako): if you want to make money you have to give something useful back, a good useful product of some sort
[13:25] herman Bergson: Let's wait for Bejiita first
[13:25] herman Bergson: ok...one funny discovery....but soooo obvious....
[13:26] herman Bergson: Before 1776 the economic theory all lived by was called mercantilism....
[13:26] herman Bergson: that theory had lived for a 250 years....so...since 1550 or so
[13:27] herman Bergson: what was a big axiom....
[13:27] herman Bergson: say...I have a bag of gold....
[13:27] herman Bergson: my neighbor has bread...I need bread...
[13:27] herman Bergson: so I buy bread by giving hime gold...
[13:28] herman Bergson: result...?
[13:28] Particle Physicist Bejiita (bejiita.imako): both happy
[13:28] Particle Physicist Bejiita (bejiita.imako): win win
[13:28] herman Bergson: I get poorer...my neighbour get richer....:-)
[13:28] Particle Physicist Bejiita (bejiita.imako): depends on the price though
[13:28] herman Bergson: No Bejiita...that is the fun of it...
[13:28] herman Bergson: I get poorer....
[13:28] Alarice Beaumont: because you eat the bread and have nothing left
[13:28] herman Bergson: what should I do when I run out of gold....I starve
[13:29] Alarice Beaumont: the other man can take the gold and get himself anything
[13:29] CB Axel: No. He's only richer until he's hungry. Then you have the bread. Money is not what makes you rich.
[13:29] herman Bergson: So...rule one of mercantilism was: It is forbidden to export gold or silver
[13:29] herman Bergson: No CB...that neighbor produces bread for he has the resources
[13:30] herman Bergson: Another rule was to keep the people as poor as possible...
[13:30] CB Axel: If we have a bomb drop on Washington, DC (oh, please let that happen), Trump can come to me with all his money and try to buy food from my garden he'll be out of luck.
[13:30] CB Axel: I'll be the rich person then.
[13:30] Particle Physicist Bejiita (bejiita.imako): ehe
[13:30] herman Bergson: that is not real mercantilism but yet true :-))
[13:31] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:31] herman Bergson: Another rule was.....Never import goods, export....and make them pay with gold or silver
[13:32] herman Bergson: At this moment the nation debt of the US is sky high.....
[13:32] herman Bergson: this can be caused by importing more than exporting :-)
[13:33] herman Bergson: another rule was....make your own products from your own resources....
[13:34] herman Bergson: Maybe these rules sound a bit familiar in the present situation....
[13:34] .: Beertje :. (beertje.beaumont): but if you don't have resources?
[13:34] CB Axel: w00t w00t
[13:35] .: Beertje :. (beertje.beaumont): lol CB
[13:35] herman Bergson: then you are in trouble...then you need money to buy them
[13:35] CB Axel: Yes. That's the only reason I wouldn't want the southern states in the US to secede.
[13:35] Alarice Beaumont: you offer yourself to help to produce the goods .. and get paid
[13:35] herman Bergson: that is how colonies were plundered and almost had to give away their resources
[13:36] CB Axel: We'd still have California, but it keeps catching on fire.
[13:36] herman Bergson: :-)
[13:36] Particle Physicist Bejiita (bejiita.imako): aa tats literarily money burning
[13:36] Particle Physicist Bejiita (bejiita.imako): the forest industry
[13:36] Particle Physicist Bejiita (bejiita.imako): that's THEIR resources
[13:36] herman Bergson: for instance
[13:37] herman Bergson: So is Silicone valley :-)
[13:37] CB Axel: I'm more worried about the wine regions.
[13:37] Alarice Beaumont: ?
[13:37] herman Bergson: Linden Lab is also stationed in San Francisco :-))
[13:37] Particle Physicist Bejiita (bejiita.imako): which make it possible for us to sit here and talk under the condition we buy a computer with a CPU from there
[13:38] CB Axel: Well, I was without SL for almost a week and survived. I think I'd do ok.
[13:38] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:38] herman Bergson: You look fine, CB :-)
[13:38] .: Beertje :. (beertje.beaumont): :))
[13:38] .: Beertje :. (beertje.beaumont): must have been cold turkey CB
[13:39] Particle Physicist Bejiita (bejiita.imako): the most important thing in here are all the friends i have made over time including you
[13:39] Particle Physicist Bejiita (bejiita.imako): and all good memories
[13:39] CB Axel: I'd miss SL, but I'd survive.
[13:39] Particle Physicist Bejiita (bejiita.imako): aaa, its not everything but yes id miss everyone
[13:40] Particle Physicist Bejiita (bejiita.imako): i have made me a place in here
[13:40] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:40] herman Bergson: That is well said on Valentine's Day :-)
[13:40] Particle Physicist Bejiita (bejiita.imako): YAY! (yay!)
[13:40] herman Bergson: Well, maybe you have some idea now what economics is all about...
[13:41] Particle Physicist Bejiita (bejiita.imako): i guess so
[13:41] herman Bergson: Next lecture we'll look into what Hayek has to say about it and how he shaped our world of today
[13:42] herman Bergson: One other thing.....
[13:42] Alarice Beaumont: very interesting :)
[13:42] herman Bergson: Language.....
[13:42] herman Bergson: Maybe you have noticed too.....
[13:43] herman Bergson: But here in the Netherlands,....the civil service in the town hall
[13:43] herman Bergson: the municipial government so to speak...
[13:43] herman Bergson: those people aren't aren't civil servants anymore
[13:44] herman Bergson: they are joined in product groups...
[13:44] herman Bergson: the deliver a product...
[13:44] herman Bergson: they don't help you...the deal with a client
[13:44] Particle Physicist Bejiita (bejiita.imako): to help themselves making money
[13:44] Alarice Beaumont: awww
[13:44] herman Bergson: the language of economics has intruded in areas where it doesn't belong
[13:45] Particle Physicist Bejiita (bejiita.imako): i use to say, before the banks were for us, now we are for the banks
[13:45] .: Beertje :. (beertje.beaumont): as it is in hospitals
[13:45] herman Bergson: At my work....the college...
[13:45] herman Bergson: there were no students....there were clients and we produced...
[13:45] Particle Physicist Bejiita (bejiita.imako): its all about making more and more profit
[13:45] herman Bergson: YES Beertje!
[13:45] Particle Physicist Bejiita (bejiita.imako): its greed
[13:45] Particle Physicist Bejiita (bejiita.imako): basically
[13:45] herman Bergson: You noticed that horrible language too!?
[13:45] .: Beertje :. (beertje.beaumont): yes of course
[13:46] herman Bergson: Really terrible....the nurse delivers a product when she treats you
[13:46] .: Beertje :. (beertje.beaumont): yes
[13:46] herman Bergson: and when you have a product you only have costs and profits
[13:47] .: Beertje :. (beertje.beaumont): and if you are old they are not sure to help you anymore
[13:47] Particle Physicist Bejiita (bejiita.imako): the worst are the pharmaceutic industries using patents to keep prices rocket high and those who cant pay (AIDS Cancer medicine ect) are left to die
[13:47] Alarice Beaumont: that is the biggest problem our society has these days :(
[13:48] Particle Physicist Bejiita (bejiita.imako): true :(
[13:48] herman Bergson: Yes Alarice
[13:48] .: Beertje :. (beertje.beaumont): old people cost too much
[13:48] herman Bergson: And the even bigger problem is that this society can't think of an alternative
[13:48] Particle Physicist Bejiita (bejiita.imako): anyone who dnt produce are just seen as a cost
[13:48] Particle Physicist Bejiita (bejiita.imako): money is NOT EVERYTHING!
[13:49] Alarice Beaumont: The state should make rules - but that is probably just too difficult - that companies pay acceptable prices.. or perhaps that hospital stay public and don't get private
[13:49] Particle Physicist Bejiita (bejiita.imako): yet this is how the world seems to work today
[13:49] herman Bergson: Well...one interesting point....
[13:49] Particle Physicist Bejiita (bejiita.imako): if u don't produce or have a ton of money you are worthless
[13:49] Particle Physicist Bejiita (bejiita.imako): sad truth
[13:49] herman Bergson: I read some article about the accumulation of wealth by a small group in any society....
[13:50] herman Bergson: this is a process of all ages they had discovered
[13:50] Alarice Beaumont: but the system work - I think - because "we" are told to be afraid to loose something we don't need!
[13:51] herman Bergson: Yes...don't do what is bad for the economy
[13:51] Particle Physicist Bejiita (bejiita.imako): hmm
[13:51] Alarice Beaumont: and "we" just don't realize it!
[13:51] herman Bergson: ok...I guess we have stuffed our brains enough with a lot of thoughts :-)
[13:52] Particle Physicist Bejiita (bejiita.imako): "dont forget to consume, consume CONSUUUUME!"
[13:52] Particle Physicist Bejiita (bejiita.imako): its crazy
[13:52] herman Bergson: Well...there you are mistaken Alarice....we do....don't we....and be sure ...we are not alone in this
[13:52] Alarice Beaumont: we are kept with a relatively "good" lifestyle and told we are living better then other.. and it has changed in the last 100 years and so.. it's simply not true... the system (pyramide) is still the same with different names
[[13:53] bergfrau Apfelbaum: dont forget to love :-) thank you Herman and Class
[13:53] herman Bergson: yes.... a happy few rich at the top and a large crowd of poor people at e the bottom
[13:53] Alarice Beaumont: and it has always been that way
[13:53] .: Beertje :. (beertje.beaumont): welterusten Bergie
[13:53] herman Bergson: yes
[13:54] herman Bergson: Time to pull the plug :-))
[13:54] CB Axel: Welterusten, everyone. See you Thursday if we don't get another ice and wind storm. :-)
[13:54] herman Bergson: Thank you all again for your participation...:-)
[13:54] CB Axel: Tuesday, I mean.
[13:54] CB Axel: It's been a rough week.
[13:54] Particle Physicist Bejiita (bejiita.imako): well love i can do for no profit
[13:54] herman Bergson: Class dismissed....
[13:54] .: Beertje :. (beertje.beaumont): :)
[13:54] Particle Physicist Bejiita (bejiita.imako): gonna go to a valentines event now
[13:54] .: Beertje :. (beertje.beaumont): take care CB
[13:54] Particle Physicist Bejiita (bejiita.imako): cu soon
[13:54] Particle Physicist Bejiita (bejiita.imako): hugs everyone and cu next time
[13:54] Alarice Beaumont: Herman.. I'm really great I made it.. so interesting again :)
[13:54] Particle Physicist Bejiita (bejiita.imako): ㋡
[13:54] herman Bergson: Enjoy BEjiita
[13:55] Particle Physicist Bejiita (bejiita.imako): hugs
[13:55] Alarice Beaumont: see you
[13:55] bergfrau Apfelbaum: byebye all:-) see you Thursday
[13:55] herman Bergson: Thank you Alarice :-)
[13:55] Particle Physicist Bejiita (bejiita.imako): aaa this was really good in general
[13:55] Particle Physicist Bejiita (bejiita.imako): interesting stuff
[13:55] Particle Physicist Bejiita (bejiita.imako): and important
[13:55] herman Bergson: yes important it is....:-)
[13:55] .: Beertje :. (beertje.beaumont): thank you Herman , have a goodnight
[13:55] bergfrau Apfelbaum: #°*** BABA ***°#
[13:56] .: Beertje :. (beertje.beaumont): bye bye
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