Catallactics
Encyclopedia
Catallactics is the praxeological
theory of the way the free market system reaches exchange ratios and price
s.
It aims to analyse all actions based on monetary calculation and trace the formation of prices back to the point where an agent makes his or her choices. It explains price
s as they are and not as they should be. The laws of catallactics are not value judgment
s, but aim to be exact, objective and of universal validity.
It was first used extensively by the Austrian
economist Ludwig von Mises
.
Friedrich Hayek
used the term Catallaxy
to describe "the order brought about by the mutual adjustment of many individual economies in a market." He was dissatisfied with the usage of the word "economy" because its Greek root, which translates as "household management", implies that economic agents in a market economy possess shared goals. Hayek derived the word "Catallaxy" (Hayek's suggested Greek construction would be rendered καταλλαξία) from the Greek verb katallasso (καταλλάσσω) which meant not only "to exchange" but also "to admit in the community" and "to change from enemy into friend."
According to Mises (Human Action
, page 3) and Hayek it was Richard Whately
who coined the term "catallactics". Whately's Introductory Lectures on Political Economy (1831) reads:
Also, in a footnote to these sentences, he continues:
It has also been cited that Whately first coined the term in commentary during his Oxford lectures.
Praxeology
Praxeology is the study of human action. Praxeology rejects the empirical methods of the natural sciences for the study of human action, because the observation of how humans act in simple situations cannot predict how they will act in complex situations...
theory of the way the free market system reaches exchange ratios and price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
s.
It aims to analyse all actions based on monetary calculation and trace the formation of prices back to the point where an agent makes his or her choices. It explains price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
s as they are and not as they should be. The laws of catallactics are not value judgment
Value judgment
A value judgment is a judgment of the rightness or wrongness of something, or of the usefulness of something, based on a comparison or other relativity. As a generalization, a value judgment can refer to a judgment based upon a particular set of values or on a particular value system...
s, but aim to be exact, objective and of universal validity.
It was first used extensively by the Austrian
Austrian School
The Austrian School of economics is a heterodox school of economic thought. It advocates methodological individualism in interpreting economic developments , the theory that money is non-neutral, the theory that the capital structure of economies consists of heterogeneous goods that have...
economist Ludwig von Mises
Ludwig von Mises
Ludwig Heinrich Edler von Mises was an Austrian economist, philosopher, and classical liberal who had a significant influence on the modern Libertarian movement and the "Austrian School" of economic thought.-Biography:-Early life:...
.
Friedrich Hayek
Friedrich Hayek
Friedrich August Hayek CH , born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought...
used the term Catallaxy
Catallaxy
Catallaxy or Catallactics is an alternative expression for the word "Economy." Whereas the word Economy suggests that people in a community possess a common and congruent set of values and goals, Catallaxy suggests that the emergent properties of a market are the outgrowths of the diverse and...
to describe "the order brought about by the mutual adjustment of many individual economies in a market." He was dissatisfied with the usage of the word "economy" because its Greek root, which translates as "household management", implies that economic agents in a market economy possess shared goals. Hayek derived the word "Catallaxy" (Hayek's suggested Greek construction would be rendered καταλλαξία) from the Greek verb katallasso (καταλλάσσω) which meant not only "to exchange" but also "to admit in the community" and "to change from enemy into friend."
According to Mises (Human Action
Human Action
Human Action: A Treatise on Economics is the magnum opus of the Austrian economist Ludwig von Mises. It presents a case for laissez-faire capitalism based on Mises' praxeology, or rational investigation of human decision-making. It rejects positivism within economics...
, page 3) and Hayek it was Richard Whately
Richard Whately
Richard Whately was an English rhetorician, logician, economist, and theologian who also served as the Church of Ireland Archbishop of Dublin.-Life and times:...
who coined the term "catallactics". Whately's Introductory Lectures on Political Economy (1831) reads:
Also, in a footnote to these sentences, he continues:
It has also been cited that Whately first coined the term in commentary during his Oxford lectures.