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Catallactics is a theory of the way the free market system reaches exchange ratios and prices.[1][2][3][4] 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.[5] It explains prices as they are, rather than as they "should" be. The laws of catallactics are not value judgments, but aim to be exact, empirical, and of universal validity. It was used extensively by the Austrian School economist Ludwig von Mises.[6]

Etymology

The term catallactics or catallaxy, respectively, comes from the Greek verb καταλλάσσω which means to exchange, to reconcile.[7][8]

Definition

Catallactics is a praxeological theory. The term catallaxy was used by Friedrich Hayek to describe "the order brought about by the mutual adjustment of many individual economies in a market."[9] Hayek 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. He 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."[10]

According to Mises[11] and Hayek[12] it was Richard Whately who coined the term "catallactics". Whately's Introductory Lectures on Political Economy (1831) reads:[13][14]

It is with a view to put you on your guard against prejudices thus created, (and you will meet probably with many instances of persons influenced by them,) that I have stated my objections to the name of Political-Economy. It is now, I conceive, too late to think of changing it. A. Smith, indeed, has designated his work a treatise on the "Wealth of Nations;" but this supplies a name only for the subject-matter, not for the science itself. The name I should have preferred as the most descriptive, and on the whole least objectionable, is that of CATALLACTICS, or the "Science of Exchanges."

See also

Notes

  1. ^ "catallactics". Oxford English Dictionary third edition. Oxford University Press. December 2002. Retrieved 3 October 2023.
  2. ^ "catallactics". Merriam Webster Dictionary (11th ed.). 2003. Retrieved 3 October 2023.
  3. ^ "s.v. catallactics". The Oxford English Dictionary: Being a Corrected Re-Issue of with An Introduction, Supplement and Bibliography of a New English Dictionary on Historical Principles. Vol. 2 C. Oxford: Clarendon Press. 1933. p. 170. Retrieved 3 October 2023 – via Internet Archive.
  4. ^ Rothbard, Murray N. (2008). "catallactics". In Durlauf, Steven N.; Blume, Lawrence E. (eds.). The New Palgrave Dictionary of Economics. Vol. 1 (2nd ed.). New York, NY: Palgrave Macmillan. pp. 704-705 – via Internet Archive.
  5. ^ Rutherford, Donald (2002). "catallactics". Routledge Dictionary of Economics (2nd ed.). London and New York: Routledge. p. 75 – via Internet Archive.
  6. ^ Kirzner, Israel M. (2001). Ludwig von Mises: The Man and His Economics. Wilmington, Delaware: ISI Books. pp. 93-.
  7. ^ Liddell, Henry George; Scott, Robert (1992). A Greek - English Lexicon. Oxford: Clarendon Press. p. 899 – via Internet Archive.
  8. ^ "s.v. καταλλάσσω". ΛΟΓΕΙΟΝ. Retrieved 30 September 2023.
  9. ^ Hayek, F.A. (1976). Law, Legislation, and Liberty (The Mirage of Social Justice). Vol. 2. London: Routledge. pp. 108–109.
  10. ^ Hayek, F.A. (1976). Law, Legislation, and Liberty (The Mirage of Social Justice). Vol. 2. London: Routledge. pp. 108–109. See also p. 185 n4.
  11. ^ Mises, Ludwig (1949). Human Action: A Treatise on Economics. London: William Hodge and Company, Limited. p. 3 – via Internet Archive.
  12. ^ "Catallactics &education". Archived from the original on 2010-07-17. Retrieved 2010-07-14.
  13. ^ Whately, Richard (1832). Introductory Lectures on Political Economy: Delivered in Eastern Term, MDCCCXXXI (2nd ed.). London: B. Fellowes. pp. 6-7. Retrieved 27 September 2023 – via Internet Archive.
  14. ^ "Online Library of Liberty - Reading Lists - Ian Dunois' Free Market foundations". Archived from the original on 2010-07-17. Retrieved 2010-07-14. A footnote to this paragraph continues: "It is perhaps hardly necessary to observe, that I do not pretend to have classical authority for this use of the word Catallactics; nor do I deem it necessary to make any apology for using it without such authority. It would be thought, I conceive, an absurd pedantry to find fault with such words as "thermometer," "telescope," "pneumatics," "hydraulics," "geology," &c. on the ground that classical Greek writers have not employed them, or have taken them in a different sense. In the present instance, however, I am not sure that, if Aristotle had had occasion to express my meaning, he would not have used the very same word. In fact I may say he has used another part of the same verb in the sense of "exchanging;" (for the Verbals in are, to all practical purposes, to be regarded as parts of the verbs they are formed from) in the third book of the Nicom. Ethics he speaks of men who hold their lives so cheap, that they risked them in exchange for the most trifling gain. The employment of this and kindred words in the sense of "reconcilement," is evidently secondary, reconciliation being commonly effected by a compensation; something accepted as an equivalent for loss or injury."

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