These are my answers to the questions, which I have thoughtfully considered. I would appreciate any feedback on these. I’ll be releasing these one chapter at a time.
Study Guide questions by Robert Murphy
Chapter 1 – Fundamentals of Human Action
- If an infant cries immediately after birth, is this action in the praxeological sense? What if the infant, several months later, has learned that crying will often lead to attention from parents? (pp.1-2)A: An infant crying immediately after birth can probably be categorized as an involuntary reflex, and not necessarily meaningfully interpreted by men. Since the criteria Rothbard outlines for action excludes involuntary reflexes, an infant crying immediately after birth cannot be considered action. After the infant has learned that crying will lead to attention, it is reasonable to assume that the infant acts with this purpose in mind, and that his purpose can be interpreted by his parents. This, therefore, renders it action in the praxeological sense.
- When doctors in the 1800s used leeches in an attempt to help patients, was this an example of human action? (p.7)A: Rothbard outlines one fundamental implication derived from the existence of human action as “uncertainty of the future”. All action is taken while speculating about future conditions and how to best meet future needs. A doctor in the 1800s may have speculated, rightly or wrongly, that leeches will heal his patient, but because he acts purposefully to achieve ends in an uncertain future, his actions can be considered human action.
- Suppose a man is strumming his guitar while sitting on the sidewalk in a large city, and that his only purpose is to listen to the enjoyable music. How should the guitar be classified? What if passerby begin giving the man loose change, so that he now views the guitar as a means to earning money? (pp.8-9)A: Because in the first example, the guitar is used in an immediately serviceable way, it is considered a consumer’s good. In the second example, it becomes a producer’s good. This distinction is made because the money he earns with his guitar is used to buy consumer’s goods, thus moving the guitar to a higher order of production.
- Suppose that a boy, on June 4, is offered the choice of seeing a fireworks show that day, or in exactly one month. If the boy chooses the show in the future, has he violated the law of time preference? (pp. 15-16)A: It is safe to say that the boy is not violating time preference. He is merely making the choice that alternatives available to him today outweigh going to the concert in the present. Although time preference tells us the value of the concert is less in a month than in the present, the real question to answer is the boys alternatives at any given time, and in what order are the respective utilities of those alternatives ranked.
- Suppose someone says, “I like steak more than burgers, and I like burgers more than hot dogs, but my preference for steak over burgers is definitely stronger than my preference for burgers over hot dogs.” What do you think Rothbard would say about this statement? (pp. 18-19)A: Rothbard’s contention is that it is impossible and, indeed, inconsequential to numerate or measure utility. Each end can only be ranked according to the others and satisfied according to those utilities.
- Imagine that a chemist measures two bottles of water, and finds that the first contains 8.002 ounces of water, while the second bottle contains 8.001 ounces of water. The chemist concludes that the bottles of water are definitely different objects. How should the economist treat them? (p. 23)A: This question depends on who the actor is. Certainly, most people would conclude that the two bottles of water are two equal units of a homogeneous supply. In other words, they are considered the same good. However, if our actor is the chemist, for his experiment he may consider these to be different objects and therefore different goods altogether.
- What are the two ways that capital increases productivity (p. 48)A: The first way capital increases productivity is it “may provide a greater production of the same good per unit of time”. The second is that is “may allow the actor to consume goods that are not available at all with shorter processes of production.”
- What are the definitions of consumption, savings, and investment? (pp. 48,53)A: Consumption is “the enjoyment of consumer’s goods – the satisfaction of wants.” Savings is “the restriction of consumption.” Investment is “the transfer of labor and land to the formation of capital goods.”(Note: Distinguishing between savings and investment is difficult for me, especially when Rothbard further grays the area saying that there is basically no difference in “plain saving” (saving consumer goods for later) and “capitalist saving” (in which savings enter the process of capital formation) (pg. 69)
- If capital goods increase the productivity of labor, why don’t people create as many capital goods as possible? (pp.48-49)A: The short answer to this question is time preference. Because any actor prefers goods in the present to goods in the future, he must continually weigh future consumption with present consumption. He must also weigh present labor for capital formation against present consumption. Eventually, the actor will consume what he has.
- Suppose that a farmer normally sets aside 10 percent of his harvest as seed corn. His son says, “That’s silly! We should sell all of our harvest and make as much money as possible.” What would this policy lead to? (p. 55)A: This policy would lead to a very short farming career. The seed corn can be considered capital. The farmer is merely adding to his capital structure in order to have more corn to sell in the future. Capital is perishable, according to Rothbard, and must be maintained (at the expense of present consumption or other alternatives) in order to continually reap its benefits.