Mises draws a distinction between autistic exchanges, which do not involve mutual benefit, and cooperative exchanges, which do. Cooperative exchanges can be contractual, involving symmetrical agreement between parties, or hegemonic, involving asymmetrical direction of a group. While hegemony provides benefits, parties engage in it due to threats. Mises argues calculation in numerical units is important for economics and requires money, though praxeology and categories of action logically precede monetary calculation.
2. Autistic and Cooperative Exchange
• Mises draws a distinction between autistic
and cooperative exchanges.
• Although Mises starts with autistic exchange,
it’s easier to understand what he means if we
begin with cooperative exchange.
• A cooperative exchange is a trade for mutual
benefit. I do something for you in order, i.e.,
to bring about, that you something for me.
3. Exchange Continued
• This is what the Latin expression do ut des means.
This was originally used in the Roman religion.
Someone sacrifices to a god in order to receive
benefits in return.
• Cooperative exchanges go back to prehistoric
times. They may have begun through giving
presents, hoping for a return gift. They may also
have started with barter. The anthropologist
David Graeber in his book Debt criticizes
economists for assuming that barter comes first,
but Mises doesn’t say this.
4. Autistic Exchange
• An autistic exchange is a non-cooperative
exchange.
• From the name, you might think that an
autistic exchange involves only one person.
This need not be true.
5. Autistic Exchange Continued
• Some autistic exchanges do involve only one
person. E.g., someone by himself who is
planting a garden. He is trying to exchange his
present state of affairs for another state of
affairs he prefers.
• Autistic exchanges can involve more than one
person, as long as you are not trying to get a
benefit from another person, your exchange
with him is autistic. E.g., a war of annihilation.
6. Example
• Suppose you give someway a present, without
expecting anything in return. This is an autistic
relationship.
• It involves more than one person, but at long
one of the persons isn’t expected to do
anything, the relationship is still autistic.
7. Cooperative Exchanges
• Mises’s concept of a cooperative exchange is
also a little tricky.
• When you hear the word “cooperative,” you
will probably think of a peaceful trade
between two or more people.
• This is just one type of cooperative exchange,
although a very important one. This is called a
contractual exchange.
8. Contractual Bonds
• A contractual exchange is symmetrical. The
parties come to an agreement on specific
transactions. E.g., I’ll give you apples if you
give me oranges.
• In a contractual relationship, no one is giving
orders.
9. Hegemonic Bonds
• A hegemonic bond is asymmetrical. Someone
is directing others. The relationship doesn’t
usually just cover one transaction.
• It usually consists of a whole group of
activities.
• A hegemonic bond is a type of cooperative
relationship.
Why is this? All the parties in a hegemonic
relationship are getting some benefit from it.
10. Hegemony Continued
• People benefit from hegemonic bonds, even if
they would rather not be in this relationship.
• Why then are they in it? They might think that
obeying is the best way to avoid physical
threats to them.
• Remember Mises’s earlier point that political
society rests on willing cooperation. The
cooperation doesn’t imply approval.
11. Contract versus Hegemony
• Contractual relationships are crucial to the
development of civilization.
• Many social theorists have noted the
distinction between contractual and
hegemonic relationships.
• These include Adam Ferguson, Claude de
Saint-Simon, and Herbert Spencer.
12. Pro-Hegemony
• Some writers favored hegemony over contract.
• These include Werner Sombart, (Heroes or
Peddlers) and Nazi philosophers.
• The Marxists also favor hegemony, both in
primitive communism and in the stage of history
that follows capitalism.
• Mises takes anyone who rejects contract and the
free market to be a supporter of hegemony.
13. Economic Calculation
• Utility is ordinal (first, second, third, etc.)
• It is not cardinal—there aren’t units of utility
that you can measure.
• Calculation in numerical units is extremely
important in economics. This kind of
calculation requires money.
• Although a great deal of economics deals with
calculation in money, this topic logically
follows a study of the nature of action.
14. Calculation Continued
• Praxeology and economics developed when
economists were trying to solve problems that
arose once monetary calculation existed. But
this fact doesn’t alter the logical order in
which economics must be studied.
• The categories of economics, such as action
and calculation, are all-or-nothing. Either they
apply or they don’t.