Catallactics

Template:Short description Template:Austrian School sidebar Catallactics is a theory of the way the free market system reaches exchange ratios and prices.<ref>Template:Cite encyclopedia</ref><ref>Template:Cite encyclopedia</ref><ref>Template:Cite book</ref><ref>Template:Cite book</ref> 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.<ref>Template:Cite book</ref> 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.<ref>Template:Cite book</ref>

EtymologyEdit

The term catallactics comes from the Greek verb {{#invoke:Lang|lang}} which means to exchange, to reconcile.<ref>Template:Cite book</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref>

DefinitionEdit

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."<ref>Template:Cite book</ref> 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."<ref>Template:Cite book See also p. 185 n4.</ref>

According to Mises<ref>Template:Cite book</ref> and Hayek<ref>{{#invoke:citation/CS1|citation |CitationClass=web }}</ref> it was Richard Whately who coined the term "catallactics". Whately's Introductory Lectures on Political Economy (1831) reads:<ref>Template:Cite book</ref><ref>{{#invoke:citation/CS1|citation |CitationClass=web }} 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 (καταλλάττονται). 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."</ref>

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