Hi Pat, it's me again.  
  
 Pat Gunning wrote:   
Michael, I have a brief reply and a somewhat longer discussion of more   
specific issues. The brief reply is along the same lines as my reply to   
John M. To criticize Mises's economics without understanding his purpose   
and how he sought to achieve it is not an appropriate way to deal with   
Mises or, in my opinion, with any other writer in the history of   
economic thought. I believe that Mises would agree with most of your   
observations, except those that are critical of him.  
  
=============  
  
Ok, I'll take the bait and enter your parlor.  
  
My goal as an economist is to find a theory (or set of theories) that (a) explain the
economy I live in and/or (b) provides guidance for actions I (and perhaps others) might
take in this economy. You seem to suggest that Mises has a different goal, is that
correct? If yes, than what is the value of his economic theory? (I don't mean this to be
rhetorical, but I don't know how else to phrase the question.)
  
Whatever Mises' goal actually is, you seem to be saying that he wants me to assume a
private market economy characterized by only a few select essentials, and further to
assume that this economy, in its theoretical construction, must function independently of
collective interventions. I think I can do this, but I do not know what value there is in
a theory derived from such an assumption, especially if that theory has little or no
relationship to the institutional world we actually live in.
  
Furthermore, after making these assumptions I am asked to conclude that "reasonable people
would expect distinctly human actions to exhibit certain patterns that would not be
reasonable to expect under different circumstances." These patterns are not empirical
patterns. I gather that according to Mises they can only be deduced rationally from the
essence of human actions.
  
And finally, "such patterns must be taken into account by those who promote market
intervention." I am not permitted to challenge these conclusions because they are deduced
from the assumptions, yet, at the same time, I am asked to accept them as a course of
action. My belief that these deduced patterns have little or no relationship to the
economy we actually live in cannot be entered as a consideration.
  
I realize that Mises wrote many volumes and this short summary leaves much out. But what
is the key element in Mesian thought that I do not understand?
  
In my mind, the element I do not understand is why one should accept Mises normative
claims about money, prices and markets (non-interventionism) if those claims have little
or no relationship to the economy we live in.
  
  
Pat Gunning wrote:  
Steve, it seems to me, did not express Mises's ideas on money, market   
and prices as clearly as I would have liked. Money and prices exist and   
if we want to deal with arguments relating to market intervention we   
must assume their existence. We use the term "market" to express (a) the   
sending and receipt of messages about willingnesses (i.e., offers) to   
buy and sell and (b) the making and acceptance of offers. A price is the   
medium that is used to make such offers. And prices could not be media   
without a generally accepted medium of exchange. Economics assumes a   
generally accepted medium of exchange.   
  
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Money, prices, and markets do not exist in an abstract form outside our thoughts. I guess
I don't see why such a statement cannot be a valid criticism of Misian economics.
  
  
Pat Gunning wrote:  
With respect,  
Pat Gunning  
  
I hope I return the same respect,  
Michael Nuwer