Abstract
In this paper, we reconsider the various states of rest within Austrian market process theory. While this theory certainly embodies a superior representation of market processes to the neoclassical general equilibrium theory, it falls short of producing a holistic theory of human action. The analysis left out those human actions that produce changes to the so-called ‘final state of rest,’ which have so far been taken as exogenous to the market process. These exogenous shocks include knowledge generation and preference shifting. However, I argue that these can and ought to be understood as market phenomena, and so belong within the scope of praxeological analysis. To capture these types of human action, I propose that a new and truly ‘final’ state of rest be introduced, which we term the ‘nirvana state of rest.’ This new state represents a ‘true’ final state, in which human action ceases because all needs, and thus all motivation to act, are completely and perpetually assuaged. Introducing this state into the analysis, we can break free from myopic analyses of mere present states of knowledge and values to observe and explain general tendencies in market processes, prices, and entrepreneurship. I also show how quarrels within Austrian circles might be resolved through this expanded, macroscopic lens.
Highlights
In the 1690s, British engineer Thomas Savery dedicated years to improving the arduous process of pumping water out of coal mines, done by horses at the time
As Hayek (2002), Rothbard (2009), and Kirzner (1999) make clear, the knowledge discovered within such processes include only the knowledge that is currently available within the market, albeit perhaps to only a few at one time, leaving outside the scope of Austrian market process all new knowledge generation not presently known by someone or, at least, knowable to someone
The market process theories of the Austrian branch of economics lies on three key states of rest. It begins its analysis with the final state of rest (FSR), which is understood as the state toward which all economic action tends
Summary
In the 1690s, British engineer Thomas Savery dedicated years to improving the arduous process of pumping water out of coal mines, done by horses at the time. In each case, the discoveries themselves would fall outside the overly constrictive boundaries of the prevailing Austrian market process theory and the role of the entrepreneur. These inventions were overtly non-entrepreneurial, according to prevailing market theory, except and until they were commercialized. Knowledge discovery and preference shifting, are praxeologically endogenous phenomena and must be explained within the Austrian market process theory. They should not be taken as exogenous (unexplained) factors. I discuss the implications of this small, but consequential, amendment, which include the expansion of entrepreneurship theory and perhaps, the resolution of longstanding disagreements within the Austrian School
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