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Catallactics Is A Theory of The Way The: Free Market System Exchange Ratios Prices

Catallactics is a theory that analyzes how prices are formed in a free market through the choices and exchanges of economic agents. It aims to objectively explain existing prices rather than how prices should be. The theory was developed by the Austrian School economist Ludwig von Mises and further expanded on by Friedrich Hayek, who coined the term "catallaxy" and derived it from a Greek word meaning "to exchange" and "to admit in the community." Richard Whately is credited with first coining the term "catallactics" to describe what he called the "Science of Exchanges."

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92 views1 page

Catallactics Is A Theory of The Way The: Free Market System Exchange Ratios Prices

Catallactics is a theory that analyzes how prices are formed in a free market through the choices and exchanges of economic agents. It aims to objectively explain existing prices rather than how prices should be. The theory was developed by the Austrian School economist Ludwig von Mises and further expanded on by Friedrich Hayek, who coined the term "catallaxy" and derived it from a Greek word meaning "to exchange" and "to admit in the community." Richard Whately is credited with first coining the term "catallactics" to describe what he called the "Science of Exchanges."

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Daniel Rae
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Catallactics is a theory of the way the free market system reaches exchange

ratios and prices. 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. 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, objective and of
universal validity. It was used extensively by the Austrian
School economist Ludwig von Mises.[1]
Catallactics is a praxeological theory, the term catallaxy being used by Friedrich
Hayek to describe "the order brought about by the mutual adjustment of many
individual economies in a market."[2] 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."[3]
According to Mises (Human Action, p. 3) and Hayek[4] it was Richard
Whately who coined the term "catallactics". Whately's Introductory Lectures on
Political Economy (1831) reads:[5]
It is with a view to put you on your guard against prejudices thus created, (and
you will meet probably with many instances of persons influenced by them,) that I
have stated my objections to the name of Political-Economy. It is now, I
conceive, too late to think of changing it. A. Smith, indeed, has designated his
work a treatise on the "Wealth of Nations;" but this supplies a name only for the
subject-matter, not for the science itself. The name I should have preferred as
the most descriptive, and on the whole least objectionable, is that of
CATALLACTICS, or the "Science of Exchanges."

https://en.wikipedia.org/wiki/Catallactics

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