Chapter 2 of Shawn Ritenour’s Foundations of Economics lays out, first, a definition of human action, and second, a number of principles that govern action and our interpretation of it.
Ritenour defines action as “applying means according to ideas to achieve ends.” All three must be present for something to qualify as action. Furthermore, the same physical activity might or might not be action depending on circumstances. Take breathing, for example (this is my example, not Ritenour’s, but I think I understand his point). Normally, breathing is not action because it happens unconsciously (no idea). However, a sprinter who has just run 100 meters at top speed might deliberately attempt to manipulate his breathing to get more oxygen to his lungs during his cool-down period. In that case, the breathing would count as action.
Ritenour gives the following implications of this definition of action:
- Things do not act.
- Action is conscious behavior, not reflex (see above).
- Only individuals act. Aggregates (civic organizations, nations, etc.) can only be said to “act” in that individual people who are part of those groups act.
- Unachieved ends are not sufficient conditions for action (some people are lazy or lack the means or knowledge to act).
- Some passive things, e.g. taking a nap, are actions if they are done purposefully.
- Actions always take place in time and are always future-oriented.
- As finite creatures, we operate in conditions of scarcity and must economize our various resources (including time).
In the following section, Ritenour explains the subjective nature of value. I appreciate the way he handles this discussion, because I have known Christians who get bent out of shape when this topic arises. They labor under the mistaken belief that if you say value is subjective, you must be a philosophical relativist. We already saw in Chapter 1 that Ritenour rejects relativism, so where is the misunderstanding?
Ritenour is one of only two Christian authors I’ve encountered (the other is Gary North) who brings up the point that only God places an objective value on economic goods. Human beings, with their limited knowledge, different circumstances, and varying degrees of sinfulness, prioritize goods in a way that’s unique to each individual. The goal of Christians is to conform their own value scale to God’s, but that still leaves room for different priorities based on our different ages, family responsibilities, and a host of other considerations. When we say value is subjective, we simply mean that people have different priorities and act on them accordingly.
In this chapter Ritenour also briefly introduces the concepts of consumer goods (things that satisfy human wants directly) and producer goods (things used to produce consumer goods). Producer goods are further subdivided into land, labor, and capital (“produced means of production”). Varying degrees of these three elements are needed to make most consumer goods.
Finally, Ritenour analyzes the element of time in action. He broaches the subject of time preference: other things being equal, human beings prefer present goods to future goods. This fairly simple and intuitive truth accounts for some very important economic phenomena that I’m sure will be explored in later chapters. Satisfaction resulting from action is also temporally bounded, and benefits of some actions play out over longer periods of time than do others; thus time preference becomes a factor when deciding which actions to take. Moreover, because the future is uncertain (to us), all action is speculative, and we often conclude after the fact that our actions were in error. We are thus introduced to the concept (though not the term) of entrepreneurship in this chapter.
Overall, this chapter provided a lot to chew on.