Glossary of Terms

Benefit - Of course, we all have our own subjective conception of that the greatest benefit might be. As Henry George puts it, people "seek to satisfy [their] desires with the least exertion." This subjectivity and variety of human desire makes exchange possible -- and that is how free exchange can be beneficial to all.

Clark's capital theory - John B. Clark, an influential early theorist of neoclassical economics, held that the economic factor of capital has no distinguishing quality other than its use as such. Capital, for Clark, is any economic input that is used as capital, i.e., is used in the process of production. This effectively lumped the factors of land and capital together, dividing the entire economic world into the fundamental elements of labor and capital.

The Economic Intepretation of History is a key element of Marxist theory. In Marx's conception of dialectical materialism, which was influenced by Hegel's dialectical philosophy, each stage of history carries the seeds of its own destruction and transformation into the next stage. This, capitalism was an inevitable outgrowth of the conflicts inherent in feudalism, and socialism will similarly follow capitalism.

Exotic interpretations - Here is a remarkable paper that presents, in very accessible terms, all of the major mainstream fallacies about urban land markets.

Fiscal policy - The attempt by government to influence the direction of the overall economy by regulating governmental borrowing and spending. In an economic slowdown, the fiscal policy response would be to engage in deficit spending to "jump-start" the economy. If inflation were increasing, the fiscal response would be to increase taxes and/or to cut government spending, to slow down the increase in the supply of money.

Keynesians - Followers of the British economist J. M. Keynes, author of General Theory of Employment, Interest and Money (1936). Keynes considered the business cycle to be an integral part of a modern economy, which must be managed by government in order to avoid calamitous depressions.

Labor Theory of Value - You may read a great deal more about this at the "LTV FAQ".

Laffer Curve - The relationship noted by Arther Laffer between tax rates and overall economic activity. Laffer held that taxes stifle incentives to produce. He called for a reduction in tax rates, which would stimulate production and increase employment. Thus, lowered tax rates would (in Laffer's theory) bring in higher public revenue.

Marginal rate of return - The additional income that comes from investing in one more unit of something (as compared with alternative possibilities for investment).

Market-clearing Price - The price at which quantity demanded equals quantity supplied — at which, in other words, the whole supply of goods bought to market are bought by consumers.

Market failure is an accepted concept in mainstream economics, but the folks at the Von Mises Institute are not shy about expressing their scorn for the idea.

Marxist theory is never easy to read, and it seems that Marx's ideas on rent are especially challenging. Here is an example.

John Stuart Mill held that labor always has a right to own what it produces. Yet he justifies property in land in terms of labor's having produced improvements to the land. Here is George's discussion of this point.

Monetary policy - The attempt by government to influence the direction of the overall economy by regulating the supply of money in circulation. Facing a recession, the monetary response would be to increase the money supply by lowering interest rates and bank reserve requirments; facing inflation, the response would be the opposite.

Monopolistic Competition - A type of imperfect competition in which many substitute goods are available, but large firms can affect the prices of goods through advertising and brand identification, etc. Examples are the markets for beer, soft drinks or magazines.

Monopoly - A market in which there is only one seller. A “monopoly price” is whatever the buyer is willing to pay rather than go without the thing.

Multiplier - Samuelson & Nordhaus's Economics tell us this: "...the change in an induced variable (such as GDP or money supply) per unit of change in an external variable (such as government spending or bank reserves)." The concept offers a means by which to judge the relative effect of various policy alternatives, by estimating how broad and deep their ramifications would be.

Neoclassical economics - The school of economic thought that grew in response to the 19th-century "classical school" of Malthus, Ricardo and Mill. (Today, some regard Henry George as the last of the "classical" economists.) Neoclassical economics focuses on microeconomics, examining individual proft-maximizing choices, and interpreting all economic phenomena as aggregations of such individual choices. More on NCE

Oligopoly - A type of imperfect competition in which there are few firms, all of whom can have some effect on prices.

Parson Malthus - Rev. Thomas Malthus, author of An Essay on the Principle of Population (1798), which held that human population inevitably tends to grow beyond its means of providing subsistence.

Perfect Competition - A market in which there are many suppliers, and the goods are the same as others that can be substituted.

Phillips curve - The relationship, noted by A. W. Phillips, between inflation and unemployment. Phillips noted that if demand for goods increases beyond an economy's most efficient level of output (at any given point in time), the increased costs of satisfying that demand will lead to inflation. Therefore, an apparent trade-off exists between inflation and unemployment. Henry George's theory of the business cycle denies the inevitablity of this. Here's how.

Principles of Economics is not available online in its entirety, but here is a sympathetic review of Menger's theory of value.

Progressive movement - A number of related social movements that emerged in response to the "gilded age" of the late 19th century, including labor unions, women's rights, and the Single Tax.

Single taxer - An advocate of the major reform proposed by Henry George and his followers, to abolish all taxation except for that on land values, which should be the source of all public revenue.

Stagflation - The simultaneous occurrence of (relatively) high inflation and (relatively) high unemployment. Prior to the 1970s, these two phenomena were thought ot be in opposition -- but then concurrent higher levels of boths began to be seen. The continued presence of stagflation is seen in the periodic upward revision of the "full employment point" -- the highest level of unemployment that is deemed possible without an unacceptable level of inflation.

Tradeoff - As the Rolling Stones put it, "You can't always get what you want." It is true that human desires tend to be unlimited, and that in choosing something one always gives up the alternatives. This truism, however, leads some phenomena in macroeconomics to be presented in terms of trade-offs, when they really are not. Professor Gaffney cites a number of these.

Unskilled workers? - Marx's measure of labor power was unskilled labor; skilled labor is reckoned as a greater quantity of simple labor. In general, capitalist production tends to reduce reliance on skilled labor, as production becomes automized. In Marxian terms this leads to greater alienation of workers (they become "mere cogs in the machine") which leads to consolidation of the "proletariat" as a social class.