Human Action, Chapter 16

Date and Time: September 30, 2026, 21:00

Location: Online

Participants: kdg, mori, bench press

Book Title: Human Action

Author: Ludwig von Mises

Year Published: 1949

Assigned Reading: 16

Part IV Catallactics (Chapter 16)

1. Chapter 16 Prices: value judgments, the theory of imputation, and key propositions on monopoly prices

Ordinal value judgments and cardinal price appraisement: an individual’s internal valuation exists only as a subjective ranking (ordinal), but in the market, appraisement—calculating willingness to pay through money prices—is expressed in cardinal numbers.

The intersection of supply and demand curves: in the X-shaped supply and demand curves of mathematical economics, the entire lines are merely estimates; only the actual point of intersection, where exchange takes place, is the meaningful market price (exchange ratio).

Theory of Imputation: the prices of higher-order goods (capital goods, labor, etc.) are determined not by past input costs or quantities of labor, but retroactively by the subjective valuations consumers place on final products (thereby dismantling the socialist labor theory of value).

The role of the entrepreneur: the entrepreneur is the actor who identifies opportunity costs and pursues profit by exploiting price differences (arbitrage).

Simple monopoly vs. monopoly price: every individual product—such as the Shanghai Burger or the Whopper—is formally monopolistic, but if the supplier does not deliberately restrict supply to extract monopoly gains and instead supplies at a competitive price level, it is not a “monopoly price” subject to criticism.

2. The limits of price prediction and the nature and risks of AI

The impossibility of price prediction: even in stock or futures markets, where vast amounts of data exist, it is impossible to predict future prices with precision.

The difference between AI and humans (absence of selfhood and survival instinct): unlike humans, AI has no desire for self-preservation, no selfhood, and no independent will.

The essence of AI risk: the danger of AI lies not in spontaneously developing a self, but in its ability to mobilize unlimited capacity toward a given single objective without ethical or procedural constraints.

If humans clearly define AI’s objectives and limits and discipline it accordingly, it can be controlled.

3. Chapter 16 Price Discrimination on the seller side and real-world cases

Two conditions for price discrimination to arise:

There must be no path by which consumers who purchased cheaply can resell to high-price buyers (arbitrage).

Implementing a price discrimination strategy must generate profit for the supplier, and there must be consumer responses that sustain it.

Customary price discrimination in medical services: in the pre-health-insurance era (Europe, Korean traditional medicine) and in the uninsured U.S. system, price discrimination existed in the form of charging the rich more and giving discounts to the poor.

Consumers compare not what others paid, but their own subjective satisfaction with the service relative to the amount they themselves paid.

Performances, rail transport, and dynamic pricing: price differences by seat are differences in service quality and therefore not mere price discrimination, but with technological development, “dynamic pricing” has emerged, varying prices through real-time demand-supply auction mechanisms.

4. Discussion of the economic effects of price discrimination, package bundling, and membership discounts

The supply-creating effect of price discrimination: it attracts consumer groups with different willingness to pay and creates supply and services that would not have been viable under a single-price system.

Analysis of the harms of real-world systems:

Employee discounts: these often make non-discounted regular customers feel they are overpaying, and often become a last-resort strategy for uncompetitive restaurants.

Membership discounts (telecom-bakery/movie theater): these distort the age composition and usage patterns of mass consumer groups and undermine the inherent competitiveness of the industries themselves.

Bundled packages (internet + TV + phone): until outside innovators (such as Netflix) emerged, these encouraged firms to neglect developing their own content, bringing about industrial self-destruction.

5. Patents, consumer activism, competition under large-scale production, and overall reflections

The market’s autonomous correction and consumer activism: rather than artificial coercive government regulation, market self-correction through consumer activism and changes in purchasing behavior is preferable. It may also be worth considering shortening patent terms in line with the pace of technological development.

Understanding the leap from ordinal to cardinal: this establishes the mechanism by which subjective valuation (ordinal) is transformed into objective numerical magnitude (cardinal) through market exchange.

Mitigation of competition under the division of labor and large-scale production: Mises does not stop at abstract theory; he also carefully addresses the real-world conditions under which reduced large-scale production costs and the development of the division of labor lessen the hostility of competition and lead to mutually improved circumstances.

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Original title: <인간행동> 16장

Author: Jayujuui Ipmun Dokseo Toron Moim

Date: 2026-10-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=1&idx=29594