First Principles
The three economic axioms and key definitions from the San Francisco School of Economics — the foundational layer of New Austrian Economics.
Source: Ingo Bischoff / SF School of Economics, founded 2006. Definitions drawn from classical political economy via Ricardo, George, Menger, and Fekete.
The Three Economic Axioms
The Economizing Principle
“Man seeks to gratify his desires with the least amount of exertion.”
Efficiency as a premise — the foundation of rational economic action.
The Scarcity Premise
“Man's desires are unlimited.”
The foundation of all economic reasoning — unlimited wants, limited means.
The Distinctive Axiom
“Man hoards consciously and systematically.”
The logical bridge from Menger's saleability theory to Fekete's gold basis framework. If man hoards consciously, the commodity most suitable for hoarding — the one with the slowest-declining marginal utility — becomes money. That commodity is gold.
Key Definitions
Political Economy
The science treating the nature of wealth and the natural laws governing its production and distribution.
Broader than "economics" — includes law, sociology, constitutional framework.
Wealth
Any material thing with exchange value, the result of labor applied on or to land.
Classical, not Misesian — grounds value in production.
Money
That kind of wealth which has a constant or nearly constant marginal utility.
The Fekete/Menger definition — completely different from Mises' regression theorem.
Currency
A medium of exchange in the form of money or other wealth, or redeemable or irredeemable notes.
Establishes the money/currency distinction — the dollar is currency, not money.
Income
Rent, Wages and Interest received in money or currency.
Classical tripartite income framework.
Capital
Wealth used in production.
Clean, Austrian-compatible definition.
Interest
The capitalist's income which exchanges for a unit of wealth.
Fekete's definition — NOT Mises' time preference; grounds interest in marginal productivity.
Law of Interest
Depends upon the willingness to exchange wealth for income.
The Fekete break from Mises, stated as a law.