Chapter 8: Money, Part 1 145

1.	Evaluate this objection: “What has just been said may be	?
	true, but it is not praxeology. According to praxeology, our
	conclusions have to follow necessarily from the action
	axiom, the subsidiary postulates, or conclusions drawn
	from any of these. This has not been accomplished here.”

Review the chapter on praxeology to help you prepare your answer.

PRAXEOLOGY AND CONVERGENCE

Contrary to the objection just suggested, the reasoning of our previous section conforms to praxeological law. (A good thing that it does, too, or I would be out of business.) Remember, we are concerned here only with a good’s exchange value—its use, as a good believed in general demand, to obtain whatever other goods I want.

Given this fact, even small differences in expected exchange value count for a great deal. I shall always tend to choose, other things being equal, the good I think likely to have the highest chance of general acceptance by others. Otherwise, I shall not be choosing my highest valued alternative. And we have already shown that Ialways do choose my highest valued alternative. You will probably find it helpful now to review the discussion of alternatives and choices. (Teachers, please make sure your students act on this suggestion.)

EXTRA-CREDIT SECTION:

FURTHER PROBLEMS FOR PRAXEOLOGY

We are not yet out of the woods, as far as praxeology is concerned. How does it follow from the fact that in the indicated circumstances,

146 An Introduction to Economic Reasoning

I shall always choose the good I expect to have the highest exchange value, that I shall choose the good that has had in the past the highest exchange value? And how do we know that goods must have differing exchange values? These are difficult questions, and in part too advanced for this book.

?1. Solve the problems just discussed. Then mail the answers to me.

MONEY AND BANKING

Long before now, you have probably thought this is a strange chapter. It is supposed to be about money and banking; but so far, it seems, we have said nothing about these subjects. As you will see in the following chapter, however, we have taken the essential steps toward understanding this difficult topic.