WHAT IS A PRICE? 189

can provide determinate answers within various ranges, given particular types of questions asked. But once the logic of price is placed within the wider context of the social arena in which actual choices and human interaction have been and are being undertaken, it is no longer the answer but an explanatory tool for an interpretive understanding of men and their meanings and actions. It is a method for rational argument to persuade others about the cogency of various narratives and ‘stories’ about the ‘real world’. There are various ways to order and interpret ‘the facts’ of the ongoing market process consistent with the logic of price. The art is to demonstrate through rhetoric and discourse the superiority of one interpretative schema over another to the others participating in the scholarly conversation. And in the process of doing so one moves from explanation to understanding and thereby completes the interpretive arc in economics.

NOTES

1 As the Chinese historian, Ssu-ma Ch’ien, observed:

Society obviously must have farmers before it can eat; foresters, fishermen, miners, etc., before it can make use of natural resources; craftsmen before it can have manufactured goods; and merchants before they can be distributed. But once they exist, what need is there for government directives, mobilizations of labor, or periodic assemblies? Each man has only to be left to utilize his own abilities and exert his strength to obtain what he wishes. Thus, when a commodity is very cheap, it invites a rise in price; when it is very expensive, it invites a reduction. When each person works away at his own occupation and delights in his own business then, like water flowing downward, goods will naturally flow forth ceaselessly day and night without having been summoned and the people will produce commodities without having been asked. Does this not tally with reason? Is it not a natural result?

(Ssu-ma Ch’ien, trans. Watson 1969, p. 334)

Ssu-ma Ch’ien was born in 145 BC and died around 90 BC.

2It is noteworthy that Ferdinand de Saussure, a founder of structural analysis, appears to have been inspired in developing his approach from classical economics and the notion of an interdependent equilibrium within a system (see Strickland 1981, p. 19).

3I have discussed Hayek’s argument on this point at greater length in other essays (see Ebeling 1985 and 1986a).

4cf. Ebeling (1988), in which I explain the way in which Mises believed that ‘ideal types’ could and did serve as the tool for interpersonal forecasting in the market arena. See also Machlup (1978, part IV, pp. 207–301), in which the ‘ideal type’ is defended both as a tool of analysis for the economist and as a method for interpersonal interpretation by social and market participants.

190 ALTERNATIVE VIEWS OF HERMENEUTICS

5I have attempted to deal more fully with the wrong turn that I see in the reduction of economic relationships to statistical classes of events in my (1985) essay on ‘Hermeneutics and the interpretive element in the analysis of the market process’; also in my (1986) review essay ‘Looking backwards: the message is in the method’, which discusses Which Road to the Past? by Robert Fogel and R.G.Elton.

6cf. Ronald H.Coase’s (1978) paper on ‘Economics and contiguous disciplines’, in which from a different perspective the argument is made that economics’ imperialism towards other social sciences is likely to be short-lived.

In the end, economics will be enriched by seeing what it can learn and incorporate from other social sciences for understanding the workings of the market.

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