Letters and Replies

Regarding Richard M. Salsman's Review of Objective Economics

To the Editor:

I was disappointed by Richard Salsman’s review of Northrup Buechner’s Objective Economics [TOS, Spring 2012]. It was not so much a review as it was a putdown of Dr. Buechner and his knowledge of economics, its history, and accepted laws. (By the way, there is no law of supply and demand as such in economics.) The list of things Dr. Buechner is criticized for doing, or not doing, seemed to go on endlessly.

By the end of Mr. Salsman’s very long review, you knew very little about Objective Economics beyond the fact that it clearly offends Mr. Salsman. About the only thing I agree with Mr. Salsman on is that Objective Economics is about price theory or microeconomics. Price theory is the fundamental base on which all of economics rests. It is always discussed in terms of an economy without government intervention. A government role can then be added. Dr. Buechner makes this quite clear.

The first major contribution in Objective Economics is in recognizing that a market is a place where individuals come to exchange goods and services (i.e., to buy and sell). It is not some mythical force that determines prices. (A market price is usually an average of recent prices or the last price at which an exchange occurred, but it is always the price at which a transaction can occur.)

The second contribution is looking at prices inductively from what goes on in the real world. Coming at prices from this perspective, one finds by far the most frequent method used in determining price is that the seller sets the price based on the relevant facts as he knows them. If a buyer wants to purchase the good or service at that price, an exchange can occur. If there is no buyer, this information must be taken into account by the seller. He can then either change the price or withdraw the product from the market.

There are several other ways in which prices are commonly determined, which Dr. Buechner also discusses: auctions, negotiated prices, brokered prices, and others. He does not discuss the relatively rare case where the buyer sets the price and advertises for sellers. Such cases are mostly limited to purchases of large blocks of stock in a company. However, the principles Dr. Buechner spells out apply also in this case. . . .

About Richard M. Salsman

Richard M. Salsman is president of InterMarket Forecasting, Inc., an assistant professor of political economy at Duke University, and a senior fellow at the American Institute for Economic Research. Previously he was an economist at Wainwright Economics, Inc. and a banker at the Bank of New York and Citibank. Dr. Salsman has authored three books: Breaking the Banks: Central Banking Problems and Free Banking Solutions (1990), Gold and Liberty (1995), and The Political Economy of Public Debt: Three Centuries of Theory and Evidence (2017). In 2021 his fourth book – Where Have all the Capitalist Gone? – will be published by the American Institute for Economic Research. He is also author of a dozen chapters and scores of articles. His work has appeared in the Georgetown Journal of Law and Public Policy, Reason Papers, the Wall Street Journal, the New York Times, Forbes, the Economist, the Financial Post, the Intellectual Activist, and The Objective Standard. Dr. Salsman earned his B.A. in economics from Bowdoin College (1981), his M.A. in economics from New York University (1988), and his Ph.D. in political economy from Duke University (2012). His personal website is https://richardsalsman.com/.

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