Free Market Economics

In our introductory lecture, we explore the foundations of free market economics through the first five pillars of economic wisdom and how different schools of thought explain market dynamics. We examine TANSTAAFL (“there ain’t no such thing as a free lunch”), incentives, marginal thinking, wealth creation through higher-valued resource use, and the role of decentralized information in market efficiency. Using examples from Soviet economic failures to modern market exchanges, Dr. Henderson shows how these principles explain both the success of free markets and the shortcomings of centrally planned economies.

In lecture two, we continue with pillars six through ten of economic wisdom, beginning with the idea that every action has unintended consequences, illustrated by examples like Britain’s rat bounty system and safety in the shipping industry. We also examine subjective value and voluntary exchange, the difference between creating jobs and creating wealth, and why real income grows only through increased output. The lecture concludes by demonstrating that competition is a "hardy weed" rather than a delicate flower, naturally emerging unless government intervention creates monopolies, as evidenced by successful deregulation in trucking and airlines that dramatically lowered prices and increased consumer choice.

In lecture three, we study the Austrian School of Economics through the work of Carl Menger and Eugen von Böhm-Bawerk, key figures in the marginal revolution of 1871 that challenged the labor theory of value. We examine how they introduced the idea that value is subjective and that each additional unit of a good becomes less valuable, resolving puzzles like Adam Smith’s diamond-water paradox and showing that labor does not determine value. The lecture also covers Menger’s insights on money and price formation, along with Böhm-Bawerk’s theories of capital and interest rates, laying the foundation for modern subjective value theory and market dynamics.