Which Comes First, The Cart or The Horse? The Horse
September 12, 2017
From: R
Sent: Monday, March 07, 2016 1:44 PM
To: Walter Block
Subject: Re: Austrian Economics
Hi, I have a doubt in economics which I got after reading the Atlas shrugged by Ayn Rand. I would be highly obliged if you could help me with this query:-Causality is an irreversible absolute. One cannot eat a cake before he bakes it. Therefore production is the cause and consumption is the effect. In any Credit transaction we consume before we produce which is a reversal of causality. Therefore any form of credit should not exist. Where am I going wrong in my thinking? R
Dear R: You say this: “In any Credit transaction we consume before we produce which is a reversal of causality.” This is false. A correct statement would be, “When we borrow, we consume before we produce which is a reversal of causality.” But in a credit transaction, there are TWO sides. The borrower and the lender. Before the borrower can consumer, the lender had to produce. So, production always comes before consumption. No exceptions.
Borrow and Lend