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Principles of Economics
English, German (translation)
328 pages, Hardcover
First published January 1, 1871
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August 8, 2023
August 2016 - The edition I listened to is not the one I listed in Goodreads. The edition I "read" (listened to actually) is by Laissez Faire Books (www.lfb.org).
This book is an absolute classic, first published in 1871. It had been on my "To Read" list for over 40 years, but somehow I never got to it till now. Laissez Faire Book Club's coming out with this audio version is what made it possible for me to read/listen and enjoy it. Since I am in the car a fair amount, transporting my son to school and back and doing other errands, being able to listen to audio books during that time has greatly enriched me. Sometimes I am so engrossed that when I stop the vehicle at a store or even in our garage, needing to get out to buy the groceries or move on to the next task, I just stay in the car and keep listening. What a pleasure.
The only problem with the MP3 format is that the tracks are quite long and there is no short "rewind" mechanism. One has to go back to the beginning of the whole, usually quite long track, if you want to hear (even a small) part of the book over. If the publisher divided the book into many shorter tracks, that would be much better. I have noticed that some of the more popular (and expensive production) audio books have done this. But getting cheaper/free audio books without this convenience is still waaaaaay better than not having them at all! So this is not a huge complaint.
This edition is blessed with extra materials at the beginning that the listener should profit from:
1. A new (LFB) edition (2014) specific Forward by Benjamin Powell that sets the context of the book's achievement and outlines key points of the book - excellent. I did not know that this work was only one part of a much longer (4 part) treatise that Menger planned, but never got to finish. I did know that Mises said Menger succumbed to a terrible pessimism and depression that took many years of productive work away from his life. This makes me even more glad and amazed that Mises never succumbed, but stayed incredibly productive throughout his very long life. BTW, Mises later said that this was the book that turned him into an economist! AND This book was the beginning of the whole Austrian School of Economics, with two powerhouses also following in Menger's path: Eugen von Boehm-Bawerk and Friedrich Wieser, then many more, including Mises and Hayek after that.
2. Another Forward by Peter Klein, probably from the Mises Inst. edition (not sure of the date), since he is associated with that group, which further explains Menger's context and the importance of the work. Good complement to Powell's Forward.
3. A very long and detailed Intro by Friedrich Hayek which gives much more information about Menger's life, situation, the ideas of the book and surrounding times. I remember it to be a bit rambling, but still fascinating. I did not agree with all of Hayek's opinions, but still great to have.
4. Intro comments by Frank Knight, I believe from the first English Edition in the 1950s, by Free Press, which I think misconstrued some of what Menger was writing about as well as begrudgingly acknowledging Menger's great contribution with this book. Can you believe that - begrudging this absolutely revolutionary book's greatness! This section is buried (after the Hayek intro? but on that track?) I remember reading this intro when I was in college, just starting to get into "Austrian school" of economics and being so disappointed in it, that I put the book down and did not get back to it... for 40+ years. How many others were affected by that intro in similar ways? Almost a crime.
5. Two translator's comments about how difficult their job was to take the long, technical and somewhat ponderous original German sentences and turn them into English that readers would be able to understand and enjoy was interesting. I think they were very successful at their task. However, since I have not read, nor would I understand fully the original German, I don't know. I trust that they were accurate. At least I do know that what they have written is actually quite easily understood, a pleasure to "read" (listen to), and also seems quite sound, based on the somewhat considerable economics that I know.
6. The work was narrated by Richard Siglar. I grew to appreciate his narration and found it admirable overall. But his pronunciation of various German words, fairly important to this work originally written in German, were a little sad. In addition, his pronunciation of the name of one of the other co-discoverers of the marginal theory of value, William Stanley Jevons, an Englishman, to be kind of a joke, since he pronounced the J as if he was a Swede (like we Americans pronounce a "y"). Also, in the beginning, I found his style to be far too "sing-songy" to be agreeable to the style of the text, or importance of what Menger was actually talking about. But, either it was that my perception changed, or the narrator actually changed his style, since I did not notice that sing-songy style as much toward the end of the book.
Here is what I loved about the actual Menger work:
1. Very readable and relatable. Not dry, except in the parts where he takes great pains to be super clear, logical and careful to get fairly long lists of numbers and examples exactly right.
2. The references to Adam Smith's great work, then his kind critique and breakthrough from it is stunning. From the motivations of individuals to trade (I always had trouble with Smith's famous statement that it was people's "propensity to truck, barter or trade"), to the subjective theory of value, to the origins of money, Menger is magnificent. Such a pleasure to see an original and amazingly clear mind at work, enriching the world with his truly and stunningly breakthrough observations.
3. Much of the book covers how prices are formed. He takes great pains to detail out the various general scenarios and they are excellent. His showing the limits of monopoly powers (with or without government grants and enforcement) and various competitive situations were very realistic as well as quite all-encompassing. There was a too-short section on entrepreneurship, which I was actually surprised at how cursory the treatment was. But at least it was there. I bet he would have gone into this in much more detail, if he had actually gotten to the other (planned) three volumes of his overall treatise that he never did get to.
4. So great to know that another one of the classic revolutionary works in science is eminently readable and understandable by any diligent individual. Highly recommended.
Downsides:
1. Be prepared for some sections of laborious lists of numerical valuations that would be much better to see printed out in a table than read in this audio version. Not much one can do about this - I guess it just comes with the audio book territory. But overall, they are a fairly small part of the book.
2. Menger's discussion of the borrowed concepts from Smith (and other classical economists?) of "Value in use" vs. "Value in exchange" was sad. Too bad he could not just have skipped that superfluous section. The discussion definitely shows how individuals do have different reasons for valuing things, but those two old categories are pretty useless, and have rightfully been put to pasture in modern economics. 1 March 2019 - I am rethinking this 2nd "downside" of the book after reading a wonderful biographical essay on Menger by one of his most brilliant students, Friedrich Wieser, which has itself just been translated into English from the original German by the wonderful Richard Ebeling. You can find that essay here: https://www.aier.org/article/carl-men...
This book is an absolute classic, first published in 1871. It had been on my "To Read" list for over 40 years, but somehow I never got to it till now. Laissez Faire Book Club's coming out with this audio version is what made it possible for me to read/listen and enjoy it. Since I am in the car a fair amount, transporting my son to school and back and doing other errands, being able to listen to audio books during that time has greatly enriched me. Sometimes I am so engrossed that when I stop the vehicle at a store or even in our garage, needing to get out to buy the groceries or move on to the next task, I just stay in the car and keep listening. What a pleasure.
The only problem with the MP3 format is that the tracks are quite long and there is no short "rewind" mechanism. One has to go back to the beginning of the whole, usually quite long track, if you want to hear (even a small) part of the book over. If the publisher divided the book into many shorter tracks, that would be much better. I have noticed that some of the more popular (and expensive production) audio books have done this. But getting cheaper/free audio books without this convenience is still waaaaaay better than not having them at all! So this is not a huge complaint.
This edition is blessed with extra materials at the beginning that the listener should profit from:
1. A new (LFB) edition (2014) specific Forward by Benjamin Powell that sets the context of the book's achievement and outlines key points of the book - excellent. I did not know that this work was only one part of a much longer (4 part) treatise that Menger planned, but never got to finish. I did know that Mises said Menger succumbed to a terrible pessimism and depression that took many years of productive work away from his life. This makes me even more glad and amazed that Mises never succumbed, but stayed incredibly productive throughout his very long life. BTW, Mises later said that this was the book that turned him into an economist! AND This book was the beginning of the whole Austrian School of Economics, with two powerhouses also following in Menger's path: Eugen von Boehm-Bawerk and Friedrich Wieser, then many more, including Mises and Hayek after that.
2. Another Forward by Peter Klein, probably from the Mises Inst. edition (not sure of the date), since he is associated with that group, which further explains Menger's context and the importance of the work. Good complement to Powell's Forward.
3. A very long and detailed Intro by Friedrich Hayek which gives much more information about Menger's life, situation, the ideas of the book and surrounding times. I remember it to be a bit rambling, but still fascinating. I did not agree with all of Hayek's opinions, but still great to have.
4. Intro comments by Frank Knight, I believe from the first English Edition in the 1950s, by Free Press, which I think misconstrued some of what Menger was writing about as well as begrudgingly acknowledging Menger's great contribution with this book. Can you believe that - begrudging this absolutely revolutionary book's greatness! This section is buried (after the Hayek intro? but on that track?) I remember reading this intro when I was in college, just starting to get into "Austrian school" of economics and being so disappointed in it, that I put the book down and did not get back to it... for 40+ years. How many others were affected by that intro in similar ways? Almost a crime.
5. Two translator's comments about how difficult their job was to take the long, technical and somewhat ponderous original German sentences and turn them into English that readers would be able to understand and enjoy was interesting. I think they were very successful at their task. However, since I have not read, nor would I understand fully the original German, I don't know. I trust that they were accurate. At least I do know that what they have written is actually quite easily understood, a pleasure to "read" (listen to), and also seems quite sound, based on the somewhat considerable economics that I know.
6. The work was narrated by Richard Siglar. I grew to appreciate his narration and found it admirable overall. But his pronunciation of various German words, fairly important to this work originally written in German, were a little sad. In addition, his pronunciation of the name of one of the other co-discoverers of the marginal theory of value, William Stanley Jevons, an Englishman, to be kind of a joke, since he pronounced the J as if he was a Swede (like we Americans pronounce a "y"). Also, in the beginning, I found his style to be far too "sing-songy" to be agreeable to the style of the text, or importance of what Menger was actually talking about. But, either it was that my perception changed, or the narrator actually changed his style, since I did not notice that sing-songy style as much toward the end of the book.
Here is what I loved about the actual Menger work:
1. Very readable and relatable. Not dry, except in the parts where he takes great pains to be super clear, logical and careful to get fairly long lists of numbers and examples exactly right.
2. The references to Adam Smith's great work, then his kind critique and breakthrough from it is stunning. From the motivations of individuals to trade (I always had trouble with Smith's famous statement that it was people's "propensity to truck, barter or trade"), to the subjective theory of value, to the origins of money, Menger is magnificent. Such a pleasure to see an original and amazingly clear mind at work, enriching the world with his truly and stunningly breakthrough observations.
3. Much of the book covers how prices are formed. He takes great pains to detail out the various general scenarios and they are excellent. His showing the limits of monopoly powers (with or without government grants and enforcement) and various competitive situations were very realistic as well as quite all-encompassing. There was a too-short section on entrepreneurship, which I was actually surprised at how cursory the treatment was. But at least it was there. I bet he would have gone into this in much more detail, if he had actually gotten to the other (planned) three volumes of his overall treatise that he never did get to.
4. So great to know that another one of the classic revolutionary works in science is eminently readable and understandable by any diligent individual. Highly recommended.
Downsides:
1. Be prepared for some sections of laborious lists of numerical valuations that would be much better to see printed out in a table than read in this audio version. Not much one can do about this - I guess it just comes with the audio book territory. But overall, they are a fairly small part of the book.
2. Menger's discussion of the borrowed concepts from Smith (and other classical economists?) of "Value in use" vs. "Value in exchange" was sad. Too bad he could not just have skipped that superfluous section. The discussion definitely shows how individuals do have different reasons for valuing things, but those two old categories are pretty useless, and have rightfully been put to pasture in modern economics. 1 March 2019 - I am rethinking this 2nd "downside" of the book after reading a wonderful biographical essay on Menger by one of his most brilliant students, Friedrich Wieser, which has itself just been translated into English from the original German by the wonderful Richard Ebeling. You can find that essay here: https://www.aier.org/article/carl-men...
June 17, 2019
Outstanding accomplishment in Economic Theory. Finally I experienced the same feeling as Wieser, Bohm-Bawerk and Mises, who openly admitted this was the book that made them economists. If you approach this with the right state of mind (and not too early in your studies, I venture to add), Menger's mix of eloquence and polemics will make you see things not truly seen before; it will put the economics pieces together in your head.
That is all I want to say about the book's accomplishments. Its profound influence across the whole spectrum economic theory and the Austrian School in particular is widely acknowledged and you can easily find nice summaries and complete essays on its influence, for example at the Mises Institute website. In this short note I just want to mention some particulars of my reading experience and some points I think are not widely recognized.
I read an old Brazilian edition, but it was the complete version, with the updated Hayek introduction. No lack of content, compared to the typical English version.
Now, for some thoughts:
1 - The book is not perfect (not a big surprise, I know). It basically serves as the groundwork for a massive system of thought, but as such there are many things left to explore. Menger himself intended this to be a much wider treatise, but never managed to finish it. You can specially notice that when you compare his super detailed discussion of money (which includes a whole subsection on its historical development across different nations) with his very short discussion of interest and capital, and no isolated treatment of credit. So the book ends up feeling a bit unbalanced. Also, his discussion of bilateral competition is somewhat lacking compared to the level of detail he poured into monopoly power and pricing fundamentals in general.
In the end, though, I think this incompleteness ironically contributes to Menger's stature as a "mythical God of Economics". It motivated a sort of treasure hunting for Menger's "lost perspective" in a series of topics.
2 - The initial discussion on the theory of the goods was perhaps a bit too extensive. And his discussion of the concept of "wealth" did not feel very satisfying in its conclusions. Even though the distinction between "wealth" and "property" seems valuable, his conclusion that in Eden there would be no "wealth as such" sounds a bit far fetched to my ears. In any case, it should be noted that, for Menger, it is also the economic character of goods that brings forward the need for the institution of property: property is needed because there are not enough goods to satisfy the existent demand, and so Nature imposes upon us the only feasible solution: property. One is left wondering if, based on this, Menger would be opposed to intellectual property...
3 - The book is massively filled with references to authors of previous epochs, from Aristotle and Roman Law to Galiani and Smith, John Law, Turgot, Ricardo, and many obscure ones in between, including (i assume) the most relevant German authors, which were not always embedded in the so called Historical tradition - Rau, Hermann, etc. Menger's reputation as a book collector is widely aknowledged. However, one is left in astonishment how the author could then have missed A. Cournot, J. Dupuit, the Germans H. H. Gossen and von Thunen, S. Bailey, Lloyd, Jennings... Hard to explain.
4 - Now, for something which not many people seem to mention when reviewing this book, I think it's very interesting how the German School still finds its way into Menger's exposition. This book is FULL of historical examples, and even conjectures about "the stages of civilization", borrowed from Roscher and Schmoller himself, his later enemy. So the book's dedication to Roscher was not just lip service. Menger was actually influenced and borrowed heavily from the historical approach. It's just that he felt that that was not the end of it, that Economics should aim at something more essential. Of course, it could always be the case that he was inserting some of that historical perspective in order to seem more in touch with the rising German tradition, but we'll never know.
On the other hand, he did not pull any punches from Adam Smith, for instance. He takes issue with the Smithian (very simplistic?) focus on the division of labor as the main catalyst of prosperity, saying that such organizational paradigm is not even the most important factor in bringing about the abundance of consumer goods: rather, it is the production and availability of higher order goods (machines, tools, etc.) that should take primacy in the causes of the wealth of nations. Thus, Menger in a sense anticipates the Bohm-Bawerkian focus on the higher productivity of a "roundabout structure of production" and one of Mises's main driving points that the standard of living can only be substantially enhanced by an increase in the amount of capital invested per capita. Obviously, for Mises, the division of labor is also of utmost importance for the maintenance of the current living standards, but this goes to show that Menger was already very nuanced for a "founder of a tradition" and that many subsequent developments which are considered the hallmarks of the Austrian approach were already quite hinted at in Menger's Grundsatze.
(As a final note on this regard, and just to clarify Menger's position with respect to the classics, the above should not be read as if Menger was trying to ridicule Smith. Want some proof? As you may know, some years after publishing this book, Menger was invited and began serving as the tutor for the Austro-Hungarian Crown Prince Rudolf. It happens that most of his lecture materials were published some 20 years ago (Carl Menger's Lectures to Crown Prince Rudolf of Austria) and in fact Menger seems to have followed, in large part, the classical-Smithian approach when teaching political economy to the future Emperor - who unfortunately died before that happened. So, once again: a very nuanced thinker and teacher.)
5 - His discussion of money is very interesting, with a special note for his etymological investigations. On this topic, Menger is also controversial, since he rejects the notion that the function of "store of value" and "measure of value" are inherent in money, being merely incidental. However, I was disappointed that he merely attributed gold and silver's use value for their decoration/vanity purposes, and did not mention the much wider appraisal of gold and silver as religious symbols. In my opinion, this accounts for the early accumulation of gold, which ended up promoting its giant supply/production ratio (see Dawn of Gold ). Menger also did not mention this last point. I will have to check if he covers it in his later article "Geld".
6 - It's also interesting how Menger tries to make clear that the concept of "merchandise" ("commodity" in the English translation, I believe) is also not inherent to the good in itself - just like its value -, but on the intention of the owner, who is currently holding it for sale. Thus, for Menger, while the popular meaning of "merchandise" is those goods that are held in stock, such as "inventories", the scientific meaning of the concept should be all economic goods that are held with the intention of being sold (and, thus, those should include... money). I find this very reminiscent of modern accounting theories and standards: the classification of an asset depends on how you intend to put it to economic use and not on the asset itself.
7 - His discussion (a whole chapter) of the old dichotomy of "value in use" and "value in exchange" is actually very coherent, in my opinion. He explains that a good may have value, given the direct use you can take from it, or it can have value, indirectly, because it may be exchanged for other things, which are themselves able to be directly used (for valuable purposes, in your subjective view). Thus, we see that at any point in time, it's the highest between these two values that binds the economic decision of the agent: if the value in use (*of a given unit*) is relatively high, you don't care about the market; if the value in exchange is high, you hold it as a merchandise. If the price on the market falls, you start using it for your purposes (burning paper notes in the winter, anyone?); if the market price rises, "we can draw gold from the moon", as the old saying goes.
So, in the end, what's Menger's main contribution, arrived at from his "causal-realist" approach?
Value is a mental/spiritual/psychological phenomenon, arising from the differences in importance of each individual's subjective needs. Such importance is then "imputed" into the goods upon which the satisfaction of that need depends. Value is not objective, in the sense that it is not something contained within the goods, not even provided by them.
Menger's focus is on the importance of different human needs, the satiation of which happens to require goods and services, which will then be appraised as such, and not based on the utility that supposedly those goods themselves provide (units of "utils", in the anglo-saxon tradition). Thus, it becomes much easier to understand that valuation and economizing is always an ordinal process, preferring one satisfaction over the other, and not a game of maximizing the amount of utility collected from goods.
Is value, then, independent from the objective realm? No.
Value is still inexorably dependent on the quantities of goods available, because that quantity will determine the importance of the need the satiation of which you must forego if you have to give away one unit of such good. If you have many units, the importance of a single one of them is low, because only those needs you value less will depend on that unit - if you give one unit away, the most valued needs are not affected, because you still have other units to satisfy them; it is the least valued needs that will now be left without being satiated.
As such it is always of crucial importance to note that what is being appraised is the value of a single unit and not of the whole batch - if it were the case, its value would be much higher, because now all the satisfaction would be called into question. In a sense, the equivalent of appraising the whole batch is appraising the value of a good of which you have only one unit: in that case, all satisfaction will also be called into question, so its value will correspond to the importance of the most urgent need that depends on having the good at all.
Now go and be an economist!
That is all I want to say about the book's accomplishments. Its profound influence across the whole spectrum economic theory and the Austrian School in particular is widely acknowledged and you can easily find nice summaries and complete essays on its influence, for example at the Mises Institute website. In this short note I just want to mention some particulars of my reading experience and some points I think are not widely recognized.
I read an old Brazilian edition, but it was the complete version, with the updated Hayek introduction. No lack of content, compared to the typical English version.
Now, for some thoughts:
1 - The book is not perfect (not a big surprise, I know). It basically serves as the groundwork for a massive system of thought, but as such there are many things left to explore. Menger himself intended this to be a much wider treatise, but never managed to finish it. You can specially notice that when you compare his super detailed discussion of money (which includes a whole subsection on its historical development across different nations) with his very short discussion of interest and capital, and no isolated treatment of credit. So the book ends up feeling a bit unbalanced. Also, his discussion of bilateral competition is somewhat lacking compared to the level of detail he poured into monopoly power and pricing fundamentals in general.
In the end, though, I think this incompleteness ironically contributes to Menger's stature as a "mythical God of Economics". It motivated a sort of treasure hunting for Menger's "lost perspective" in a series of topics.
2 - The initial discussion on the theory of the goods was perhaps a bit too extensive. And his discussion of the concept of "wealth" did not feel very satisfying in its conclusions. Even though the distinction between "wealth" and "property" seems valuable, his conclusion that in Eden there would be no "wealth as such" sounds a bit far fetched to my ears. In any case, it should be noted that, for Menger, it is also the economic character of goods that brings forward the need for the institution of property: property is needed because there are not enough goods to satisfy the existent demand, and so Nature imposes upon us the only feasible solution: property. One is left wondering if, based on this, Menger would be opposed to intellectual property...
3 - The book is massively filled with references to authors of previous epochs, from Aristotle and Roman Law to Galiani and Smith, John Law, Turgot, Ricardo, and many obscure ones in between, including (i assume) the most relevant German authors, which were not always embedded in the so called Historical tradition - Rau, Hermann, etc. Menger's reputation as a book collector is widely aknowledged. However, one is left in astonishment how the author could then have missed A. Cournot, J. Dupuit, the Germans H. H. Gossen and von Thunen, S. Bailey, Lloyd, Jennings... Hard to explain.
4 - Now, for something which not many people seem to mention when reviewing this book, I think it's very interesting how the German School still finds its way into Menger's exposition. This book is FULL of historical examples, and even conjectures about "the stages of civilization", borrowed from Roscher and Schmoller himself, his later enemy. So the book's dedication to Roscher was not just lip service. Menger was actually influenced and borrowed heavily from the historical approach. It's just that he felt that that was not the end of it, that Economics should aim at something more essential. Of course, it could always be the case that he was inserting some of that historical perspective in order to seem more in touch with the rising German tradition, but we'll never know.
On the other hand, he did not pull any punches from Adam Smith, for instance. He takes issue with the Smithian (very simplistic?) focus on the division of labor as the main catalyst of prosperity, saying that such organizational paradigm is not even the most important factor in bringing about the abundance of consumer goods: rather, it is the production and availability of higher order goods (machines, tools, etc.) that should take primacy in the causes of the wealth of nations. Thus, Menger in a sense anticipates the Bohm-Bawerkian focus on the higher productivity of a "roundabout structure of production" and one of Mises's main driving points that the standard of living can only be substantially enhanced by an increase in the amount of capital invested per capita. Obviously, for Mises, the division of labor is also of utmost importance for the maintenance of the current living standards, but this goes to show that Menger was already very nuanced for a "founder of a tradition" and that many subsequent developments which are considered the hallmarks of the Austrian approach were already quite hinted at in Menger's Grundsatze.
(As a final note on this regard, and just to clarify Menger's position with respect to the classics, the above should not be read as if Menger was trying to ridicule Smith. Want some proof? As you may know, some years after publishing this book, Menger was invited and began serving as the tutor for the Austro-Hungarian Crown Prince Rudolf. It happens that most of his lecture materials were published some 20 years ago (Carl Menger's Lectures to Crown Prince Rudolf of Austria) and in fact Menger seems to have followed, in large part, the classical-Smithian approach when teaching political economy to the future Emperor - who unfortunately died before that happened. So, once again: a very nuanced thinker and teacher.)
5 - His discussion of money is very interesting, with a special note for his etymological investigations. On this topic, Menger is also controversial, since he rejects the notion that the function of "store of value" and "measure of value" are inherent in money, being merely incidental. However, I was disappointed that he merely attributed gold and silver's use value for their decoration/vanity purposes, and did not mention the much wider appraisal of gold and silver as religious symbols. In my opinion, this accounts for the early accumulation of gold, which ended up promoting its giant supply/production ratio (see Dawn of Gold ). Menger also did not mention this last point. I will have to check if he covers it in his later article "Geld".
6 - It's also interesting how Menger tries to make clear that the concept of "merchandise" ("commodity" in the English translation, I believe) is also not inherent to the good in itself - just like its value -, but on the intention of the owner, who is currently holding it for sale. Thus, for Menger, while the popular meaning of "merchandise" is those goods that are held in stock, such as "inventories", the scientific meaning of the concept should be all economic goods that are held with the intention of being sold (and, thus, those should include... money). I find this very reminiscent of modern accounting theories and standards: the classification of an asset depends on how you intend to put it to economic use and not on the asset itself.
7 - His discussion (a whole chapter) of the old dichotomy of "value in use" and "value in exchange" is actually very coherent, in my opinion. He explains that a good may have value, given the direct use you can take from it, or it can have value, indirectly, because it may be exchanged for other things, which are themselves able to be directly used (for valuable purposes, in your subjective view). Thus, we see that at any point in time, it's the highest between these two values that binds the economic decision of the agent: if the value in use (*of a given unit*) is relatively high, you don't care about the market; if the value in exchange is high, you hold it as a merchandise. If the price on the market falls, you start using it for your purposes (burning paper notes in the winter, anyone?); if the market price rises, "we can draw gold from the moon", as the old saying goes.
So, in the end, what's Menger's main contribution, arrived at from his "causal-realist" approach?
Value is a mental/spiritual/psychological phenomenon, arising from the differences in importance of each individual's subjective needs. Such importance is then "imputed" into the goods upon which the satisfaction of that need depends. Value is not objective, in the sense that it is not something contained within the goods, not even provided by them.
Menger's focus is on the importance of different human needs, the satiation of which happens to require goods and services, which will then be appraised as such, and not based on the utility that supposedly those goods themselves provide (units of "utils", in the anglo-saxon tradition). Thus, it becomes much easier to understand that valuation and economizing is always an ordinal process, preferring one satisfaction over the other, and not a game of maximizing the amount of utility collected from goods.
Is value, then, independent from the objective realm? No.
Value is still inexorably dependent on the quantities of goods available, because that quantity will determine the importance of the need the satiation of which you must forego if you have to give away one unit of such good. If you have many units, the importance of a single one of them is low, because only those needs you value less will depend on that unit - if you give one unit away, the most valued needs are not affected, because you still have other units to satisfy them; it is the least valued needs that will now be left without being satiated.
As such it is always of crucial importance to note that what is being appraised is the value of a single unit and not of the whole batch - if it were the case, its value would be much higher, because now all the satisfaction would be called into question. In a sense, the equivalent of appraising the whole batch is appraising the value of a good of which you have only one unit: in that case, all satisfaction will also be called into question, so its value will correspond to the importance of the most urgent need that depends on having the good at all.
Now go and be an economist!
January 6, 2024
ENGLISH
“Principles of Political Economy” is the book that placed Carl Menger among the heads of the so-called “Marginalist Revolution”, along with William Stanley Jevons and Leon Walras — Jevons recognizes that German Hermann Gossen had also addressed the key idea of marginal utility even before him, although without due public recognition.
As I wrote in my review of Jevons's book (https://www.goodreads.com/review/show...), the “Revolution” radically changed the focus of the study of economics. If economists up until then studied the Economy as a whole complex system in operation, analyzing its various phenomena one by one, the theorists of the Revolution start from the fundamental analysis of how individuals make their economic choices, so as to extrapolate it to aggregated phenomena.
The Revolution is not limited to method. It also introduces important concepts and proposes new ways of looking at those in use. Central to this new outlook is the concept of value. Work was the source of all economic value for economists up until then. For marginalists like Menger, however, the source becomes people's subjective perception of utility. Menger makes it clear that value relates to the perceived importance of a good in satisfying human needs. The utility is directly related to the scarcity of this good. In this way, the Marginalists fill in an important gap that Political Economy from Smith to Marx was leaving blank: the role of demand in the economy. Menger follows this line, and works with the concept of utility while trying to take into account many of its complexities.
Menger struggles much more with the problem of utility, while Jevons simply adheres to the philosophical background of Jeremy Bentham and applies his concept of utility to economics. The result is a simpler and more objective exposition by Jevons, which does not invalidate Menger's good, more nuanced exposition of the point, though.
Menger seeks to build more elaborate concepts than Jevons, but also takes a more tortuous and thorny path to explain the notion of utility. Menger classifies goods as inferior or superior: goods of first, second, third, fourth orders, and so on. Inferior goods would be those of first order: those that directly satisfy human needs. As the “orders” of goods increase — he calls goods of “superior” orders — it means that the good moves away from the direct satisfaction of the need.
For Menger, the more a society engages in the production of superior goods, the greater its prosperity. Thus, contrary to Adam Smith, not only would the division of labor indicate prosperity, since a primitive society can have a division of labor in which groups of people take care of primitive activities different from each other (such as hunting, taking care of offspring, etc.); it is, however, important that this division of labor implies activities linked to the production of superior goods. Here, I understand that Smith was in truth more focused on division of labor in a context of continuity and collaboration between activities, which would indicate its high productivity — hence Smith's example of a pin factory’s production line. He uses this example and extrapolates it indicating that a society with a greater division of labor, implying a higher level of continuity and collaboration among economic activities, would be more prosperous; while Menger's criticism — in my view partially mistaken — focuses on activities, although specific and divided among the members of society, short of continuity and collaboration.
For Menger, four factors need to be present for something to be a “good”:
1) The existence of a human need.
2) That the thing has qualities that make it capable of being placed in a causal connection with the satisfaction of said need.
3) The recognition, by the person, of this causal connection between the said thing and the satisfaction of the respective need.
4) The person can dispose of that thing, so as to be able to use it effectively to satisfy that need.
Menger thus starts from the use of a term which has an ambiguous nature, since “good” can be used both as an adjective and a noun. In economics, “good” is used as a noun, but it incorporates an adjective given its characteristic of serving a human need. Menger makes it clear that he is dealing with things that satisfy human needs, and that this happens not because of the intrinsic qualities of these things but because of the utility they represent to people.
For Menger, the characterization of a thing as an “economic” or “non-economic” good depends on supply and demand, and time. A thing whose demand is smaller than its supply is an economic good; a thing whose demand is smaller than its supply is a non-economic good. In addition, if there's no demand today, it's a non-economic good, but that could change once there is demand.
In my opinion, choosing an ambiguous term like “good” in this context exposes the thesis to immediate criticisms of a logical nature. In Menger's view, due to the lack of complementary goods in the production of a certain inferior good, the superior good loses the quality of a “good” for not fulfilling rule 4 above. That is, a problem in production would affect the economic substance of the product, so that if an episodic accident occurs that causes the unavailability of one of the things that enter into the production process, that thing is no longer considered a “good” according to Menger. However, in my view the thing continues to be a “good” despite the occurrence of an episodic and sporadic problem in its availability. It is a good that has had a problem, but it continues to be a “good” (and its price should even go up), and the interruption of its supply or its resumption should not affect its substance — although, as said, the term “good” carries the ambiguous idea of noun-adjective mentioned above.
Although Jevons is much more emphatic and uses mathematical demonstrations, Menger also conceives the key idea of marginal utility (though, as Jevons, he does not use the term): the phenomenon that causes interest in a certain good to decline as it becomes more available and meets human needs, and vice versa. Or more precisely, successive quantities of a good generate smaller increases in satisfaction for the consumer.
Menger delves into a clear and interesting analysis of the historical evolution of money, and points to the inevitability of private property and the State as its guarantor. If there are economic exchanges, there would be private property and the State would protect property through the legal apparatus. Thus, any reform of a socialist nature, which intended to make goods available to all, would have to take private property into account.
Another highlight of the work is its lucid treatment of the commodity and the issue of monopoly and competition. Menger carries out a quite modern analysis of the rationality of economic agents in the supply of goods at quantities and prices that maximize profits depending on a monopolistic or a competitive context.
I did not know that Menger had a background in Law. But that became clear right when I started reading this book. The emphasis given by the author to the term “causal connection”, a very important and recurrent term in continental Europe’s Legal Science, indicates his academic background.
“Principles of Political Economy” has historical importance not only for jointly leading the so-called “Marginalist Revolution”, but also for founding the Austrian School of Economics. It is obviously not immune to criticism, but it is a clear and pleasant read.
PORTUGUÊS
“Princípios de Economia Política” é o livro que colocou Carl Menger como um dos lideres da chamada “Revolução Marginalista”, juntamente com William Stanley Jevons e Leon Walras — Jevons reconhece que o alemão Hermann Gossen também abordou a ideia de utilidade marginal até mesmo antes dele, embora sem o devido reconhecimento público.
Como afirmei em minha revisão ao livro de Jevons (https://www.goodreads.com/review/show...), a dita “Revolução” muda radicalmente o foco do estudo da Economia. Se até então os economistas estudavam a economia como um sistema complexo como um todo em funcionamento, analisando um por um os seus vários fenômenos, os teóricos da dita Revolução partem da análise fundamental de como os indivíduos fazem suas escolhas econômicas, para então extrapolar para fenômenos agregados.
A dita Revolução não se limita ao método. Introduz também conceitos importantes e propõe novas maneiras de olhar conceitos já em uso. Central a esse então novo olhar é a conceituação de valor. A fonte de todo valor econômico, para os economistas de até então, era o trabalho. Já para os marginalistas como Menger, tal fonte passa a ser a percepção subjetiva de utilidade pelas pessoas. Menger deixa bem claro que valor se relaciona com a importância percebida de um bem em satisfazer necessidades humanas. E essa utilidade tem relação direta com a escassez desse bem. Desse modo, os marginalistas suprem uma lacuna importante que vinha sendo deixada pela então Economia Política de Smith a Marx: o papel da demanda na Economia. Menger segue essa linha, e trabalha o conceito de utilidade tentando levar em conta muitas de suas complexidades.
Menger se digladia muito mais com o problema da utilidade, enquanto Jevons simplesmente adere ao ideário filosófico já construído por Jeremy Bentham e aplica o conceito de utilidade dele para a Economia. O resultado é uma exposição mais simples e objetiva por parte de Jevons, o que não invalida a boa exposição, mais nuançada, de Menger sobre o ponto.
Menger procura construir conceitos mais elaborados do que Jevons mas também envereda por um caminho mais tortuoso e espinhoso do que Jevons para explicar a noção de utilidade. Menger qualifica os bens como inferiores ou superiores: bens de primeira, segunda, terceira, quarta ordens e assim por diante. Os bens inferiores seriam os de primeira ordem: aqueles que satisfazem diretamente necessidades dos seres humanos. À medida que aumentam as “ordens” dos bens — ele chama de bens de ordens “superiores” — significa que o bem se distancia da satisfação direta da necessidade.
Para Menger, quanto mais uma sociedade se engaja na produção de bens superiores, maior será a sua prosperidade. Assim, diferente do que disse Adam Smith, não apenas a divisão do trabalho indicaria prosperidade, já que uma sociedade primitiva pode ter uma divisão do trabalho em que grupos de pessoas cuidam de atividades primitivas diferentes entre si (como caçar, cuidar da prole, etc.). É, no entanto, importante que essa divisão do trabalho implique atividades ligadas à produção de bens superiores. Aqui, entendo que Smith estava mais focado na divisão do trabalho em um contexto de continuidade e colaboração entre as atividades, o que indicaria sua alta produtividade — daí a invocação do exemplo da linha de produção de uma fábrica de alfinetes por ele. Ele usa esse exemplo e o extrapola para a sociedade, indicando que uma sociedade com maior divisão do trabalhão implicando maior nível de continuidade e colaboração entre as atividades econômicas seria mais próspera, enquanto a crítica de Menger, a meu ver parcialmente equivocada, centra-se nas atividades, embora específicas e divididas entre os membros da sociedade, sem esses fatores de continuidade e colaboração.
Para Menger, quatro fatores precisam estar presentes para que uma coisa adquira a qualidade de “bem”:
1) A existência de uma necessidade humana.
2) Que a coisa possua qualidades que a tornem apta a ser colocada em nexo causal com a satisfação da referida necessidade.
3) O reconhecimento, por parte do homem, desse nexo causal entre a referida coisa e a satisfação da respectiva necessidade.
4) O homem poder dispor dessa coisa, de modo a poder utilizá-la efetivamente para satisfazer à referida necessidade.
Menger, assim, parte do uso de um termo de natureza ambígua, já que “bem” pode ser usado tanto como adjetivo como substantivo. Em economia, “bem” é usado como substantivo, mas embute adjetivo dada a sua característica de servir a uma necessidade humana. Menger deixa claro que está tratando de coisas que satisfazem necessidades humanas e que isso se dá não por qualidades intrínsecas a essas coisas, mas pela utilidade que elas representam às pessoas.
Para Menger, a caracterização de uma coisa como um bem “econômico” ou “não econômico” depende da oferta e da demanda e do tempo. Uma coisa cuja procura é inferior à sua oferta é um bem econômico; uma coisa cuja procura é inferior à sua oferta é um bem não econômico. Se não houver procura hoje, não é bem econômico, mas isso pode mudar se passar a haver procura.
Na minha opinião, enveredar pela escolha de um termo ambíguo como “bem”, nesse caso, expõe a tese a críticas imediatas de caráter lógico ao raciocínio. Na ótica de Menger, por faltar bens complementares na produção de determinado “bem inferior”, o bem superior perde a qualidade de “bem” por não preencher a regra 4 acima. Ou seja, um problema na produção afetaria a substância econômica do produto, de modo que se acontece um acidente episódico que cause a indisponibilidade de uma das coisas que entram no processo de produção, essa coisa passa a não ser considerada “bem” segundo a acepção de Menger. Não obstante, entendo que a coisa continua sendo “bem” apesar da ocorrência de um problema episódico e esporádico em sua disponibilidade. É um bem que teve um problema, mas que continua sendo um “bem” (e seu preço deverá inclusive subir) e a parada de seu suprimento ou sua retomada não deveriam afetar sua substância — ainda que, como dito, o termo “bem” carregue a ideia ambígua de substantivo-adjetivo mencionada acima.
Embora Jevons seja muito mais enfático e utilize demonstrações matemáticas, Menger também concebe a ideia-chave de utilidade marginal (embora não a tenha assim chamado, assim como Jevons): o fenômeno que faz com que o interesse por determinado bem caia à medida que ele esteja mais disponível e supra necessidades humanas, e vice versa. Ou, mais precisamente, quantidades sucessivas de um bem geram acréscimos de satisfação progressivamente menores ao consumidor.
Menger mergulha em uma análise de evolução histórica clara e interessante sobre o dinheiro e também para apontar para inevitabilidade da propriedade privada e o Estado como garantidor dela. Havendo trocas econômicas, haveria propriedade privada e assim o Estado protegeria a propriedade por meio do aparato jurídico. Desse modo, qualquer reforma de caráter socialista, que pretendesse disponibilizar bens para todos, teria obrigatoriamente de levar em conta a propriedade.
Outro destaque da obra é seu tratamento lúcido sobre mercadoria e à questão do monopólio e da concorrência. Percebe-se uma percepção já bastante moderna de racionalidade dos agentes econômicos na oferta de bens a quantidades e preços que maximizem lucros a depender do contexto, se com monopólio ou com concorrência.
Antes de começar a ler a obra, eu não sabia que Menger tinha formação jurídica. Mas isso ficou claro logo no começo da leitura. A ênfase dada pelo autor ao “nexo causal”, termo bastante importante e recorrente na Ciência Jurídica da Europa continental, indica seu background acadêmico.
“Princípios de Economia Política” tem importância histórica não só por encabeçar conjuntamente a dita “Revolução Marginalista”, mas também por fundar a Escola Austríaca de Economia. Obviamente não é imune a críticas, mas é uma leitura, além de tudo, clara e agradável.
“Principles of Political Economy” is the book that placed Carl Menger among the heads of the so-called “Marginalist Revolution”, along with William Stanley Jevons and Leon Walras — Jevons recognizes that German Hermann Gossen had also addressed the key idea of marginal utility even before him, although without due public recognition.
As I wrote in my review of Jevons's book (https://www.goodreads.com/review/show...), the “Revolution” radically changed the focus of the study of economics. If economists up until then studied the Economy as a whole complex system in operation, analyzing its various phenomena one by one, the theorists of the Revolution start from the fundamental analysis of how individuals make their economic choices, so as to extrapolate it to aggregated phenomena.
The Revolution is not limited to method. It also introduces important concepts and proposes new ways of looking at those in use. Central to this new outlook is the concept of value. Work was the source of all economic value for economists up until then. For marginalists like Menger, however, the source becomes people's subjective perception of utility. Menger makes it clear that value relates to the perceived importance of a good in satisfying human needs. The utility is directly related to the scarcity of this good. In this way, the Marginalists fill in an important gap that Political Economy from Smith to Marx was leaving blank: the role of demand in the economy. Menger follows this line, and works with the concept of utility while trying to take into account many of its complexities.
Menger struggles much more with the problem of utility, while Jevons simply adheres to the philosophical background of Jeremy Bentham and applies his concept of utility to economics. The result is a simpler and more objective exposition by Jevons, which does not invalidate Menger's good, more nuanced exposition of the point, though.
Menger seeks to build more elaborate concepts than Jevons, but also takes a more tortuous and thorny path to explain the notion of utility. Menger classifies goods as inferior or superior: goods of first, second, third, fourth orders, and so on. Inferior goods would be those of first order: those that directly satisfy human needs. As the “orders” of goods increase — he calls goods of “superior” orders — it means that the good moves away from the direct satisfaction of the need.
For Menger, the more a society engages in the production of superior goods, the greater its prosperity. Thus, contrary to Adam Smith, not only would the division of labor indicate prosperity, since a primitive society can have a division of labor in which groups of people take care of primitive activities different from each other (such as hunting, taking care of offspring, etc.); it is, however, important that this division of labor implies activities linked to the production of superior goods. Here, I understand that Smith was in truth more focused on division of labor in a context of continuity and collaboration between activities, which would indicate its high productivity — hence Smith's example of a pin factory’s production line. He uses this example and extrapolates it indicating that a society with a greater division of labor, implying a higher level of continuity and collaboration among economic activities, would be more prosperous; while Menger's criticism — in my view partially mistaken — focuses on activities, although specific and divided among the members of society, short of continuity and collaboration.
For Menger, four factors need to be present for something to be a “good”:
1) The existence of a human need.
2) That the thing has qualities that make it capable of being placed in a causal connection with the satisfaction of said need.
3) The recognition, by the person, of this causal connection between the said thing and the satisfaction of the respective need.
4) The person can dispose of that thing, so as to be able to use it effectively to satisfy that need.
Menger thus starts from the use of a term which has an ambiguous nature, since “good” can be used both as an adjective and a noun. In economics, “good” is used as a noun, but it incorporates an adjective given its characteristic of serving a human need. Menger makes it clear that he is dealing with things that satisfy human needs, and that this happens not because of the intrinsic qualities of these things but because of the utility they represent to people.
For Menger, the characterization of a thing as an “economic” or “non-economic” good depends on supply and demand, and time. A thing whose demand is smaller than its supply is an economic good; a thing whose demand is smaller than its supply is a non-economic good. In addition, if there's no demand today, it's a non-economic good, but that could change once there is demand.
In my opinion, choosing an ambiguous term like “good” in this context exposes the thesis to immediate criticisms of a logical nature. In Menger's view, due to the lack of complementary goods in the production of a certain inferior good, the superior good loses the quality of a “good” for not fulfilling rule 4 above. That is, a problem in production would affect the economic substance of the product, so that if an episodic accident occurs that causes the unavailability of one of the things that enter into the production process, that thing is no longer considered a “good” according to Menger. However, in my view the thing continues to be a “good” despite the occurrence of an episodic and sporadic problem in its availability. It is a good that has had a problem, but it continues to be a “good” (and its price should even go up), and the interruption of its supply or its resumption should not affect its substance — although, as said, the term “good” carries the ambiguous idea of noun-adjective mentioned above.
Although Jevons is much more emphatic and uses mathematical demonstrations, Menger also conceives the key idea of marginal utility (though, as Jevons, he does not use the term): the phenomenon that causes interest in a certain good to decline as it becomes more available and meets human needs, and vice versa. Or more precisely, successive quantities of a good generate smaller increases in satisfaction for the consumer.
Menger delves into a clear and interesting analysis of the historical evolution of money, and points to the inevitability of private property and the State as its guarantor. If there are economic exchanges, there would be private property and the State would protect property through the legal apparatus. Thus, any reform of a socialist nature, which intended to make goods available to all, would have to take private property into account.
Another highlight of the work is its lucid treatment of the commodity and the issue of monopoly and competition. Menger carries out a quite modern analysis of the rationality of economic agents in the supply of goods at quantities and prices that maximize profits depending on a monopolistic or a competitive context.
I did not know that Menger had a background in Law. But that became clear right when I started reading this book. The emphasis given by the author to the term “causal connection”, a very important and recurrent term in continental Europe’s Legal Science, indicates his academic background.
“Principles of Political Economy” has historical importance not only for jointly leading the so-called “Marginalist Revolution”, but also for founding the Austrian School of Economics. It is obviously not immune to criticism, but it is a clear and pleasant read.
PORTUGUÊS
“Princípios de Economia Política” é o livro que colocou Carl Menger como um dos lideres da chamada “Revolução Marginalista”, juntamente com William Stanley Jevons e Leon Walras — Jevons reconhece que o alemão Hermann Gossen também abordou a ideia de utilidade marginal até mesmo antes dele, embora sem o devido reconhecimento público.
Como afirmei em minha revisão ao livro de Jevons (https://www.goodreads.com/review/show...), a dita “Revolução” muda radicalmente o foco do estudo da Economia. Se até então os economistas estudavam a economia como um sistema complexo como um todo em funcionamento, analisando um por um os seus vários fenômenos, os teóricos da dita Revolução partem da análise fundamental de como os indivíduos fazem suas escolhas econômicas, para então extrapolar para fenômenos agregados.
A dita Revolução não se limita ao método. Introduz também conceitos importantes e propõe novas maneiras de olhar conceitos já em uso. Central a esse então novo olhar é a conceituação de valor. A fonte de todo valor econômico, para os economistas de até então, era o trabalho. Já para os marginalistas como Menger, tal fonte passa a ser a percepção subjetiva de utilidade pelas pessoas. Menger deixa bem claro que valor se relaciona com a importância percebida de um bem em satisfazer necessidades humanas. E essa utilidade tem relação direta com a escassez desse bem. Desse modo, os marginalistas suprem uma lacuna importante que vinha sendo deixada pela então Economia Política de Smith a Marx: o papel da demanda na Economia. Menger segue essa linha, e trabalha o conceito de utilidade tentando levar em conta muitas de suas complexidades.
Menger se digladia muito mais com o problema da utilidade, enquanto Jevons simplesmente adere ao ideário filosófico já construído por Jeremy Bentham e aplica o conceito de utilidade dele para a Economia. O resultado é uma exposição mais simples e objetiva por parte de Jevons, o que não invalida a boa exposição, mais nuançada, de Menger sobre o ponto.
Menger procura construir conceitos mais elaborados do que Jevons mas também envereda por um caminho mais tortuoso e espinhoso do que Jevons para explicar a noção de utilidade. Menger qualifica os bens como inferiores ou superiores: bens de primeira, segunda, terceira, quarta ordens e assim por diante. Os bens inferiores seriam os de primeira ordem: aqueles que satisfazem diretamente necessidades dos seres humanos. À medida que aumentam as “ordens” dos bens — ele chama de bens de ordens “superiores” — significa que o bem se distancia da satisfação direta da necessidade.
Para Menger, quanto mais uma sociedade se engaja na produção de bens superiores, maior será a sua prosperidade. Assim, diferente do que disse Adam Smith, não apenas a divisão do trabalho indicaria prosperidade, já que uma sociedade primitiva pode ter uma divisão do trabalho em que grupos de pessoas cuidam de atividades primitivas diferentes entre si (como caçar, cuidar da prole, etc.). É, no entanto, importante que essa divisão do trabalho implique atividades ligadas à produção de bens superiores. Aqui, entendo que Smith estava mais focado na divisão do trabalho em um contexto de continuidade e colaboração entre as atividades, o que indicaria sua alta produtividade — daí a invocação do exemplo da linha de produção de uma fábrica de alfinetes por ele. Ele usa esse exemplo e o extrapola para a sociedade, indicando que uma sociedade com maior divisão do trabalhão implicando maior nível de continuidade e colaboração entre as atividades econômicas seria mais próspera, enquanto a crítica de Menger, a meu ver parcialmente equivocada, centra-se nas atividades, embora específicas e divididas entre os membros da sociedade, sem esses fatores de continuidade e colaboração.
Para Menger, quatro fatores precisam estar presentes para que uma coisa adquira a qualidade de “bem”:
1) A existência de uma necessidade humana.
2) Que a coisa possua qualidades que a tornem apta a ser colocada em nexo causal com a satisfação da referida necessidade.
3) O reconhecimento, por parte do homem, desse nexo causal entre a referida coisa e a satisfação da respectiva necessidade.
4) O homem poder dispor dessa coisa, de modo a poder utilizá-la efetivamente para satisfazer à referida necessidade.
Menger, assim, parte do uso de um termo de natureza ambígua, já que “bem” pode ser usado tanto como adjetivo como substantivo. Em economia, “bem” é usado como substantivo, mas embute adjetivo dada a sua característica de servir a uma necessidade humana. Menger deixa claro que está tratando de coisas que satisfazem necessidades humanas e que isso se dá não por qualidades intrínsecas a essas coisas, mas pela utilidade que elas representam às pessoas.
Para Menger, a caracterização de uma coisa como um bem “econômico” ou “não econômico” depende da oferta e da demanda e do tempo. Uma coisa cuja procura é inferior à sua oferta é um bem econômico; uma coisa cuja procura é inferior à sua oferta é um bem não econômico. Se não houver procura hoje, não é bem econômico, mas isso pode mudar se passar a haver procura.
Na minha opinião, enveredar pela escolha de um termo ambíguo como “bem”, nesse caso, expõe a tese a críticas imediatas de caráter lógico ao raciocínio. Na ótica de Menger, por faltar bens complementares na produção de determinado “bem inferior”, o bem superior perde a qualidade de “bem” por não preencher a regra 4 acima. Ou seja, um problema na produção afetaria a substância econômica do produto, de modo que se acontece um acidente episódico que cause a indisponibilidade de uma das coisas que entram no processo de produção, essa coisa passa a não ser considerada “bem” segundo a acepção de Menger. Não obstante, entendo que a coisa continua sendo “bem” apesar da ocorrência de um problema episódico e esporádico em sua disponibilidade. É um bem que teve um problema, mas que continua sendo um “bem” (e seu preço deverá inclusive subir) e a parada de seu suprimento ou sua retomada não deveriam afetar sua substância — ainda que, como dito, o termo “bem” carregue a ideia ambígua de substantivo-adjetivo mencionada acima.
Embora Jevons seja muito mais enfático e utilize demonstrações matemáticas, Menger também concebe a ideia-chave de utilidade marginal (embora não a tenha assim chamado, assim como Jevons): o fenômeno que faz com que o interesse por determinado bem caia à medida que ele esteja mais disponível e supra necessidades humanas, e vice versa. Ou, mais precisamente, quantidades sucessivas de um bem geram acréscimos de satisfação progressivamente menores ao consumidor.
Menger mergulha em uma análise de evolução histórica clara e interessante sobre o dinheiro e também para apontar para inevitabilidade da propriedade privada e o Estado como garantidor dela. Havendo trocas econômicas, haveria propriedade privada e assim o Estado protegeria a propriedade por meio do aparato jurídico. Desse modo, qualquer reforma de caráter socialista, que pretendesse disponibilizar bens para todos, teria obrigatoriamente de levar em conta a propriedade.
Outro destaque da obra é seu tratamento lúcido sobre mercadoria e à questão do monopólio e da concorrência. Percebe-se uma percepção já bastante moderna de racionalidade dos agentes econômicos na oferta de bens a quantidades e preços que maximizem lucros a depender do contexto, se com monopólio ou com concorrência.
Antes de começar a ler a obra, eu não sabia que Menger tinha formação jurídica. Mas isso ficou claro logo no começo da leitura. A ênfase dada pelo autor ao “nexo causal”, termo bastante importante e recorrente na Ciência Jurídica da Europa continental, indica seu background acadêmico.
“Princípios de Economia Política” tem importância histórica não só por encabeçar conjuntamente a dita “Revolução Marginalista”, mas também por fundar a Escola Austríaca de Economia. Obviamente não é imune a críticas, mas é uma leitura, além de tudo, clara e agradável.
September 2, 2015
Principles of Economics clarifies the nature of economic value by the real life actions of individual human beings, it also launched the Marginalist Revolution when it corrected theoretical errors in the theory of value of the old economic classical school, for this philosophical thought, Carl Menger became the founder of the Austrian School of Economics.
The theory of value is the core to economics, and marginal utility is the source to value, for economizing individuals must decide what ends to satisfy most from the available means. Menger states, “value is thus nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgement economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well being. Hence, value does not exist outside the consciousness of men.” Value can’t be objective, it is rooted in subjective means.
The differences in the marketability of commodities is a necessary prerequisite for the origin of money because it must be the most marketable and saleable good without having exchange limitations and sustain its marketability over time. Money is not the invention of the state nor the byproduct of legislation as well as not even necessary to be sanctioned by a political authority for its existence. Money is a natural phenomenon of economic relationships established over time through the exchange of commodities, and eventually one or two commodities reigns supreme as money.
Even though this wasn’t my first economics book, this book is very good to introducing not only economics in general but Austrian Economics. Menger is simply brilliant, for he saved economics of the flawed existing structures of economic thought and legitimately established economics as a theoretical science, for marginal utility changed economics as to solving the water-diamond paradox.
The theory of value is the core to economics, and marginal utility is the source to value, for economizing individuals must decide what ends to satisfy most from the available means. Menger states, “value is thus nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgement economizing men make about the importance of the goods at their disposal for the maintenance of their lives and well being. Hence, value does not exist outside the consciousness of men.” Value can’t be objective, it is rooted in subjective means.
The differences in the marketability of commodities is a necessary prerequisite for the origin of money because it must be the most marketable and saleable good without having exchange limitations and sustain its marketability over time. Money is not the invention of the state nor the byproduct of legislation as well as not even necessary to be sanctioned by a political authority for its existence. Money is a natural phenomenon of economic relationships established over time through the exchange of commodities, and eventually one or two commodities reigns supreme as money.
Even though this wasn’t my first economics book, this book is very good to introducing not only economics in general but Austrian Economics. Menger is simply brilliant, for he saved economics of the flawed existing structures of economic thought and legitimately established economics as a theoretical science, for marginal utility changed economics as to solving the water-diamond paradox.
July 29, 2018
A truly revolutionary book. This is Economic's Copernicus setting the foundations of Economics anew. Such a copernican turn that it sets the foundations for value, capital and institutional evolution theory for all other continental (aka "Austrian) economists to follow. The most important economic book of the XIXth century.
August 22, 2020
Some economists today may mistakenly believe there is no or little benefit to reading the original works of past economists. Menger's Principles of Economics, however, disproves such a belief. Along with Walras and Jevons, Menger is one of the forefathers of the economic concept of marginal utility. While the other two economists incorporated proto-quantitative methods into their economic analysis, Menger recognized and argued for the subjective theory of value, to which quantitative methods will remain fundamentally unexplanatory.
Throughout the book, the reader can easily recognize foundations Menger has laid out and how subsequent Austrian and non-Austrian economists have built from Menger's knowledge. Beginning with the human individual, Menger recognizes the fundamental law of cause and effect. The human mind cannot imagine any event or phenomenon in which an effect can occur without a cause. Humans also seek to move from a state of less satisfaction to one of greater satisfaction (a need). In doing so, a person must believe there is a solution available to alleviate dissatisfaction (a means). If possible, this person then attempts to command the thing or situation to directly satisfy the need (an ends).
However, upon satisfaction of a need, we also recognize humans have a nearly unlimited hunger of needs. At any satisfaction or fulfillment of a need or goal, we immediately endeavor to satisfy yet another one. As such, it is evident that every satisfaction of needs cannot directly come from nature without human effort. Humankind must save and forego current consumption in order to create tools, techniques, explore new areas, and other way in which to satisfy their needs. Thus, Menger conceptualizes higher-ordered goods. Goods that are directly consumed are called first-ordered goods (also consumption goods). Goods that are not directly consumed but are used to produce first-ordered goods are called second-ordered goods. The logic follows with third-ordered goods, fourth-ordered goods, and so on.
From here, Menger lays out the foundations of economic exchange, value, the formation of prices, the theory of commodities, and finally the origin and nature of money. One can quickly recognize from the mentioning of these topics that economists such as Bohm-Bawerk, Mises, Hayek, and Rothbard have all built upon and improved on Menger, further extending our understanding of overall economic theory.
Menger correspondingly builds upon and corrects the errors of past economists. On the topic of rent and the value of land, Menger corrects Ricardo's theory of rent (and while not directly named, critiques the Georgist position on land). On Adam Smith, Menger believes the origin for the economic exchange is not due to our human propensity to truck, barter, and trade; but is instead from our rational recognition and deliberate action to benefit from trade. Moreover, the division of labor, Menger writes, can be seen in primitive collecting societies. In other words, the division of labor alone is insufficient to explain the wealth of nations. When humans began to investigate methods for producing higher-ordered goods, this is when the condition of humankind improve.
Lastly, and perhaps most famously, Menger corrects the errors of all other past economists in arguing for both the theory of marginal utility and the subjective theory of value, combined as the theory of subjective marginal value. In attempting to explain the value of goods, classical economists settled on the labor theory of value since they could not reduce labor into a more fundamental factor. Classical economists, however, could not explain why diamonds were more valuable than water when it is the case water is essential for human life while diamonds were, at the time, limited in functionality. I will leave this diamond and water paradox unanswered in the hopes that it will inspire you, the reader, to read this fundamental text.
It is clear--with Menger as a prime example--that as time progresses, it is not necessarily true that knowledge also accumulates and progresses. Economic understanding has retrogressed and a fair reading of this book will more than likely convince you of that.
Throughout the book, the reader can easily recognize foundations Menger has laid out and how subsequent Austrian and non-Austrian economists have built from Menger's knowledge. Beginning with the human individual, Menger recognizes the fundamental law of cause and effect. The human mind cannot imagine any event or phenomenon in which an effect can occur without a cause. Humans also seek to move from a state of less satisfaction to one of greater satisfaction (a need). In doing so, a person must believe there is a solution available to alleviate dissatisfaction (a means). If possible, this person then attempts to command the thing or situation to directly satisfy the need (an ends).
However, upon satisfaction of a need, we also recognize humans have a nearly unlimited hunger of needs. At any satisfaction or fulfillment of a need or goal, we immediately endeavor to satisfy yet another one. As such, it is evident that every satisfaction of needs cannot directly come from nature without human effort. Humankind must save and forego current consumption in order to create tools, techniques, explore new areas, and other way in which to satisfy their needs. Thus, Menger conceptualizes higher-ordered goods. Goods that are directly consumed are called first-ordered goods (also consumption goods). Goods that are not directly consumed but are used to produce first-ordered goods are called second-ordered goods. The logic follows with third-ordered goods, fourth-ordered goods, and so on.
From here, Menger lays out the foundations of economic exchange, value, the formation of prices, the theory of commodities, and finally the origin and nature of money. One can quickly recognize from the mentioning of these topics that economists such as Bohm-Bawerk, Mises, Hayek, and Rothbard have all built upon and improved on Menger, further extending our understanding of overall economic theory.
Menger correspondingly builds upon and corrects the errors of past economists. On the topic of rent and the value of land, Menger corrects Ricardo's theory of rent (and while not directly named, critiques the Georgist position on land). On Adam Smith, Menger believes the origin for the economic exchange is not due to our human propensity to truck, barter, and trade; but is instead from our rational recognition and deliberate action to benefit from trade. Moreover, the division of labor, Menger writes, can be seen in primitive collecting societies. In other words, the division of labor alone is insufficient to explain the wealth of nations. When humans began to investigate methods for producing higher-ordered goods, this is when the condition of humankind improve.
Lastly, and perhaps most famously, Menger corrects the errors of all other past economists in arguing for both the theory of marginal utility and the subjective theory of value, combined as the theory of subjective marginal value. In attempting to explain the value of goods, classical economists settled on the labor theory of value since they could not reduce labor into a more fundamental factor. Classical economists, however, could not explain why diamonds were more valuable than water when it is the case water is essential for human life while diamonds were, at the time, limited in functionality. I will leave this diamond and water paradox unanswered in the hopes that it will inspire you, the reader, to read this fundamental text.
It is clear--with Menger as a prime example--that as time progresses, it is not necessarily true that knowledge also accumulates and progresses. Economic understanding has retrogressed and a fair reading of this book will more than likely convince you of that.
February 9, 2016
One of the best economics texts I've ever read. For a book over 100 years old and translated from German, it's surprisingly easy to read. Menger clearly explains value, marginal utility (Menger is the economist who first posited this concept), prices, and money. I have this up there with "Man, Economy and State" as my favorite Econ books, only this one is much shorter.
August 3, 2014
Because I read later Austrian-School economists before finally exploring, Menger, much of the content here is very familiar to me. Still, this here is the work that really transformed the study of economics, with ideas such as the subjective source of value, marginal utility, and the origins commodities, and keeping that perspective added a lot of interest when reading this book. Knowing that Ludwig von Mises was highly influenced by Menger, it's fascinating to see small but important insights here that were later expounded by him, such as the origins of money and the concept of "acting man." I'd say that this would make an excellent companion to modern-day economics texts.
May 29, 2017
The knowledge in this book may not be anything new for many people who knew why they wanted to read Menger. This book is a foundation of the Austrian School of Economics; but it also is relevant for economy in general.
The relevance of it is that it was a change of methodology that imposed itself on all the field of economy (in different degrees). It is the starting point of the so called subjective revolution, a trend that gave much insight on the main economical problems from that time and introduced is to the importance of the micro-economical analysis
The relevance of it is that it was a change of methodology that imposed itself on all the field of economy (in different degrees). It is the starting point of the so called subjective revolution, a trend that gave much insight on the main economical problems from that time and introduced is to the importance of the micro-economical analysis
July 28, 2022
Some notes from the underground:
I listened to some podcast where the author of ‘the bitcoin standard’ recommended reading ‘austrian economy’ - specifically the works of Menger, Böhm-Bawerk and Von Mises.
I hate fucking economy (had to endure a few subjects at universities - worst fucking bullshit I ever had to read) and swore to my previous self never to read it again
He warned that since austrian economy is highly critical of governments, you would not find austrian economy in any public institution.
So I checked the public norwegian libraries - no austrian economy to be found. I checked norwegian business educations - no austrian economy to be found. I checked norwegian publications - no austrian economy to be found.
That’s interesting.
So I started with Von Mises and now this guy Menger. Two takeaways:
1) They actually do hate the government
2) Austrian economy actually makes sense (and spends some time showing how the economy I learned at school is complete nonesense)
I listened to some podcast where the author of ‘the bitcoin standard’ recommended reading ‘austrian economy’ - specifically the works of Menger, Böhm-Bawerk and Von Mises.
I hate fucking economy (had to endure a few subjects at universities - worst fucking bullshit I ever had to read) and swore to my previous self never to read it again
He warned that since austrian economy is highly critical of governments, you would not find austrian economy in any public institution.
So I checked the public norwegian libraries - no austrian economy to be found. I checked norwegian business educations - no austrian economy to be found. I checked norwegian publications - no austrian economy to be found.
That’s interesting.
So I started with Von Mises and now this guy Menger. Two takeaways:
1) They actually do hate the government
2) Austrian economy actually makes sense (and spends some time showing how the economy I learned at school is complete nonesense)
September 5, 2023
Somehow fame has never been able to catch-up with his momentous contribution to economics
January 11, 2011
This by the founder of the "Austrian School" of economics (so-called by Murray Rothbard, so it works for me).
As with any treatise on economics (especially those written in the 19th century), this is dry. The gist of Austrian economics is that economies are the accumulation of individual human actions (praxeology from the Ancient Greek praxis from which we get "practice", i.e. "to do", see Human Action by Ludwig von Mises, to be read and reviewed at a later time). Menger introduces the concept of Subjective Marginal Utility*. He starts with defining what a "good" is, then to what an economy is and what constitutes "economic goods" (scarcity). He then moves on to value and how and why certain economic goods derive their relative values ("value is thus the importance that individual goods or quantities of goods attain for us because we are conscious of being dependent on command of them for the satisfaction of our needs" (p.115)) , which then dovetails nicely into his exposition on his theory of exchange.
He then moves on to the theory of price, describing the hows and whys of price formation. It is imperative to realize that until the late 19th century, economics had no good explanation of how prices were formed, relying on the flawed theory that prices were set by landlords or producers (nominally to recover costs and fund further investment) which led to even more flawed and asinine theories like Marx's surplus value of labor. It is also important to note that most people today still have no idea how prices are formed and often feel victimized and then fall into the idea that government can and should do something about prices, the unintended consequences of such always create further market distortions and often create more harm than good. The preceding is not opinion but has been borne out by centuries of human experience, usually under the misguided trope that "this time we'll get it right." No, we won't.
Pardon the digression.
Menger then moves on to delineate the difference between use-value and exchange-value, also very important to economic thought and something people do just about every waking moment without realizing it (differentiate and then act upon that differentiation, that is).
After defining what a commodity is and how they fit into the general principles (a little too boring for this space) he moves on to money, the nature and origin of it and how it came to what it is today: a store of value, a unit of measure and a medium of exchange.
Intermittently he touches upon time preference, but this is gotten into further by his student and ideological heir, Eugen von Bohm-Bawerk in his Positive Theory of Capital and also his Capital and Interest (which is next on my list of Austrian Economics texts to tackle).
Great book, but very dry. It took me entirely too long to get through, but it was worthwhile.
If interested in economics at all, I highly recommend.
As with any treatise on economics (especially those written in the 19th century), this is dry. The gist of Austrian economics is that economies are the accumulation of individual human actions (praxeology from the Ancient Greek praxis from which we get "practice", i.e. "to do", see Human Action by Ludwig von Mises, to be read and reviewed at a later time). Menger introduces the concept of Subjective Marginal Utility*. He starts with defining what a "good" is, then to what an economy is and what constitutes "economic goods" (scarcity). He then moves on to value and how and why certain economic goods derive their relative values ("value is thus the importance that individual goods or quantities of goods attain for us because we are conscious of being dependent on command of them for the satisfaction of our needs" (p.115)) , which then dovetails nicely into his exposition on his theory of exchange.
He then moves on to the theory of price, describing the hows and whys of price formation. It is imperative to realize that until the late 19th century, economics had no good explanation of how prices were formed, relying on the flawed theory that prices were set by landlords or producers (nominally to recover costs and fund further investment) which led to even more flawed and asinine theories like Marx's surplus value of labor. It is also important to note that most people today still have no idea how prices are formed and often feel victimized and then fall into the idea that government can and should do something about prices, the unintended consequences of such always create further market distortions and often create more harm than good. The preceding is not opinion but has been borne out by centuries of human experience, usually under the misguided trope that "this time we'll get it right." No, we won't.
Pardon the digression.
Menger then moves on to delineate the difference between use-value and exchange-value, also very important to economic thought and something people do just about every waking moment without realizing it (differentiate and then act upon that differentiation, that is).
After defining what a commodity is and how they fit into the general principles (a little too boring for this space) he moves on to money, the nature and origin of it and how it came to what it is today: a store of value, a unit of measure and a medium of exchange.
Intermittently he touches upon time preference, but this is gotten into further by his student and ideological heir, Eugen von Bohm-Bawerk in his Positive Theory of Capital and also his Capital and Interest (which is next on my list of Austrian Economics texts to tackle).
Great book, but very dry. It took me entirely too long to get through, but it was worthwhile.
If interested in economics at all, I highly recommend.
September 4, 2022
The fundamentals of economics from the perspective of the Austrian school of economics. A great book and mostly easy to read. This book changed economic theory.
March 19, 2023
'Principles of Economics' by Carl Menger is a dated book (1871) and thus a nuanced investigation into the world of economics compared to the depth of contemporary works is not to be expected. However, as I read this book specifically to get an insight on the birth of the subjective theory of value and the marginal revolution I was quite satisfied.
I appreciated the clear and logical methodology of his approach to economics; throughout the book he incrementally builds up his theory through observing causality and synthesising this in 'economic laws' that apply to all economic endeavours. Menger starts out at the basics of economics and carefully lays out its definitions - which can come off as quite dull but is necessary for him to build upon. That is not to say some chapters can't be skipped. In the final chapter Menger treats the theory of money, which was a quick interesting read as it gave me a somewhat new insights on the origin and use of money.
Regarding formulation and lengthy sentences, Menger was not really 'quotable'. The used methodology certainly required him to 'leave no stone unturned' and this resulted in the avoidance of possibly concise and 'incomplete' treatment of the subjects, especially because of the general laws. However, the absence of concise formulations is filled by coherent and thorough investigations which increase comprehension.
The core of Menger's economic theory is human needs and the aim of the economizing individual to satisfy said needs, he attempts to discover the attached causal connections and the laws to which those are subject. It is clear that such an approach is necessarily mostly subjective. He firstly incorporates human need and the strive for the satisfaction of those needs in his definition of goods, before extending this to the dichotomy of non-economic and economic goods. An economic good can only attain this status if the quantitative relation is such that the requirements of the individual are higher than the available quantity of the good. This quantitative relationship is extended to the theory of value, as our satisfaction is dependent on concrete quantities of the good, this is thus an objective factor of value. This objective factor is complemented with an subjective factor: diminishing marginal utility (although Menger never uses this term, this goes back to the mentioned lengthy formulation in the book): the term used for describing the diminishing value individuals attribute to goods with each concrete satisfaction. This is in line with Menger's view that value is merely subjective, it is not inherent in goods. This is then further expanded to the formation of prices in isolated exchanges, as well as differing monopoly situations paired with the effects of competition.
I appreciated the clear and logical methodology of his approach to economics; throughout the book he incrementally builds up his theory through observing causality and synthesising this in 'economic laws' that apply to all economic endeavours. Menger starts out at the basics of economics and carefully lays out its definitions - which can come off as quite dull but is necessary for him to build upon. That is not to say some chapters can't be skipped. In the final chapter Menger treats the theory of money, which was a quick interesting read as it gave me a somewhat new insights on the origin and use of money.
Regarding formulation and lengthy sentences, Menger was not really 'quotable'. The used methodology certainly required him to 'leave no stone unturned' and this resulted in the avoidance of possibly concise and 'incomplete' treatment of the subjects, especially because of the general laws. However, the absence of concise formulations is filled by coherent and thorough investigations which increase comprehension.
The core of Menger's economic theory is human needs and the aim of the economizing individual to satisfy said needs, he attempts to discover the attached causal connections and the laws to which those are subject. It is clear that such an approach is necessarily mostly subjective. He firstly incorporates human need and the strive for the satisfaction of those needs in his definition of goods, before extending this to the dichotomy of non-economic and economic goods. An economic good can only attain this status if the quantitative relation is such that the requirements of the individual are higher than the available quantity of the good. This quantitative relationship is extended to the theory of value, as our satisfaction is dependent on concrete quantities of the good, this is thus an objective factor of value. This objective factor is complemented with an subjective factor: diminishing marginal utility (although Menger never uses this term, this goes back to the mentioned lengthy formulation in the book): the term used for describing the diminishing value individuals attribute to goods with each concrete satisfaction. This is in line with Menger's view that value is merely subjective, it is not inherent in goods. This is then further expanded to the formation of prices in isolated exchanges, as well as differing monopoly situations paired with the effects of competition.
This entire review has been hidden because of spoilers.
March 30, 2023
I came across this work, after my encounter with term, "Macro-economic forces"
Macro-economic forces similar to how Religious tradition claim, "Spiritual forces"
No difference, I mean jovially, replace with a more scientific term for acceptance.
Overall, I appreciated this work.
It has helped me to raise my understanding from new concepts in Economics.
I keep going back to Tamil Nadu, India, which is my roots.
I go back to compare, to help me synthesize.
While -- I read this work, I ask, how can I apply this?
a. Classify Goods
b. Sort them using principles
c. Eg: Capital Goods, Higher Order, Lower Order goods
Most Tamil people hold to Classical view of economics.
Tamil people are obsessed with land, house, gold.
With Land -- I recall around 2000-2007, there was serious spike in value. How Serious? 300% or 400% or 800%
I find myself in joy looking at things around me after reading this work. I keep wondering,
"Oh, this must be a higher-order good?"
"Oh, is this why so and so district in Tamil Nadu is poor?"
"Oh, I wonder what can be done about it?"
Well, this work doesn't answer those questions.
However, it will establish foundation towards finding economic answers.
This work highly conceptual.
You might like this if you desire to understand from fundamental principles.
Deus Vult,
Gottfried
Macro-economic forces similar to how Religious tradition claim, "Spiritual forces"
No difference, I mean jovially, replace with a more scientific term for acceptance.
Overall, I appreciated this work.
It has helped me to raise my understanding from new concepts in Economics.
I keep going back to Tamil Nadu, India, which is my roots.
I go back to compare, to help me synthesize.
While -- I read this work, I ask, how can I apply this?
a. Classify Goods
b. Sort them using principles
c. Eg: Capital Goods, Higher Order, Lower Order goods
Most Tamil people hold to Classical view of economics.
Tamil people are obsessed with land, house, gold.
With Land -- I recall around 2000-2007, there was serious spike in value. How Serious? 300% or 400% or 800%
I find myself in joy looking at things around me after reading this work. I keep wondering,
"Oh, this must be a higher-order good?"
"Oh, is this why so and so district in Tamil Nadu is poor?"
"Oh, I wonder what can be done about it?"
Well, this work doesn't answer those questions.
However, it will establish foundation towards finding economic answers.
This work highly conceptual.
You might like this if you desire to understand from fundamental principles.
Deus Vult,
Gottfried
September 26, 2021
This is my first book on the journey to understanding Austrian Economics. I started with Carl Menger because he is considered to be the father of the Austrian school. I was not disappointed.
This book is very easy to read and understand. I guess a lot of the credit should go to the translators for that. Menger reduces economics to its basic building blocks. He begins by defining "goods", then moves to distinguish "economic goods". He works methodically in this way up to a "theory of price".
This work presents a new way of thinking to me. In college, I had a course on Economics but it was not Austrian economics.
The most profound idea in this book is about property. Menger explains how private property is an inevitable outcome of having "economizing individuals" and "economic goods".
Menger was one of the people who independently came up with the "marginal utility theory of value". His explanation in this book is the clearest I have seen yet.
On to the next one.
This book is very easy to read and understand. I guess a lot of the credit should go to the translators for that. Menger reduces economics to its basic building blocks. He begins by defining "goods", then moves to distinguish "economic goods". He works methodically in this way up to a "theory of price".
This work presents a new way of thinking to me. In college, I had a course on Economics but it was not Austrian economics.
The most profound idea in this book is about property. Menger explains how private property is an inevitable outcome of having "economizing individuals" and "economic goods".
Menger was one of the people who independently came up with the "marginal utility theory of value". His explanation in this book is the clearest I have seen yet.
On to the next one.
March 1, 2020
I put off reading this book for too long. It's a very readable book that launched the Austrian School of economics. The author is very thorough in leading the reader through the development of economic science based on observation and inductive logic. What I found most useful was Menger's viewpoint on consumer choices in satisfying their own needs as the determining factor in establishing value. This is a market-centric or customer-centric perspective that was later adopted by marketing theorists like Peter Drucker and Theodore Levitt. This line of thinking is what directly connects applied business management to the principles of economics and serving the values of people (currently under the guise of "Humanomics.")
October 25, 2018
I picked this book up on the recommendation in 'Economics for real people' where Gene Callahan writes "Perhaps because Menger is laying out the basis for marginalist, subjectivist economics for the first time, he explains his concepts careful enough that the 'intelligent layman' with no economic background should be able to grasp his ideas" which is a fitting description. Indeed Menger is very careful in describing his subject, almost to the point of repeating himself one too many times! A nice feature with this book is that it concentrates on some basic features of economic thought, so it is fairly short and being very clearly written, a good read.
June 23, 2023
A very well written, easy to read thought experiment by the founder of the Austrian school of economic thought. It explains the organic nature of markets as means of satisfying needs and prices as the result of subjective, relative valuation of marginal supply of and demand for goods. It also explains the temporal structure of production - goods of higher order (e.g., land, labor, and capital) that are combined to produce consumption goods.
June 17, 2022
Excelente tratado de Carl Menger en el que inaugura el pensamiento de la Escuela Austriaca. En este tratado, Menger se desmarca del pensamiento de los economistas clásicos como Marx o A.Smith los cuales defendían que el valor de los bienes reside exclusivamente en factores objetivos para pasar a desarrollar la teoría de la utilidad marginal la cual se apoya sobre factores subjetivos.
Read
April 5, 2019Lúcido ensayo acerca del accionar humano en un entorno regulado, per se estado/sociedad. Tal vez no tenga la rústica originalidad de Ricardo o Cantillon, pero la depuración del pensamiento económico que hace el maestro Menger es de admirar, tanto que el tiempo lo respaldo con lúcidos alumnos.
May 23, 2020
Here lays the ground for a series of groundbreaking economical work by Eugen Böhm von Bawerk and Ludwig von Mises. The original german version is very dense and even redundant at some points, not very motivating for beginners.
May 20, 2023
Brilliant and concise as can be. Touches on some great points that should be discussed today, like the origin and value of money. The book that inspired Ludwig von Mises to become an economist, I can see why.
June 13, 2017
A must-read for those who want to learn more about the austrian school of economics.
January 16, 2021
A foundational book. Written by the founding father of the Austrian School. It is a must read.
October 30, 2021
Expone, quizá de una forma muy densa los principios austriaco. El contenido es excelente y es lo que considero importante.
March 25, 2022
ONe paragraph = one sentence (or two). Lots of footnotes.
June 14, 2022
I started it but never finished it, I thought it was well written although is kind of old and a difficult to follow, just too for somebody who is an amateur in economics.
February 7, 2024
An economy is a means to utilize commodities to meet the needs of humans, and money is a measurement of price for said utilities.
June 28, 2021
I decided to read this book because it seems Menger is the forgotten man of Austrian Economics...not that i'm some sort of strict adherent to the school, but I find it fascinating. You'd likely not have Mises or Rothbard without Menger.
He integrated a price theory based on subjective value, with the principle of marginal utility. In my job today I still use Marginal Utility to explain a LOT of the phenomena. Menger was the first in the world to do this. He was the "Godfather" of the marginal revolution, or the subjectivist revolution.
I suppose that's WHY I read this book. Not because some snippet of it would be relevant to current economics, but mostly just because the history of the thought intrigues me.
So Menger is a really clear thinker - but the translation from German isn't always easy to read. Lots of run-on sentences and dated terminology. He's also writing in the Austro-Hungarian Empire pre-WWI, and the field of economics is dominated by the German, or "Historical" schools of thought. Because he's outside of mainline German economics he was derided with "Oh, he's an Austrian..." This, in eventuality became a badge of honor at the time, because some economists of the "historical" school claimed, eventually, that they were gifted their 'knowledge' from the divinity of Hitler! Good time historically to be an outcast...
Menger wasn't really a revolutionary, in fact praising "historical" economics when it came to day-to-day price changes...BUT he saw a human being striving to fulfill his wants. He SAW subjectivism, when all in his field were screaming "no." He was looking to find REAL prices, in reality. Not theoretical prices, and not the cost of production.
Between him, Jevons, and Walras, you have the marginalist revolution. "The more of a good you possess, the less you value each individual unit." In order to try and quantify such a vast and complex economic subject, you have to look at human wants, which are unlimited.
This is NOT behavioral economics or psychology. It's simply the ranking utility of the good...there is no measuring utility...ordinal nor cardinal.
Today the marginal revolution is widely accepted, but doesn't get the credit it deserves. They solved the "value paradox" that Adam Smith so struggled with...
There is no Mises without Menger, and I've been avoiding Mises' 1,100 page book like the plague. Menger gave me a little bit of a push to maybe just go for it.
Land, labor, capital...which we ALL learn in college...means NOTHING without individuals, and their actions. In many ways I suspect that Menger laid the groundwork for Mises' "praxeology." There's no "MACRO" flavor to this book...this is just economics.
Tough to read, but worthwhile for students of economics.
3.5 stars.
He integrated a price theory based on subjective value, with the principle of marginal utility. In my job today I still use Marginal Utility to explain a LOT of the phenomena. Menger was the first in the world to do this. He was the "Godfather" of the marginal revolution, or the subjectivist revolution.
I suppose that's WHY I read this book. Not because some snippet of it would be relevant to current economics, but mostly just because the history of the thought intrigues me.
So Menger is a really clear thinker - but the translation from German isn't always easy to read. Lots of run-on sentences and dated terminology. He's also writing in the Austro-Hungarian Empire pre-WWI, and the field of economics is dominated by the German, or "Historical" schools of thought. Because he's outside of mainline German economics he was derided with "Oh, he's an Austrian..." This, in eventuality became a badge of honor at the time, because some economists of the "historical" school claimed, eventually, that they were gifted their 'knowledge' from the divinity of Hitler! Good time historically to be an outcast...
Menger wasn't really a revolutionary, in fact praising "historical" economics when it came to day-to-day price changes...BUT he saw a human being striving to fulfill his wants. He SAW subjectivism, when all in his field were screaming "no." He was looking to find REAL prices, in reality. Not theoretical prices, and not the cost of production.
Between him, Jevons, and Walras, you have the marginalist revolution. "The more of a good you possess, the less you value each individual unit." In order to try and quantify such a vast and complex economic subject, you have to look at human wants, which are unlimited.
This is NOT behavioral economics or psychology. It's simply the ranking utility of the good...there is no measuring utility...ordinal nor cardinal.
Today the marginal revolution is widely accepted, but doesn't get the credit it deserves. They solved the "value paradox" that Adam Smith so struggled with...
There is no Mises without Menger, and I've been avoiding Mises' 1,100 page book like the plague. Menger gave me a little bit of a push to maybe just go for it.
Land, labor, capital...which we ALL learn in college...means NOTHING without individuals, and their actions. In many ways I suspect that Menger laid the groundwork for Mises' "praxeology." There's no "MACRO" flavor to this book...this is just economics.
Tough to read, but worthwhile for students of economics.
3.5 stars.
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