Saturday, June 21, 2008

Quote of the day (#1)

"Value is 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. It is, therefore, also quite erroneous to call a good that has value to economizing individuals a "value," or for economists to speak of "values" as of independent real things, and to objectify value in this way. For the entities that exist objectively are always only particular things or quantities of things, and their value is something fundamentally different from the things themselves; it is a judgement made by economizing individuals about the importance their command of the things has for the maintenance of their lives and well-being. Objectification of the value of goods, which is entirely subjective in nature, has nevertheless contributed very greatly to confusion about the basic principles of our science."

This quote is taken from the last paragraph of the first part of chapter 3 in Carl Menger's book Principles of Economics (page 120-21). The italics in the qoute are Menger's, not mine.

It could probably be argued that the economics profession has yet to fully absorb Menger's insight on the value of things. All too often I notice in prominent debates concerning the economics of some such thing that the commenter tends to conflate the value of the thing with the perceived value of the thing. The more of this book I read, the more I regret not having picked it up sooner. If you want straightforward economic theory, then this book is the place to start.

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