Value is nothing inherent in goods, no property of them, nor an independent thing existing by itself. It is a judgment economizing men make about the importance of goods at their disposal for the maintenance of their lives and well-being. Hence value does not exist outside the consciousness of men.
So wrote Carl Menger, one of the three economists who created the marginal revolution in the early 1870s. This is a very nice, succinct statement.
I’m discussion leader of a colloquium on Menger in Las Vegas that starts Thursday evening. It’s in 6 sessions. I loved the Menger readings for the first three. The readings for the last 3, on methodology, were challenging, but I think I get it.
Here is my short bio of Carl Menger for The Concise Encyclopedia of Economics.
READER COMMENTS
Kevin Dick
Mar 30 2022 at 5:24pm
This is clearly not true in my experience. I assure you that value exists in the consciousness of my dog and that we can measure her relative value of quite a few different goods 🙂
David Henderson
Mar 30 2022 at 8:03pm
Oops.
I left out a few words that Menger had in the original:
Hence value does not exist outside the consciousness of men, women, children, and Kevin Dick’s dog. 🙂
Seriously, though, good point. Animals clearly have values. You should see our two older male cats howl when we feed wet food to our new kitten in the bathroom with the door closed so they can’t get in.
Kevin Dick
Mar 31 2022 at 3:23am
Menger was prescient in anticipating my existence 🙂
I had the good fortune to go on a fascinating trip to Yellowstone this winter to learn about and observe wolves. I was struck by how a wolf pack faces quite similar types of scarcity constraints and tradeoffs in allocating effort as a group of humans. They clearly think on the margin and work through game theory scenarios.
Phil H
Mar 31 2022 at 12:17am
In a modern complex economy, I’m not sure it can be stated quite so simply. There are quite a lot of industrial inputs that may not have any end-user value (what we’d usually think of as “importance of goods…for the maintenance of their lives and well-being”); but they have value for their role in the industrial processes that ultimately do deliver that end-user value.
In that sense, some value is outside the consciousness of people; but it still depends on that consciousness.
Neel Chamilall
Mar 31 2022 at 4:04am
Phil, I co-authored a paper in which my co-author and I highlighted Menger’s focus on the complexity of economies: https://www.degruyter.com/document/doi/10.2202/1145-6396.1064/html
Thank you for this post, David. Did you discuss Menger’s critcism of Adam Smith’s over-emphasis on division of labor as the major cause of economic progress? Cf. the following passage taken from Menger’s Principles: ”
“The greatest improvement in the productive powers of labour,” says Adam Smith, “and the greater part of the skill, dexterity, and judgment with which it is anywhere directed, or applied, seem to have been the effects of the division of labour.” And: “It is the great multiplication of the productions of all the different arts, in consequence of the division of labour, which occasions, in a well‐governed society, that universal opulence which extends itself to the lowest ranks of the people.”
In such a manner Adam Smith has made the progressive division of labor the central factor in the economic progress of mankind—in harmony with the overwhelming importance he attributes to labor as an element in human economy. I believe, however, that the distinguished author I have just quoted has cast light, in his chapter on the division of labor, on but a single cause of progress in human welfare while other, no less efficient, causes have escaped his attention.”
Any thoughts about this criticism?
Neel Chamilall
Mar 31 2022 at 4:09am
Oops, just realized I had misread your post as having enjoyed the first three sessions of the colloquium when the colloquim starts only today. Sorry for this.
David Henderson
Mar 31 2022 at 10:21am
You’re welcome, Neel. And no need to apologize for jumping the gun.
Re the criticism of Adam Smith. For each session I come up with questions to kick off the discussion. As it happens, I noticed that quote also and have a question about it: basically, is Menger’s criticism right? As discussion leader, I’m supposed to minimize the insertion of my views on the questions I pose. But I think Menger is wrong.
I think he’s wrong on another criticism of Smith also, about whether Smith believed in spontaneous order. (That wasn’t the term that either Smith or Menger used, but that’s the concept.) Menger thinks Smith didn’t. I think Smith did.
Jon Murphy
Mar 31 2022 at 7:30am
Then they do have end-user value. The end-user is the industrial user
JFA
Mar 31 2022 at 10:11am
“There are quite a lot of industrial inputs that may not have any end-user value”.
Most (all?) industrial inputs are used in a chain of production processes that have an end-user. The industrial inputs are just a step in the means-ends continuum and (to bastardize Dewey) can be treated as helping to achieve ends in view, in this case the ends of the person purchasing those industrial inputs. It is the consciousness of that person (and their subjective assessment) that determines the value of those inputs. The end user for those industrial inputs is the producer.
Comments are closed.