Karl Menger: biography, writings

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

Carl Menger, whose biography will be discussed later in the article, was born in 1840, February 23. He is known as an outstanding economist and founder of the Austrian school. During the Third Reich, it was widely believed that all its representatives, including the founder himself, were Jews.

Carl Menger: short biography

The future economist was born in a small town of Galicia. It belonged at that time to the Austrian Empire. Menger's father was a lawyer, and his mother was a merchant's daughter from Bohemia. There were three sons in the family. Max (senior) became involved in political activities, and Anton followed in his father's footsteps. Karl Menger spent his childhood in Western Galicia, in the countryside. Feudal relations existed in this territory at that time. Menger studied law at the universities of Vienna and Prague. In 1867, he was fascinated by economic science. In Krakow, at the Yangellon University, he defended his thesis. In 1871, a book was published, thanks to which Karl Menger became famous. The biography of the economist since 1873 has been associated with teaching. For the next 30 years he was a professor at the University of Vienna. From 1876 to 1878 Carl Menger was tutorheir to the throne of Austria, Crown Prince Rudolf, who later committed suicide. In 1879, he became head of the department of political economy in Vienna. Over the following years, Menger, in addition to his economic scientific activities, took part in the reforms of the state financial system. After a while, he entered the Supreme Chamber in the parliament of the empire. By handing over to Friedrich f. Vizer (his student) the department, Menger took up scientific work. In 1921 he died without completing the second edition of his book on the foundations of political economy. The manuscripts were published by his son (also Karl). Menger Jr. is known as a mathematician. A theorem is named after him.

Value Concept

The Economist rejected the idea of a labor cost. Carl Menger summarized his concept as follows:

"Value has a subjective character. It does not exist outside the consciousness of an individual. The labor that is spent on the production of a good does not act either as a source or as a material of value."

He paid special attention to Smith's paradox. Its essence is the question: "Why is the price of diamonds much higher than water, despite the fact that water is more useful than diamonds for humans?" In classical political economy, this contradiction is explained by the fact that the value of a product, if not identical to the work spent on its production, depends on it directly. According to Menger, it does not matter whether a diamond was found by chance or whether it was mined using labor. Moreover, onIn practice, no one thinks about the history of the origin of any good. Value depends on the subjective perception of people who value relatively rare services or goods - this is how Carl Menger believed. The theory of labor value, therefore, on the basis of this conclusion, was denied by the representatives of the Austrian school. However, economists did not take into account an important circumstance. Labor theory considered the conditions for mass production of a product using (or the possibility of using) automata and machines. At the same time, political economy studies the pricing of art objects, antiques, prototypes either indirectly or does not study at all.

Conditions for endowing the good with value

Karl Menger believed that value does not act as an objective property of a thing. It reflects a person's judgment about the good. In this regard, the same product may have a different value for different individuals. As necessary conditions for obtaining value, he called:

1. Utility for a particular person.
2. Rarity.

Subjective value is determined by the usefulness of the last unit of the product.

The Doctrine of Goods

The study of the relationship between human needs and the ability of objects to satisfy them was the starting point of economic analysis, which was carried out by Carl Menger. The works of the scientist reveal several conditions under which an object turns into a blessing:

1. The existence of a human need.
2. The presence of potentialcharacteristics through which an individual's needs can be met.
3. Knowledge of a person about the specified properties of an object.
4. Possession of an item, which makes it possible to use the necessary characteristics.

The good, as Carl Menger argued, is that which can satisfy human needs. The first three chapters of his book on the foundations of political economy are devoted to this doctrine.

Classification of goods

Karl Menger identified several types:

1. The lowest level. Such goods are needed to meet the immediate needs of a person.
2. The highest level. These items are used to produce lower order goods.
3. Compliments are complementary things.
4. Substitutes are fungible goods.
5. Economic - items, the need for which does not exceed the number available at the moment.
6. Non-economic - goods, the number of which is greater than the need.

Teaching about the product

Chapter 7 of the work on the foundations of political economy is devoted to him. In it, Carl Menger talks about the difference between an economic good and a commodity. In addition, he gives a description of the main characteristics of the product - the limit and degree of its ability to be realized, as well as its ability to be converted. Borders should be understood as aggregate consumer demand. The degree of ability to implement is important for products that do not have independent value, but are necessary as elements of other goods. Menger's scientific merit was the introduction tothe use of concepts such as bid and ask prices.

Money concept

It is based on the determination of the ability of goods to be sold. Subsequently, this concept was investigated by Mises. The doctrine of money is revealed in the 8th chapter. It contains 4 parts. The first describes the essence and origin of funds. Menger points to emerging problems in the process of exchanging products of labor within a primitive society. He says that interest leads people to give their goods in exchange for others with greater marketing power, despite the fact that they do not need them as a means of satisfying immediate needs. The next part provides a description of the money used by each nation in a particular era. In the early stages of development, cattle acted as them in the Old World. Cultural progress and the formation of cities cause the marketability of animals to decrease in the same proportion as it increases for useful metals. Copper was the first such material. Subsequently, it was replaced by gold and silver.

Features of the appearance of coins

They are described in the fourth part of the 8th chapter. The usual exchange of products for metal ingots, which have the properties of an easy-to-sell commodity, involves difficulties in determining the sample. The minting of coins began to act as the best guarantee of the quality and weight of the metal. The idea of the spontaneous appearance of money had a significant impacton the formation of the views of Mises, Hayek and other representatives of the Austrian economic school.