Karl Menger, whose biography will be considered later in the article, was born in 1840, February 23. He is known as an outstanding economist and creator of the Austrian school. During the Third Reich, it was widely believed that all its representatives, including the founder himself, were Jews.
Karl Menger: a brief biography
The future economist was born in the small town of Galicia. She belonged at that time to the Austrian Empire. Menger's father was a lawyer, and his mother was a merchant's daughter from Bohemia. In total, the family had three sons. Max (senior) began to engage in political activities, and Anton - followed in the footsteps of his father. Karl Menger spent his childhood in Western Galicia, in the countryside. At that time feudal relations existed on this territory. At the universities of Vienna and Prague, Menger studied law. In 1867, he was fascinated by economic science. In Krakow, at the University of Yangellon, he defended his thesis. In 1871, a book was published, thanks to which Karl Menger became known. The biography of the economist since 1873 is associated with teaching. For the next 30 years, he was a professor at the University of Vienna. From 1876 to 1878, Karl Menger was a mentor to the heir to the throne of Austria, Crown Prince Rudolph, who subsequently 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 research 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. Passing to Friedrich f. Wieser (his student) department, Menger engaged in 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 Carl). Menger Jr. is known as a mathematician. His last name is a theorem.
Value concept
The economist rejected the idea of the cost of labor resources. Karl Menger briefly expressed his concept as follows:
"Value has a subjective character. It does not exist outside the consciousness of the individual. Labor that is expended on the production of good does not act either as a source or as a material of value."
He paid special attention to the Smith 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 cost of a product, if not identical to the work spent on its production, then depends on it directly. According to Menger, it doesn’t matter if a diamond was accidentally found or mined using labor. Moreover, in 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 - Karl Menger thought so. The theory of working value, therefore, on the basis of this conclusion was denied by 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) automatic machines and machines. In this case, political economy, the pricing of objects of art, antiques, prototypes or indirectly explores, or does not study at all.
Value conditions
Karl Menger believed that value does not appear as an objective property of a thing. It reflects a person’s judgment about the good. In this regard, the same product may have different values for different individuals. As the necessary conditions for obtaining value, he called:
- Usefulness for a specific person.
- Rarity.
Subjective value is determined by the utility of the last unit of the product.
Doctrine of benefits
The study of the relationships established between human needs and the ability of objects to satisfy them was the starting point of the economic analysis conducted by Karl Menger. The scientist’s works reveal several conditions under which an object turns into a blessing:
- The existence of human needs.
- The presence of a particular thing with potential characteristics by which the needs of the individual can be satisfied.
- Human knowledge of the indicated properties of the subject.
- Possession of a thing that makes it possible to use the necessary characteristics.
Fortunately, as Karl Menger claimed, this is something that can satisfy human needs. The first three chapters of his book on the foundations of political economy are devoted to this teaching.
Classification of benefits
Karl Menger distinguished several types:
- The lowest level. Such benefits are needed to meet the immediate needs of man.
- Highest level. These items are used to produce goods of a lower order.
- Compliments are complementary.
- Substitutes are interchangeable goods.
- Economic - items, the need for which does not exceed their quantity, available at the moment.
- Non-economic - goods, the number of which is greater than the need.
Teaching about the product
He is devoted to chapter 7 of the work on the foundations of political economy. In it, Karl Menger talks about the differences 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 sell, as well as the ability to handle. Borders should be understood as aggregate consumer demand. The degree of ability to sell 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 of such concepts as the price of supply and demand.
Money concept
It is based on the determination of the ability of goods to sell. Subsequently, this concept was investigated by Mises. The doctrine of money is revealed in chapter 8. It contains 4 parts. The first describes the essence and origin of the funds. Menger points to emerging problems in the process of exchanging the products of labor within the framework of a primitive society. He says that interest leads to the fact that people give their goods in return to others with greater marketing ability, despite the fact that they do not need them as means to satisfy their immediate needs. The next part describes the money used by each people in a particular era. At the early stages of development, cattle acted as them in the Old World. Cultural progress and the formation of cities leads to the fact that the marketing ability of animals decreases in the same proportion in which it increases in useful metals. The first such material was copper. Subsequently, it was replaced by gold and silver.
