Karl Menger: biography, works

Karl Menger, whose biography will be considered later in the article, was born in 1840, on 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 of its representatives, including the founder himself, were Jews.

Karl Menger: A Short Biography

A future economist was born in a small town in 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. All in all, the family had three sons. Max (senior) began to engage in political activities, and Anton - followed in the footsteps of his father. His childhood Karl Menger spent in Western Galicia, in the countryside. On this territory there were at that time feudal relations. In the universities of Vienna and Prague Menger studied law. In 1867, he was fascinated by economic science. In Cracow, at Yanghellon University, he defended his thesis. In 1871, a book was published, thanks to which Karl Menger became known. The biography of an economist since 1873 is connected with teaching. For the next 30 years he was a professor at the University of Vienna. From 1876 to 1878, Karl Menger was the tutor of the heir to the throne of Austria, Crown Prince Rudolph, who subsequently committed suicide. In 1879 he became the head of the department of political economy in Vienna. Over the next 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. Having passed Friedrich f. Vizer (his student) department, Menger engaged in scientific work. In 1921, he died, and did not finish the second edition of his book on the foundations of political economy. The manuscript was published by his son (also Karl). Menger, Jr. is known as a mathematician. His name is the theorem.

The concept of value

The economist rejected the idea of the cost of a working resource. Karl Menger briefly expressed his concept as follows:

"Value has a subjective character, it does not exist beyond the consciousness of the individual.The work 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. The essence of it 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 the product, if not identical to the work spent on its production, depends on it directly. According to Menger, it is not important whether a diamond was accidentally found, or its extraction was carried out 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 - as Karl Menger considered. 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. At the same time, the pricing of art objects, antiques, prototypes, or political economy, 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 of the good. In this connection, the same product can have different values for different individuals. As the necessary conditions for obtaining value, he called:

1. Usefulness for a specific person.
2. Rarity.

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

The doctrine of the blessings

The study of the relationships established between the needs of man and the ability of objects to satisfy them, was the starting point of economic analysis conducted by Carl Menger. The works of the scientist reveal several conditions under which an object turns into a good:

1. The existence of a human need.
2. The presence in a particular thing of potential characteristics through which the needs of the individual can be met.
3. Knowledge of the person about the indicated properties of the object.
4. Possession of a thing that makes it possible to use the necessary characteristics.

Fortunately, as Karl Menger argued, this is something that can satisfy human needs. This doctrine is devoted to the first three chapters of his book on the foundations of political economy.

Classification of goods

Carl Menger distinguished several types:

1. The lowest level. Such goods are needed to meet the immediate needs of man.
2. Highest level. These objects are used to produce goods of a lower order.
3. Compliments are mutually complementary things.
4. Substitutes are interchangeable goods.
5. Economic - items, the need for which does not exceed their number, available at the moment.
6. Non-economic - benefits, 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, Carl Menger talks about the differences between the economic good and the commodity. In addition, it provides a description of the main characteristics of the product - the limit and degree of its ability to implement, as well as the ability to handle. The boundaries should be understood as the aggregate consumer demand. The degree of ability to implement is important for products that do not have an independent value, but are necessary as elements of other goods. The scientific merit of Menger was the introduction into everyday life of such concepts as the price of supply and demand.

The concept of money

It is based on the definition of the ability of goods to be sold. Later, this concept was investigated by Mises. The doctrine of money is revealed in the eighth chapter. There are 4 parts in it. The first describes the essence and origin of the means. Menger points to the emerging problems in the process of the exchange of the products of labor within the framework of primitive society. He says that interest leads to the fact that people give their goods in return for others, having a greater marketing ability, despite the fact that they do not need them as a means to meet immediate needs. The next part describes the money used by each people in a certain era. In the early stages of development, cattle were used as them in the Old World. Cultural progress and the formation of cities leads to the fact that the marketing power of animals decreases in the same proportion as it increases in useful metals. Copper was the first such material. Subsequently, it was replaced by gold and silver.

Features of appearance of coins

They are described in the fourth part of the 8th chapter. The usual exchange of products for metal ingots, which possess the properties of a product that is easy to sell, involves difficulties in determining the sample. As the best guarantee of quality and the fullness of the metal, coinage began to appear. The idea of a spontaneous appearance of money had a significant influence on the formation of the views of Mises, Hayek and other representatives of the Austrian economic school.