EconomistaAustriaco on Nostr: Carl Menger published *Grundsätze der Volkswirtschaftslehre* in 1871, and the ...
Carl Menger published *Grundsätze der Volkswirtschaftslehre* in 1871, and the economics profession has never fully recovered from ignoring it.
Menger didn't tinker at the margins of classical economics. He demolished the labor theory of value that had infected economic thought since Adam Smith and reached its toxic conclusion in Marx. Value doesn't originate in the hours a worker spends hammering nails. Value originates in your mind, in the mind of the individual who wants something.
This is the theory of subjective value, and it is devastatingly simple. A glass of water in Vienna costs almost nothing. That same glass in the Sahara is worth everything you own. The water didn't change. The labor to produce it didn't change. What changed is the human situation surrounding it.
Menger built his entire analysis on "goods of higher and lower order," tracing how consumer goods satisfy wants directly, while capital goods satisfy them indirectly through production chains. A sawmill (higher-order good) produces lumber, which produces your house. The value of the sawmill derives from the value you place on the house. Causation runs backward from consumer to producer, not forward from raw materials to finished product.
This single reversal demolished socialist economic planning before the Soviet Union even existed. Prices communicate real human valuations across an entire economy. Menger proved this in 1871. Central planners still haven't read the memo.
Published at
2026-08-30 01:36:27 UTCEvent JSON
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