5 replies to this topic

[Murphy]

What is Menger's theory of goods?

[Rune]

Menger said that four conditions needed to be present for something before something could be regarded as an economic good:

1. Must be a human need or want
2. The thing must have certain qualities that are able to cause want satisfaction
3. Man must know that the thing have these qualities
4. Man must own the thing

Salerno argues that condition 2 is unnecessary and says that it is sufficient that man believes that the thing has these qualities.

[Murphy]

Right. Basically modern Austrians combine 2 and 3 to say that people believe the item will help satisfy the want. Also, condition 4 I think for Menger had more to do with physical control, rather than legal right. So for example if there were valuable ore on an asteroid near Mars, it might be able to satisfy human wants and people would know about it, but if we were unable to get our hands on it, it wouldn't be a good.

[Joanne]

Murphy, on Sep 4 2005, 02:43 PM, said:

What is Menger's theory of goods?

First and foremost, according to Menger need presupposes the existence of goods.

Two broad categories of goods are:

ECONOMIC GOODS: These are goods that come about due to the need for action to economize them, so that they can be used by consumers who demand and value them as part of the means to achieve their ends and have satisfaction of their needs.

NON ECONOMIC GOODS: These are goods that are so plentiful that once needs are met, there is still an abundant quantity left of them. The supply of them exceeds the need for them so there is no action to economize them.

Economic goods are categorized in terms of their relationship and proximity to the ultimate end user:

1. Lowest/first order goods - these would be consumer goods that are directly involved in satisfying human wants and needs.

2nd...3rd.....4th......ith order goods - these are goods that are use at various stages as factors or production to eventually produce the first order goods. Bread was used as an example as a product directly consumed by the user, but it takes stages to get to its final result, flour, eggs, oil, leavening agents, the utensils an appliances needed to bake it, are all things that the end user does not readily see, but are at stages of production further removed from the consumer.

[Murphy]

Joanne, on Nov 3 2006, 01:21 PM, said:

First and foremost, according to Menger need presupposes the existence of goods.

Do you mean the other way around?

Beyond this quibble your answer is right. You should also review Rune's answer above, but there's no point in you retyping what he said.