An ontology of economic objects: An application of Carl Menger's ideas

American Journal of Economics and Sociology

Volumn 58, Issue 2, 1998, Pages 299-312

  Zúñiga, Gloria L ^a  

^a UNIVERSITY AT BUFFALO   (United States)

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EID: 0033110636     PISSN: 00029246     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1536-7150.1998.tb03474.x     Document Type: Article

References (16)

1. Carl Menger's contribution preceded the emergence of the neoclassical school of economics which is the present mainstream in economics. His Principles of Economics served as the foundation for the Austrian school of economics which, unlike the neoclassical school, did not employ mathematics as its means of describing economic phenomena. Much of neoclassical theory is, however, founded on Menger's and other Austrian economists' contributions to economic theory.
2. Friedrich A. von Hayek makes this point in "The Facts of the Social Sciences," Individualism and Economic Order, The University of Chicago Press, Chicago and London, 1948, p.59. Hayek writes, "Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." Ibid, p. 60. John Searle has argues similarly in, for example, Minds, Brains and Science and The Construction of Social Reality that money is what people think, use, and treat as money.
3. Friedrich A. von Hayek makes this point in "The Facts of the Social Sciences," Individualism and Economic Order, The University of Chicago Press, Chicago and London, 1948, p.59. Hayek writes, "Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." Ibid, p. 60. John Searle has argues similarly in, for example, Minds, Brains and Science and The Construction of Social Reality that money is what people think, use, and treat as money.
4. Friedrich A. von Hayek makes this point in "The Facts of the Social Sciences," Individualism and Economic Order, The University of Chicago Press, Chicago and London, 1948, p.59. Hayek writes, "Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." Ibid, p. 60. John Searle has argues similarly in, for example, Minds, Brains and Science and The Construction of Social Reality that money is what people think, use, and treat as money.
5. Neoclassical economists employ the term utility to denote preference for one good or bundle of goods. A utility curve is a representation of the level of preference of a bundle of goods. Suppose that the bundle of goods includes two goods, and one of these is X and the other Y. The utility curve of such a bundle of goods is assigned a numerical value by a utility function of the form U = U (X, Y).
6. See Carl Menger, Principles of Economics, p. 239
7. This last condition explains the spontaneous organization of market places, fairs, or other means for advertising the availability of goods for sale. See Carl Menger, Principles of Economics, p. 248-250. It is erroneous to think that needs for things are created by the advertising of commodities since the concept of 'need' is a condition for the goods-character of a thing. Accordingly, a commodity does not produce a need but merely addresses an already existing need.
8. By contrast, Kant describes the satisfaction obtained from the beautiful as entirely disinterested. In other words, Kant's conception of disinterestedness in the aesthetic judgment of the beautiful is not merely the absence of desiring to possess the thing of beauty. More importantly, Kant explains that the satisfaction derived form the beautiful finds no grounds in the judging subject's situation or private conditions. Rather, the satisfaction is derived from the inherent characteristic in the thing itself which is universally intelligible as beautiful. Whether or not one agrees with Kant, his explanation of disinterested judgment presents a distinction between judgments which consider a personal gain - as is the case with economic judgments - and those which are not bound up with concepts, feelings, or deliberations unique to the judging subject given particular circumstances - as Kant describes the satisfaction obtained from the beautiful to be. See Immanuel Kant, Critique of Judgment, J.H. Bernard's translation, 1968, pp.38-46.
9. First-order goods are those which provide an immediate satisfaction of a need or want. Higher-order goods, such as second-order or third-order goods, are those which stand in the mediate stages toward the satisfaction of a need or want. As such, higher-order goods do not provide a direct satisfaction in themselves, although their importance lies in the fact that they are the intermediate needs toward the satisfaction of an end. The value attributed to yeast, flour, butter, and eggs is, for example, dependent on the putative value of the bread which these ingredients can be used to produce. If the agent perceives a connection between the prospective value of the bread in connection with the satisfaction of his hunger, then the bread as a good of a first order will determine the putative value of all the ingredients as goods of a higher order.
10. Hence, the future value of a building is not equal to the capital invested in the factors of production for the construction of die building. Rather, the future value of the building will depend on the putative value of the satisfaction the agent will have to forego in the present if his capital and entrepreneurial activity were not dedicated to the construction of the building. The sacrificed present value of his resources will determine the expected future value of the chosen alternative.
11. The main reason for this is that the body of economic theory does not address the ontological status of 'number'. Furthermore, to establish such an ontological commitment is philosophically problematic since it does not explain how we establish the epistemic link with abstract, mind-independent entities. In other words, since numbers are not part of our sensory experience, how do we acquire knowledge of numbers? And further, how do numbers enter the realm of human interaction such that, when I utter "two," my interlocutor grasps my meaning of "two"?
12. The intentional directedness of mathematical beliefs is central to Husserl's analysis of mathematical objects. The considerations offered in the discussion rely on Husserl's insights. See Edmund Husserl, Logical Investigations, Section 2, Volume II, pp. 250-253. See also Richard Tieszen, "Mathematics," The Cambridge Companion to Husserl, pp. 438-462.
13. The intentional directedness of mathematical beliefs is central to Husserl's analysis of mathematical objects. The considerations offered in the discussion rely on Husserl's insights. See Edmund Husserl, Logical Investigations, Section 2, Volume II, pp. 250-253. See also Richard Tieszen, "Mathematics," The Cambridge Companion to Husserl, pp. 438-462.
14. Carl Menger, Principles of Economics, p. 192, brackets mine.
15. Suppose that the price tag for a pair of shoes is $100. If the potential buyer estimates that the pair of shoes has more value to him than other potential uses of the $100, then he will buy the shoes. This does not mean that the price is equal to the subjective value of the shoes to the buyer. The price of $100 that the buyer is willing to pay only reflects that the subjective value of the shoes is at least $100. But it is possible that the buyer might have been willing to pay $150 or more for the pair of shoes.
16. I am indebted to John Searle for his exposition of the epistemic and ontological sense of subjective in The Construction of Social Reality, pp. 7-9.