Wednesday, December 30, 2009

Clashing Concepts of Utility

Neoclassical economics is built upon the subjective theory of value. Carl Menger (1840 - 1921) is the father of the subjective theory of value. Menger states: "value is therefore nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs, that is, to our lives and well-being."[1] There is no neoclassical economist – and this is pretty much anyone who does not adhere to the failed labour theory of value – that denies this. However, it seems there are many who, along the way, forgot what Menger meant by the term – diminishing marginal utility. I used to be one of them, not because I forgot but because no one ever told me in the first place. So, I had to find out for myself.

For full text PDF, click here or see an edited version at Mises.org

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