Carl Menger
Biography
Carl Menger (1840-1921) was a lawyer and political scientist. He worked as a journalist and market analyst until receiving his law degree, and afterwards he immediately began work in the field of economics. His most famous works are Principles and Investigations into the Method of the Social Sciences with Special Reference to Economics. Carl Menger is most notable as the founder of the Austrian school of economics. German historicists coined the term "Austrian School" in reference to Menger's works in order to highlight the separation between his theories and mainstream German economics [18].
Menger's Contribution: The Marginal Utility Revolution
Menger's best known work, Principles of Economics created the system of value and price theory which is the core of the Austrian schools of economic thought. Through the law of marginal utility, Menger's work, established a link between the subjective values underlying consumer choices and objective market prices. He believed that rather than providing "utils" as William Jevons suggested, that goods were valuable because of their ability to satisfy wants that differed in purpose and importance. This discovery allowed Menger to solve the diamond-water paradox that had puzzled Adam Smith. Menger's theory replaced the labor theory of value and the classical theory of "calculated action" which attempted to explain market prices using supply and demand, but solely through the choices of businessmen. Menger provided a theory of value which took into account the preferences and applications of individual consumers for differing goods, which is the basis of modern Austrian economics [19].
General Overview | Major Contributors | Game Theory Models | Objections/Arguments | Sources
