Tuesday, February 23, 2010

Happy Birthday Carl Menger

Today is the anniversary of the birth of Carl Menger, founder of the Austrian School of economics. One of the most significant aspects of his work was overturning the "cost theory of value" which stated that the value of a good or service was determined by the cost of the inputs.

This idea was a keystone to classical economics. Instead, Menger put forth a "subjective value theory" which stated that goods or services could have numerous uses, of different value to each individual. Consequently, it was possible for both sides of an exchange to benefit from the trade. When you're teaching mutual benefits of trade in either micro or macro, make sure to mention Menger's name. For more complete information on Menger and his influence, you can check here and here.

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