Wednesday, February 4, 2009

Higher Ground via Higher Orders

This post is part of a series exploring Principles of Economics by Carl Menger.  The following explores content from chapter 1.

Previously in this series: Menger on Complementary Goods

After establishing the nature of goods and the causal mechanism of their production in society, Menger makes the case that the progress of human welfare throughout history- everything that each generation has to be grateful to the previous one for- has been due to extending the chain of production by adding to it goods of increasingly higher order. The very definition of a gatherer society entails that it deals predominantly with low order goods; it gathers plant-life as food (a first order good). A more advanced society puts potential food into the ground to use it as seed (a higher order good), and thereby increases its prosperity. The building of a plow extends the production chain further. This progression has continued to the present day, when a bowl of cereal on my breakfast table is the end of a chain comprising several hundred orders of goods, each one making the process more productive. Thus the upward march of technique and technology for the benefit of mankind has been the story of adding ever higher orders of goods to the chain of production.

Next in this series: Menger on Time and Uncertainty

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