Wednesday, February 25, 2009

Menger and the Teleological Nature of Economics

This post is part of a series exploring Principles of Economics by Carl Menger.  The following explores content from chapter 2.

Previously in this series: Economic Character of Higher Order Goods and the Deductive Method of Menger

Thus far, Menger has established that higher order goods only have goods character and economic character by virtue of the goods character and economic character of their corresponding lower order goods. Before Menger, many economists had this exactly backwards, perhaps falling for the common vanity of wanting to give their science the airs of physics. Perhaps they thought that, since a higher order good is prior to its corresponding lower order good, then the former must impart its value to the latter, like a cue ball imparting its energy to an 8-ball. As Menger showed, the proper way of thinking about economics is not the mechanistic analysis of impulsion and impact, but the teleological analysis of ends and means.

Next in this series: Menger on Wealth and Prosperity

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