Previously in this series: Value Theory Before Menger
To understand Menger's insight into value (and the Classical School's lack thereof), it would be useful to brush up on some Aristotelean logic. In the Categories, Aristotle explains his "fourfold division" in which expressions that represent things, as parts of propositions, are classified according to :
- whether they are (A.) general (a class, or in philosophical argot, "a universal") or (B.) distinct ("a particular") and
- whether they signify (1.) an entity or (2.) a non-entity.
According to Aristotle's examples, and using the alphanumerical scheme I give above, the expression "man" would be classified as A1, "knowledge" or "whiteness" as A2, "that man" or "Socrates" as B1, and finally "that knowledge" or "that whiteness" as B2.
Technical terms for the above classifications are:
- A1: Essential Universals, or Secondary Substances
- A2: Accidental Universals
- B1: Essential Particulars, or Primary Substances
- B2: Accidental Particulars
Through his fourfold division, as in much of his work, Aristotle tried to clear up a confusion present in the writings of his teacher Plato. Plato insisted that universals like "horse" and accidents like "fineness" were actual entities, which he called forms. For Plato, essential particulars (distinct and concrete things) were pale shadows of these forms. The forms were primary and most fully "real", and the essential particulars only "emanations" from them.
Aristotle found that to be nonsense. To him, essential particulars (that man, that horse, that table) were the things that were fully "real" and existed of themselves: that is why he called them primary substances. Universals were merely groupings of, and accidents merely aspects of those concrete things. It was the "forms" whose existence depended upon distinct and concrete things, not the other way around.
When Classical economists ever since Adam Smith considered the value paradox, they were comparing "essential universals": Aristotle's secondary substances (the class "bread" and the class "diamonds"). Therein lay their confusion. Sure, if you ask a fellow whether bread-in-general or diamonds-in-general are more important to him, he will answer that bread is, because it sustains his life, while diamonds are a luxury. But in deciding his actions, man does not assign importance to such classes. He only assigns importance to "essential particulars": Aristotle's primary substances (that loaf of bread, those three diamonds). Say a man's house is being submerged in a flood, and he must decide whether to save the loaf of bread in his pantry, or the three diamonds in his lock-box. He does not ask himself, "what class of thing is more important to my life, bread or diamonds?" like some unmoored philosopher. He considers (if it takes any thought at all) whether those particular three diamonds are more important than that particular loaf of bread.
Thus, value, according to Menger, is...
the importance that individual goods or quantities of goods attain for us because we are conscious of being dependent on command of them for the satisfaction of our needs.
Plato obscured things greatly with his theory of the forms. Aristotle took great care in clearing up that obscurity more than 2,300 years ago. Yet for thinkers like Adam Smith it was to no avail, as they fell into exactly the same kind of crime-against-common-sense that Plato repeatedly fell into with his undue emphasis on universals. It should not be surprising that an Aristotelean insight would be beyond Adam Smith, and yet self-evident to Carl Menger. Smith was part of a succession of thinkers who liked to pretend to be above the "old school" of Aristotelean Scholastic thought. This attitude was particularly acute in Protestant countries (like Smith's Scotland), where anything associated with the Catholic Church (as Aristotelean Scholasticism was) was considered archaic and backwards. Menger on the other hand, as a scholar in Catholic Austria of the 19th century, was steeped in Aristotle.
Next in this series: Further Mengerian Insights on Value