[hist-analytic] Menger/Bohm-Bawerk "Paradox"
Baynesr at comcast.net
Baynesr at comcast.net
Sun Feb 21 12:00:22 EST 2010
Karl Menger and Bohm-Bawerk had to make use of the
term "class of wants" in order to refute the objections raised
by those who considered bread as such more valuable than
silk because the class "want of nourishment" is more important
than the class "want of luxurious clothing." (Von Mises, Human
Action, Foundation for Economic Education, p. 123)
First, it should be noted that Von Mises is a fictionalist with respect
to classes. That is, he believes they are "entirely superfluous."
However, what is interesting is the relation of this "paradox" and the
matter of marginal utility in economics. We must distinguish total utility
and marginal utility. Take gold. If we consider its marginal utility, where
'marginal utility' means something like "the change that would accrue in
satisfaction upon producing one additional unit product or service." In
this case the marginal utility of gold is greater than iron: if I get one
additional ounce of gold I'm financially better off that receiving one
additional ounce of iron.
BUT if we talk about total utility iron is more valuable that gold,
since the world would lose considerably if ALL the iron disappeared
as opposed to all the gold. What I find interesting about
marginal utility, aside from its importance to economics, is how it
resembles other notions that trade on the "margin." For example we can
think of a morpheme as the smallest unit that makes a difference to
meaning. So 'ly' may indicate t he adverbial. Thus morphology is a
study of morphemes not definitions of meaning etc. There are other examples.
Consider for example 'calorie' (in grams): "the energy required to raise the
temperature a gram of water 1 °C." Now this is very similar to the "marginal"
notions except that the "margin" is predetermined. In any event, the
Menger/Bohm-Bawerk "paradox" may conceal some interesting issues in
philosophy of science. In future posts I may dealing with issues in philosophy
of economics that interface the usual discussions in physics.
What I'm "fishing" for is middle ground between Schumpeter and the
business cycle people and the Austrians, even though Scumpeter was a
student of Bohm-Bawerk.
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