Principles of Economics

By Carl Menger

Synopsis: First printed in 1871 in German, this book is Carl Menger’s contribution to the field of economics. Menger is considered the founder of the Austrian School of Economics, and his ideas, expositions, and sharp discernment between erroneous and correct economic ideas is foundational to the Austrian School.

Strong Points: Menger was expert at discerning correct economic principles from false ones. He also was able to illustrate the principles in a series of examples given after each declaration of principle, further aiding the reader in understanding. Menger’s ideas were so sound, that the reader feels that what he was writing was merely common sense, and it will leave the reader wondering why they didn’t think of that before themselves. Some of Menger’s contributions include an emphasis on the subjective nature of value, an explanation of how value is derived at, the difference between economic and non-economic goods, an exposition of the principle of marginal utility (which was such a novelty that the phrase “marginal utility” had yet to be coined), discussion about the nature of goods, wealth, exchange, the formation of prices, the nature of money, and an explanation of the origin of money.

Weak Points: Since the book is older and a pioneering work, there are many terms that differ from our modern use. Marginal utility is one, and capital goods are another (Menger calls capital goods “goods of a higher order” and consumer goods “first order goods” or “goods of a lower order”). But this is not necessarily a problem, as the reader can determine what the author is saying probably better with the absence of jargon. The biggest defect of the book was Menger’s own writing style, which was meticulous, wordy, redundant, and quite tedious. It made for a slower read and caused clarity to suffer somewhat at points, as well as the general interest that the text inspired, causing the reader to slog through what becomes a somewhat tedious read.

Interesting: 3/5

Must Read: 3/5

Overall: 3.5/5

Pages: 328

Selected Quote: “Governments have therefore usually accepted the obligation of stamping the coins necessary for trade. But they have so often and so greatly misused their power that economizing individuals eventually almost forgot the fact that a coin is nothing but a piece of precious metal of fixed fineness and weight, for which fineness and full weight the honesty and rectitude of the mint constitute a guarantee. Doubts even arose as to whether money is a commodity at all. Indeed, it was finally declared to be something entirely imaginary resting solely on human convenience. The fact that governments treated money as if it actually had been merely the product of the convenience of men in general and of their legislative whims in particular contributed therefore in no small degree to furthering errors about the nature of money.” (p. 283).

 
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