Academic journal article The American Journal of Economics and Sociology

An Ontology of Economic Objects: An Application of Carl Menger's Ideas

Academic journal article The American Journal of Economics and Sociology

An Ontology of Economic Objects: An Application of Carl Menger's Ideas

Article excerpt

I

Introduction

Economists speak of macroeconomic phenomena such as inflation, unemployment, and growth as existing conditions in our social reality. These conditions describe existing states of affairs in the world which affect choice. To the average individual, for example, such conditions are facts which will influence his saving and spending decisions. When making economic decisions, then, individuals view the world as composed of economic facts. It is not that the individual, qua economic agent, shapes the world in a particular way. Tables and chairs, mountains and trees, minerals and rain, dogs and cats - all real things in the world remain the same, and as clearly apprehensible to him as these real things are when he is not acting as an economic agent. However, there is a difference in how the individual, qua economic agent, divides the reality he perceives. He orders things in the world according to their role in the economic conditions which affect his plans. As a result, a thing of natural beauty such as a tree may acquire an economic character if he perceives a causal connection between the tree and his need for shelter. The individual thus perceives the tree not just as a gift of nature, or a beautiful thing, or as an instance of a woody perennial plant, but also as an intermediate good, a means for the fulfillment of a plan to build a house.

Similarly, all things in the world - both artifacts and naturally existing things - are viewed by the economic agent as constituents of a reality divided by and articulated through economic considerations. All phenomena which economists speak of constitute a reality viewed through the lenses of the economic actor. The elements of such phenomena can not be described by the language of physics alone since such a description would lack the social dimension of objects, such as the tree qua construction material. Instead, mainstream economists refer to the 'economic microfoundations' of such phenomena which are constituted by elements such as firms, consumers, and markets. But these elements of macroeconomic phenomena presuppose other, more elementary, economic objects. For example, a 'consumer' presupposes goods and a market, and 'firms' presuppose the production of a good, the demand for a good, and a labor market, and 'market' presupposes an existing notion of exchange. There are, then, even more fundamental elements in economic phenomena to which we may refer as economic objects.

The relevant question here is this: what makes any one thing an economic object? based on the discussion above, the quick and easy answer is that an economic object is a product of beliefs and physical things. However, this answer requires further examination. The purpose of this paper is to present an ontology of economic objects as a first attempt to lay the groundwork for a complete description of the aspect of social reality we shall call economic reality. Throughout the development of the body of economic theory, there has been a piecemeal approach to the description of economic objects such as money, price, and others. With only one exception, no single economist has contributed a general theory of economics containing an exact description of all economic objects which are part of its theoretical framework. This exceptional contribution was provided by Carl Menger in his Principles of Economics, first published in 1871. Central to Menger's general theory is a description of laws governing six economic objects: economic goods, commodity, money, value, price, and exchange. The ontology of economic objects in this paper will be founded on Menger's theoretical framework, although I include some extended philosophical analysis as well as considerations from the perspective of mainstream economics.(1) Menger's description is significant because it offers the conditions for settling objectively whether the views individuals have about an instance of a given category of economic objects indeed correspond to that category. …

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