On the Transformation of Economic Value: From Its Austrian Roots to Contemporary Economics

Abstract

Carl Menger’s theory of subjective economic value is not only one of the greatest contributions of Austrian economics, subjective value is also the received view in mainstream economics today. However, modern-day economic theory does not explicitly address the theory advanced by Menger but merely assumes that value is subjective on the basis that the experience of valuing something is no more than an expression of preference. Accordingly, contemporary economists do not appear to recognize the distinction between this understanding of value and any other possible understanding of value, such as objective theories of moral value advanced in older strands of inquiry. Lacking the theoretical basis laid by Menger, subjectivity indeed appears deceptively simple: choices are made on the basis of preferences, and preferences are subjective. It would thus follow that further examination of the phenomenon of choice appears unnecessary. The aim of this paper is to present the Austrian philosophical foundations of the theory of subjective economic value and examine how this received theory has been quite significantly transformed in its transition to a neoclassical economics framework that has disposed of its theoretical basis.