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Carl Menger was an Austrian economist who contributed to the development of the marginal utility theory and to the formulation of a subjective theory of value.
Menger received a Ph.D. from the Jagiellonian University in KrakĂłw in 1867 and then accepted a position in the Austrian civil service. In 1873 he became a professor of political economy at the University of Vienna, remaining there, with brief interruptions, until 1903. He then devoted himself to his studies in economics. Menger was widely known as the founder of the Austrian school of economics.
Menger also used the subjective theory of value to disprove the Aristotelian view that exchange involves a transaction of equal value for equal value. In exchange, Menger pointed out, people will give up what they value less in return for what they value more, which is why both sides can gain from an exchange. That led him to the conclusion that middlemen create value by facilitating exchange. Menger also showed that money, as a transactional medium, solves the difficulty of exchanging goods directly: a chicken farmer who wants gasoline finds it easier to trade those chickens for some widely accepted goodâmoneyâand then to trade this good for gasoline. It is far more difficult to trade chickens directly for gasoline. Money, like language, developed naturally as a means for facilitating human interaction.
