Economy and Economic Goods

Menger separates goods in general from economic goods. A thing may satisfy a need and still not require economizing if it is available beyond all requirements. Air under normal conditions is useful but not economic because no one must allocate it. A good becomes economic when the quantity available to a person or society is smaller than the full requirement for it. Scarcity, in this precise sense, forces choice.

To economize, people must estimate their requirements. They ask how much of a good is needed for direct satisfaction and how much is needed as a higher-order input for future goods. This estimate is never a purely mechanical total. It depends on expected wants, production plans, seasons, techniques, and the importance of different satisfactions.

When available quantities fall short of requirements, people must economize. They preserve the most important uses, postpone less important uses, and avoid waste. This does not yet require money or markets. Even an isolated person must decide whether a quantity of water should be used for drinking, cooking, washing, animals, or irrigation. The logic of allocation appears before exchange.

Goods can move between non-economic and economic status. Clean water may be abundant in one place and scarce in another. Timber may be free in an unsettled forest and dear near a growing city. A change in population, knowledge, technique, transport, or legal command can turn an abundant good into an economic good, or an economic good into a non-economic one.

Chapter 2 can be read as a scarcity map. First estimate requirements. Then compare requirements with available command. If command is sufficient for every relevant use, the good remains non-economic. If command is insufficient, the good becomes economic and must be allocated among competing uses. From this point, value theory can begin.