Chapter IV First Analysis of the Category of Action page 93-94 of Human Action:
Mises begins by distinguishing the two types of economic goods (consumer goods and producer goods), but I’m yet to understand why they need to be distinguished or if, in fact, they can be distinguished.
For example, take an apple bartered/sold to an me The apple is the highest stage of serviceableness or, the lowest stage of production because it is about to be consumed by me. Yet, these calories I consume are in fact needed for my body to labor which is a high ordered good of production (thus, it is both a low stage of production in that I am consuming it as well as a high stage of production since it will service my body in eventual labor)
Jeremiah,
George Reisman distinguishes between the two very well in his Capitalism. As you allude, capital-goods and consumer-goods are not decided by the type of good or what it looks like, et cetera, but by its function in the structure of production. LIke you say, food can be a capital-good if it’s used as a means of production. This is prob. one of the major reasons why Huerta de Soto considers durable consumer goods types of capital-goods.
A bit later he writes why he makes the distinction:
The purpose of such an arrangement of goods in orders is to pro-
vide a basis for the theory of value and prices of the factors of pro-
duction. It will be shown later how the valuation and the prices of
the goods of higher orders are dependent on the valuation and the
prices of the goods of lower orders produced by their expenditure.
The first and ultimate valuation of external things refers only to
consumers’ goods. All other things are vaIued according to the part
they play in the production of consumers’ goods.
He also agrees with your point of it all depending:
It is therefore not necessary actually to arrange producers’ goods
in various orders from the second to the nth. It is no less superfluous to
enter into pedantic discussions of whether a concrete good has to be
called a good of the lowest order or should rather be attributed to one
of the higher orders. Whether raw coffee beans or roast coffee beans
or ground coffee or coffee prepared for drinking or only coffee pre-
pared and mixed with cream and sugar are to be called a consumers’
good ready for consumption is of no importance. It is immaterial
which manner of speech we adopt. For with regard to the problem
of valuation, all that we say about a consumers’ good can be applied
to any good of a higher order (except those of the highest order) if we
consider it as a product.
@ John
Do you remember what section/chapter of Capitalism?
@Dave
Thanks. I actually saw that later on as i continued reading the chapter, but tend to post as the questions as they come to me.
I’ve had this question too but I have a more radical doubt as to the cap.-cons. distinction. Given Jeremiah’s example, I reasoned thusly, that fruits are producer’s goods & consumer’s goods at the sametime, but this is impossible, therefore there are no producers or consumers goods. Perhaps it is a problem of subjectivism? Unless you consider a good from the viewpoint of the actor, then there cannot be an economic definition and a coherent one. So maybe consumer goods are goods that are intended to be used at subjective time1 while producer’s goods are goods to be used over a longer range of subjective time?
this is the marginal revolution all over again…
what is worth more , the class of all diamonds or of all buckets of water?
each marginal unit of a thing may be this or that…it may be a producers good or a consumers good. its status is determined by the actors who demonstrate preference with it, and not through facts of its ‘objective qualities’ (even though these often play a role in subjective valuation). it may be a producers good today and a consumers good tomorrow…its status as such is subjective, at least unless we restrict our domain, or for exposition make simplifying assumptions, (let me talk of all the fruits that are producers goods, and all the fruits that are consumers goods will be the subject of tomorrows lecture…)