I wish to call into question the fundamental Mengerian idea that the consumer determines price. Not being an economist, I’ll resort to some examples to make my point:
You have two cantalope and you’d like to trade them for a bag of rice. Fortunately, I have a bag of rice and I agree to the 2:1 trade. Which of us decided the price of the rice should be two cantalope? I think it’s fair to say we both did- that was the price in which two conditions were met: I thought I would gain from the transaction, and you thought you would, too. Who was the consumer in this transation? We both were, I wanted to consume cantalope, and you wanted to consume my rice. Who was the producer? We both are- we both grew our own crop.
Now let’s use gold and silver. You want my gold, I want your silver. Though we may not have mined these metals ourselves, by trading with each other we represent the lowest order producer. Suppose we both wish to consume these metals for our own personal use. Which side of the transaction determined the price?
Finally, suppose I have a car and you have a unit of currency (let’s say a really shiny coin). Again, neither of us are the sole producers of the goods we own, though we both represent the lowest order of producer. When I give you the car and you give me the unit of currency, which of us determined the price? Which of us had their ends met by the transaction?
tl;dr: Why do we distinguish consumers from producers when both sides are getting ends met by trade? If both sides benefit, from which direction is value imputed?
I think your issue can be resolved by defining the word “consumer” differently. Austrian-School Economics doesn’t use “consumer” in the same way as “buyer” or “purchaser”. Rather, it means by “consumer” a person acting in his capacity to directly satisfy his desires. This is also the basis for the distinction between “consumer/consumption goods” and “producer/production goods”.
Where it exists, money can be considered the highest-order good. This makes sense from the Austrian-School treatment of money as “the most marketable commodity” - in other words, that commodity which people are most willing to exchange for any other. So in a market transaction where one side trades money for some other good and the other side trades the good for money, the person who ends up with the lower-order good (necessarily not the money) can be termed the “consumer” and the person who ends up with the higher-order good (necessarily the money) can be termed the “producer”.
… Menger’s intentions were to reconstruct Classical economics on firmer foundations by grounding the supply-and-demand theory of price and the theory of monetary calculation in the choices and actions of consumers and to repair its superstructure by healing the rift between the theory of price and the theory of distribution.
Actually, while we’re on the topic, I have one more question. If I’m trading US dollars for Japanese Yen, then which side is the consumer? Since this is an exchange of goods of equal production order, both sides would be considered a consumer, just as though it was a trade of cantalope and rice. How off base is this reasoning?
You are confused about how prices are determined. “Buyer” and “seller” is not synonymous with “consumer” and “producer” since consumers also sell (e.g. used furniture) and producers necessarily also buy (their input goods). Producers do not always sell to consumers, they also sell to other producers, consumers do not always buy from producers, they also buy from other consumers (e.g. used furniture). And so on.
The buyer alone does not determine the price of an exchange. Both the buyer and the seller must agree to the exchange (price). Rather, the primacy of the consumer comes in determining the composition and overall structure of production. Producers do not decide what will be produced, appearances aside. It is consumers which determine what will be produced and in what quantities. That is the sense in which consumers are primary.
Note that the exchange of fiat monies is a bit of a “special case” since Austrian theory explicitly denies the possibility of the existence of multiple, competing monies as we have in the national fiat monetary system. But to answer your question: in general, I would argue that most investment exchanges are “producer-producer” exchanges.
I probably should have tacked on the implied phrase “without the intervention of government” to that sentence. Of course, there are multiple competing currencies in the real world, so it is possible. But it is only possible because of the same reason that rent control is possible: government intervention.
Strictly speaking, “exchanging” one currency for another is just a conversion between two quantitatively related currencies. Under the international gold standard, different national currencies were simply different weights of gold. Today, with fiat currencies, the situation is more complicated, but I think the principle remains the same.
However, typically a person “exchanges” one currency for another because the latter is accepted in market transactions where he is or is going. So comparatively, the latter currency is the higher-order good in this case. You’re effectively selling US dollars for Japanese yen, so that you can use those yen to buy things in Japan (which you typically can’t do with US dollars). Because you’re the one receiving the higher-order good, you’re the producer and the currency exchange is the consumer.