Saturday, November 12, 2016
In the field of economics there are various euphemisms that have arisen to describe goods in general.
A good is an object of value, but all value is subjective. No value is inherent. A major difference between Austrians and their obverse, is the theory of value.
The common euphemisms we hear are: Capital Good, Consumer Good, Veblen Good, Giffen Good, Producer Good, etc. They're all objects of value that are consumed at some stage of the production process.
Now this brings me to my next, more important point. Why so many names? The answer is that economists are using artifice to build their scholarly reputation.
No need to understand the different definitions given to these names, with the exception of two of them. These two are Capital Good and Consumer Good. The others are discursive hodgepodge.
The others aside from the latter two, are attempting to describe the uniqueness according to supply and demand, and their associated prices. Of course this is subjective, as some goods are simply more scarce than others.
A Capital Good is a good that uses labor to convert raw materials into a new capital good. In Austrian terms, you mix land and labor to produce a capital good.
Land is raw materials, labor is human effort.
At every stage of the production process, given that there are many of them--an unspecified quantity, capital goods are used and produced. This process of mixing land and labor to produce a capital good occurs at all stages.
A Consumer Good is what is consumed by someone. At this point, the good is no longer producing anything but human satisfaction. It cannot be mixed with land and labor any further to produce another good.
I must assert that each permutation of a good is subjective. Both goods are essentially consumed over time. Albeit our perspectives coalesce toward one central idea, we can decidedly say that a person can use either good in different ways.