Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

268 Money, Bank Credit, and Economic CyclesAll human action is directed toward the attainment of anend, or consumer good, which can be defined as a good thatdirectly and subjectively satisfies the needs of the humanactor. The term first-order economic goods has traditionallyreferred to those consumer goods which, in the specific, subjectivecontext of each action, constitute the goal pursued bythe actor in performing the action. 4 The achievement of thesegoals, consumer goods, or first-order economic goods, is necessarilypreceded by a series of intermediate stages representedby “higher-order economic goods” (second, third, fourth,etc.). The higher the order of each stage, the further the goodis from the final consumer good.Furthermore all human action takes place in time, and weare not referring here to the deterministic or Newtonian senseof the word (i.e., merely physical or analogical), but to the subjectivesense; that is, the actor’s subjective perception of timewithin the context of his action. According to this subjectivistconception, the actor experiences the passage of time as heacts; in other words, as he realizes new ends and means,designs plans of action and completes the different stageswhich compose each action.When human beings act, they inevitably synthesize memoriesof the past into new expectations and mental images forthe future, regarding the different stages in the action processthey will follow. This future is never predetermined, butinstead the actor imagines, creates and builds it step by step.Therefore the future is always uncertain, since it has yet to bebuilt, and the only part of it the actor possesses consists of specificideas, mental images or expectations he hopes to realizethrough the completion of the stages he imagines will make4 This classification and terminology were conceived by Carl Menger,whose theory on economic goods of different order is one of the mostimportant logical consequences of his subjectivist conception of economics.Carl Menger, Grundsätze der Volkswirthschaftslehre (Vienna: WilhelmBraumüller, 1871). Menger uses the expression “Güter der erstenOrdnung” (p. 8) to refer to consumer goods or first-order goods. Englishtranslation by J. Dingwall and B. Hoselitz, Principles of Economics (NewYork: New York University Press, 1981).