Menger Transformed Economics from a Discipline Focused on the Study of Objective Wealth to One Based on Exchange or Catallactics

This theory of capital in Menger’s founding work is completely consistent with his seminal contribution to the subjective theory of value that was a paradigm shift in economics, completely transforming the discipline from one focused on the study of wealth, perceived to be objective (plutology), to one based on exchange (catallactics).

Classical economics was, at least originally, a pragmatic discipline. Its aim was to study means to increase the “wealth of nations”. Its orientation is thus to a macroeconomic magnitude. It needed a measure of wealth, and the classical notion of value was primarily designed to serve this need. Production and distribution of wealth was what really mattered. The consumer was an outsider, not an economic agent . . . . Markets, in classical doctrine, contained producers and merchants only. All this changed when subjective utility replaced objective (and measurable) cost of production as the source of value.

Economics now had to find a place for the consumer. It was he, after all,  who now bestowed value on objects. All non-consumer goods were now shown to have at best purely derivative value. . . . each consumer as an individual would now assign value to objects which become economic goods as a result of his action. (Lachmann, 1986: 145)

--Peter Lewin and Nicolas Cachanosky, Austrian Capital Theory: A Modern Survey of the Essentials, Cambridge Elements in Austrian Economics (Cambridge, UK: Cambridge University Press, 2019), 7-8.