----------------- HES POSTING ----------------- 
This message relates mostly to Scott Cullen's suggestion that appraisement is relevant to
the issue. His comment, in my view, is right on target. The key to "investment value" is
the appraisal.
 
It's too bad, though, that he did not succeed in his detective work on Fisher. He could
have looked at Frank Fetter's work for example. When, around the turn of the 19th to the
20th century, the early American economists, including Fetter and Herbert Davenport,
proceeded to apply the new Austrian theory of value (price) and cost to the problem of
pricing capital; they were led to the concept of appraisal. These economists recognized
that individuals could calculate the "value" of their capital, which in Carl Menger's
Austrian theory included all material assets as well as patent rights and even goodwill,
by using a "capitalization process." For Fetter and others, the phenomenon of appraisal
was dealt with under the rubric of "capitalization."
 
Davenport, followed by Frank Knight, conceived of capital as the entrepreneur-appraised
current "value" of all assets under the strict assumption of competition, which implied a
set of complete private property rights. Broadly speaking, they regarded current wealth,
or current capital, as the conceptual sum of the appraisals of all individuals acting in
the role of the entrepreneur. Ludwig von Mises later distinguished between (1) valuation,
which is the attaching of a money-based subjective utility by the consumer role, and (2)
appraisement, which is the attaching of a money-based price by the entrepreneur role.
 
Scott, if you would like some references, I will be happy to provide them. Many of the
materials are on the internet now at JSTOR.
 
 
Regarding Robin Neill's comment that economics deals with "relative value," I largely
agree. However, it is probably misleading to use the term "value" here. Don't you agree
that economics deals with relative price, which is the result partly of valuation by
individuals acting in the consumer role? I mentioned something like this in my earlier
message. Of course, economics also deals with absolute price, but that is a different
subject.
 
Pat Gunning 
Feng Chia University, Taiwan 
 
 
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