----------------- 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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