2.1.6. Imaginary Goods.

D.1. Imaginary Goods: 

I. Following Weakness of Knowledge (09 in Primacy of the Knowledge), now a possibility of Goods exists which serve either Imaginary Needs, or have Imaginary Uses. 

II. Goods resulting from a misperception of non-existent human needs, or misperception of non-existent useful properties are Imaginary Goods - Goods born of only our imagination. 

Axiomatic Derivation:

1. From 09 in Primacy of the Knowledge, it follows that knowledge of Needs, and of Useful things can be weak i.e. incomplete, contradictory, outdated, misinformed etc etc. 

2. From 1, it follows that a possibility exists of assuming to be true a false Need, or false Useful Thing. 

3. False Need is a need assumed to exist when in fact it does not exist in the sense of need as defined in Needs. 

4. False Useful Things is a Useful Thing is assumed to be Useful Thing when it is not in sense defined in Useful Things. 

5. Good Characters formed of a False Need, or a False Useful Things are all Imaginary Goods.

7.6. For an elaboration read the following explanation.

Explanations:

E.1. From Need we know that perceptions plays a role. However, perception cannot affect our knowledge or our control due to their nature - knowledge results either from our critical experiences or formal research, and control is a bodily movement not a mental image of anything. However, we may very well perceive something to have useful properties even when it does not have them, or we may very well perceive a need when it is entirely absent i.e. of four traits of a Good, need and useful properties are subject to misperception. 

E.2. Ignoring cases of psychopathologies, most of the needs among healthy individuals are social-psychological and a smaller fraction is physiological. Thus while hunger is one physiological need, we wish to eat certain foods, and avoid others and this is a psychological need, we wish to consume in company of our friends or family, this is our social need, and we may be very hygiene cautious and this is much more psychological than physiological need as it may mostly be our fear of being sick. 

E.3. Since, most of the needs are psychological images, they are subject to problems of human psychology, most redundant of which is a misperception. Likewise, useful things too become subject of social-psychological forces. They too now are subject to problems of human psychology, and often misperception. 

E.4. Thus, under the influence of social settings since childhood, we may end up perceiving that a pseudo-medicine can help us relieve our sickness, when it cannot - we falsely assign useful properties to it, and define it as a Good. Or falsely believe a need of protecting ourselves from things which do not exist, and memorize a mantra in now a dead language meaning of which we know not, and so imagine a need to exist, and imagine a means to gratify it. 

E.5. Menger, accordingly, defines two imaginary goods: 

Goods Which Serve Imaginary Needs: The full host of mantras and statues and buildings to serve superstitions of people.  

Goods Which Have Imaginary Uses: Love potions, colour water therapy, etc etc.

E.6. For Menger it is the progress in knowledge, in science, which results in a decreased number of imaginary goods. Thus, in more primitive societies there are more needs and uses which are the result of misperception, and lack of knowledge but as we progress this reduces.

E.7. Two Observations: 

a) Menger does not make it explicit what sets apart the perceived usefulness from our knowledge of uses of good. Perhaps, it can be an interesting discussion.

b) Menger hypothesizes that increased progress in science and education of the masses results in a reduced number of imaginary goods. However, the observations of a thriving pseudo-medicine industry in the UK, and self-help industry which sells only words and no real advice in the US compels us to discuss this issue in the modern world. 

Reference: Menger, Carl (2004). Principles of Economics, Online edition, The Mises Institute, 2004. (Chapter 01 page 53)