I have been interested in publishing, by some means, a book that amounts of economics for laymen. Hazlett published Economics in One Lesson, which attempted to satisfy such issues.
This post will be an attempt to explain orders of production, at least for myself, so that I can more easily explain them for those who are not familiar with economic terminology. I would like to do this with more topics in future posts.
An order of production is a good that is a certain number of one steps from a resulting consumer's good in the process of production. The way that Menger described such orders was that a second order good is one step away from a consumer's good. Thus, a consumer's good is a first order good, uncooked cookie-dough might be a second order good, and the eggs, flour, and other ingredients would all be third-order goods.
To keep with the subjective value theory, treatment by any user of a good defines the order of the good. For instance, you could in theory consume cookie dough, thus you would have used that good as a first-order good. However, other users may treat cookie dough as a second-order good by baking it into cookies, which would then be consumed.
To further upset the supposed objective nature of orders of production, consider hand tools. For a hand tool to be a consumer good, it must be consumed in its usage. Ordinarily, you don't use cookies for anything but consumption. However, it is possible to use cookies for purposes like weight or even insulation. Obviously, such uses would be very inefficient compared to other materials, but that is beside the point. That is, you can use cookies for more than just consumption, thus the "common sense" uses for a good are not necessarily the only possible uses for a good. Rather, it is the user that defines the usefulness, within the laws of physics.
