I will now reproduce a direct quote from the obituary and then I will present an economic analysis of the idea.
"In the theory of language, Professor Putnam is known for the assertion that meaning is not “in the head”; rather, he said, what we call the meaning of a word is informed by external factors — the context in which a concept is encountered.
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In a 1975 paper called “The Meaning of ‘Meaning,’” Professor Putnam further illustrated his argument with a famous thought experiment called Twin Earth. He imagined a planet alongside our own that was a facsimile in almost every way, including holding a replica of each person. The only difference on Twin Earth was its water. Though it looks like H2O, tastes like H2O, fills the lakes, rivers and oceans and performs the same functions as H2O, Twin Earth’s water had a different chemical makeup, abbreviated as XYZ.
Therefore, if an earthling named, say, Oscar, were to travel to Twin Earth and visit his doppelgänger, Twin Oscar, when they referred to water, they would actually be talking about two different things, even though they appeared to be the same. Because Oscar and Twin Oscar are identical in every way, including their thoughts at a given time, Professor Putnam argued, meaning cannot simply be a function of what is formulated in someone’s head."
THE ECONOMICS OF MEANING
In the language of economics, H2O and XYZ are perfect substitutes. Even though Oscar and Twin Oscar view them to be different objects, they each provide the same flow of services in a Beckerian Household Production Function. Both H2O and XYZ provide the same cleansing services and both replenish the body when drank. Both Oscar and Twin Oscar would have the same marginal willingness to pay for an extra ounce of H2O or XYZ. Thus, they are the same thing.
To an economist, objects are bundles of attributes. Soap is a collection of attributes that we demand because when combined with water, we can wash ourselves. "Meaning" is meaningless to me. We acquire bundles of attributes through markets or household production. We know what we want. We know our budget constraint and time constraint and we act in our self interest.
Where "meaning" may matter is in the following case; suppose I want to be nice to you but I don't know how you interpret language. If I say "hello", that may be a curse in your language (note the word has different meanings). If I am aware that I know that I don't know how you interpret words then I will be very cautious in how I approach you. I will smile. I will not raise my hands. I will mimic how you act and will watch your body language and your eyes to sense your sense of danger.
For example, right now progressives say that Don Trump is speaking in code and is sending signals to "his people" . This suggests that words have different meanings to different people. If we disagree about what words mean, then this will interfere with our ability to trade with each other and our economy will be poorer because of this. Language commonality is a co-ordination device such that we can more cheaply (using less time) convey ideas and goals. Trade is facilitated by common currency and an agreed up on language. This has meaning to me.
Once you acknowledge that all objects are collections of smaller items then we enter the world of Sherwin Rosen's hedonics. A BMW is a bundle of vehicle attributes while a Mercedes is an object that has bundled into it a different set of vehicle attributes. Most people view these products to be close but not perfect substitute. Through markets, we learn the "meaning" of how people value objects. If this is what Putnam meant by "informed by external factors" then he was a sloppy economist because he simply should have said; value is determined by the interaction of "supply and demand".