The Retarded Acceptance of the Marginal Utility Theory

Author(s): Emil Kauder

Source: The Quarterly Journal of Economics, Vol. 67, No. 4 (Nov., 1953), pp. 564-575
Published by: Oxford University Press
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 THE RETARDED ACCEPTANCE OF THE
MARGINAL UTILITY THEORY

By EMIL KAUDER

Introduction, 564. - I. Importance of religious backgrounds i

and eighteenth centuries, 565. - II. Place of work in social t
III. Delayed acceptance in the nineteenth century, 570.- IV. C

Before 1870 the history of the theory of value sho

strange features, not easily paralelled in the history o
science. In the same field two diverse schools were w
pletely secluded from each other. One group discovered
the theory of value-in-use, the other continued to clin
to the theory of objective value, especially labor value
might have developed much faster if the British classic
up their fruitless search for an objective value and had
to the other school, which was exploring utility theory
Much earlier than is generally assumed the theoris
jective value had discovered the principles of marginal
the time of Adam Smith, Italian and French economists
sidered it self-evident that the interplay of utility and sca
the value of consumer goods, money, and the level of w
had sketched a price theory very similar to Wicksel
much later date, and Bernoulli presented a mathemati
marginal utility.2 These French, Italian, and Swiss writ
all problems of marginal utility except one; no one saw
1. The history of marginal utility theory from Aristotle t
substantial literature. We mention only two significant works: A
Storia critica della teoria del valore in Italia (Milano, 1889); Otto
Grenznutzenschule (Halberstadt, 1926). See also Emil Kauder,
Marginal Utility Theory," Economic Journal, September 1953
The best documentation for the Italian writers from the end of
century until about 1800 can be found in the voluminous coll
Classici Italiani Di Economia Politica (Milano, 1804).
2. Ferdinando Galiani, Della Moneta (the first anonymous edition was not
available to me), ed. Fausto Nicolini (Bari, 1915), Book I, chap. II, p. 25; Book V,
chap. I, p. 289. Graziani, op. cit., p. 99. Oeuvres de Turgot, ed. Daire (Paris, 1844),
Vol. I, "Valeurs et Monnaies," p. 72. Daniel Bernoulli, Versuch einer neuen
Theorie der Wertbestimmung von Glucksfdllen, ed. A. Pringsheim under the title:
Die Grundlagen der modernen Wertlehre. Brentano und Leser, Sammlung dlterer
und neuerer staatswissenschaftlicher Schriften des In- und A uslandes (Leipsic, 1896).
(Original edition and title, "Specimen Theoriae Novae de Mensura sortis," 1738,
not used.)
564

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 MARGINAL UTILITY THEORY 565

between marginal utility and the individual value

The correct relation was discovered in 1834 by Wi
Fourteen years later John Stuart Mill, in his Princip
Lloyd's achievement) expounded a somewhat weak mi
tive and subjective elements in his theory of value
British Mercantilists, Petty and Locke, the classicist,
Ricardo before him and Karl Marx after him, either
utility approach or paid scant attention to it.
Why did they do this? Ignorance of literature alon
been the reason for the nonacceptance. Neither the M
the Classicists may have read the Italian economists, y
Pufendorf and Adam Smith was acquainted with G
Pufendorf.3 Adam Smith discussed economy with Tu
have gotten at least some inkling about the directions in which
Galiani and Turgot had moved in trying to solve the value problem.4

In the seventeenth and eighteenth centuries it was not ignorance

which accounted for the dividing line between the two opposing
points of view, but rather the antagonism between the Aristotelian-
Thomistic and the Protestant social schools of thought. It was no
coincidence that the members of the Italo-French subjective value
school were Catholics and that the defenders of the cost theory of
value were Protestants, as indicated in the following table:
THE ITALO-FRENCH
SUBJECTIVE VALUE SCHOOL COST THEORY

Lottini Petty |
Davanzatti Locke Protestants
Montanari Adam Smith
Galiani > Catholics
Beccaria
Turgot
Condillac

It seems likely that different religious backgrounds help to

explain the fact that the French and Italian economists worked at
3. Raymond de Roover, "Monopoly Theory prior to Adam Smith: A Revi-
sion," this Journal, Vol. LXV (1951), p. 521.
4. Dugald Stewart, "Account of the Life and Writings of Adam Smith,"
The Works of Adam Smith, Vol. V (London, 1811), p. 467. I. Jastrow, "Ein neuer
Adam Smith Fund und der Aufbau des national6konomischen Lehrgebaudes,"
Zeitschrift far Nationalokonomie, Vol. VIII (Vienna, 1937). This paper contains,
in the notes, a very good survey of the literature.

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566 QUARTERLY JOURNAL OF ECONOMICS

cross-purposes with the British economists. Of course, the

of their forefathers should explain only partly the thinking
ing of the mature authors. These latter can by no means be
simply as either Catholics or Protestants without qualifica
they may hold religious convictions which are at variance
faith of their youth. Thus the young Galiani, when he
Treatise on Money, was influenced by Vico,5 by Catholic t
and by the deism of the eighteenth century.7 Condillac was
main interpreters of sensualistic philosophy. In the Bri
Locke and Adam Smith combined deism with sensualism. But all
these variegated views of sensualism, deism, etc., were grafte
either a Catholic-Thomistic or a Protestant-Puritan pattern of
thought. The point is that early education leaves its permanent
impression on our minds, regardless of how we may change our con-
victions at a later date. These indelible fundamentals created specific
social outlooks which separated the two camps.

II

According to Max Weber, Calvin and his disciples placed work

in the center of their social theology.8 This earth is the place where
man has to strive, by incessant labor, for the greater glory of God.9
All work in this society is invested with divine approval. Any social
philosopher or economist exposed to Calvinism will be tempted to
give labor an exalted position in his social or economic treatise, and
no better way of extolling labor can be found than by combining work
with value theory, traditionally the very basis of an economic
system. Thus value becomes labor value, which is not merely a

5. See Fausto Nicolini, "Giambattista Vico e Ferdinando Galiani. Ricerca

storica," Giornale Storico Della Letteratura Italiana, Vol. LXXI (10 semestre 1918),
p. 142.
6. See especially his polemic against the Protestant theory of usury and his
defense of Catholic censorship. Galiani, "Della Moneta," Early Economic
Thought, ed. Arthur Eli Monroe (Cambridge, 1945), p. 3C0. A short time before
he wrote an essay on the immaculate conception. See S. G. Tallentyre (pseud. for
Evelyn Beatrice Hall), The Friends of Voltaire (New York, 19c7), p. 64. Appar-
ently the young Galiani was not the skeptical freethinker of his later days.
7. Galiani defends the theory of social harmony, one of the most important
principles of deism. "Della Moneta," A. E. Monroe, op. cit., p. 288.
8. Max VW eber, "Die protestantische Ethik und der Geist des Kapitalismus,"
Gesanimelte Auf&dtze zur keligicns-soziologie, Vol. I (Tibingen, 1926), p. 17. See
also Talcott Parsons, The Structure of Social Action (Glencoe, Illinois, 1949),
p. 500.
9. J. B. Kraus, S. J., Scholastik, Puritanismus und Kapitalismus (Munich,
1930), p. 243.

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 MARGINAL UTILITY THEORY 567

scientific device for measuring exchange rates but also

tie combining Divine Will with economic everyday life
Generally authors are not fully aware of the connec
their ideas and their early education. Locke and Adam
see clearly the relation between their theory of labor
vin's glorification of work, although traces thereof ca
their writings. Locke wrote: "God .. commanded m
labor...." Man must follow this command, continu
improve the world which God has given men for their
Labor, divinely ordained, becomes the measure of mar
This conclusion had been drawn already by Locke and
clearly by Adam Smith who, in spite of being a deist,
his entire lifetime, a deep sympathy for Presbyteriani
The author of the Wealth of Nations believed that
hand of Providence must be guiding economic actio
insure just prices. Fair prices are reached if the amou
the exchanged goods is the same. Like many other def
labor theory, Adam Smith combined the Calvinistic gl
labor with the Aristotelian-Scholastic theory of the f
doubt Locke and Smith, both of whom studied in the B

1. John Locke, "The Second Treatise on Civil Government

in John Locke on Politics and Education (New York, 1947), p. 9
Puritan family see Alexander Campbell Fraser, Locke (Philadelp
Even as a student at Oxford Locke had doubtless revolted again
dogmatism" and "Congregational fanaticism," but this revoluti
the social convictions of Calvinistic teaching.
2. Adam Smith was born in the town of Kirkcaldy, whose in
fought for the Covenant in the battle of Tippermuir. See Fran
Smith (London, 1904), p. 1. In the Burgh School of Kirkcaldy
contact with young Scottish Presbyterians, e.g., John Drysdale
"the helm of the Scotch Church as Moderator of its general
(Ibid., p. 3.) His mother wanted him to become an Episcopali
with the help of the Snell Exhibition he was sent to Oxford. Howe
to become a clergyman (Ibid., p. 8). His Episcopalian baptism
him from signing the Westminster Confession before the Presbyt
when he became professor at Glasgow in 1750 (Ibid., p. 23). His
for the Presbytery is plainly expressed in The Wealth of Nations:
perhaps, to be found anywhere in Europe, a more learned, decen
and respectable set of men than the greater part of the Presby
Holland, Geneva, Switzerland and Scotland." The Wealth of N
1928), Vol. II, p. 453. Already in his time his favorable attitu
byterianism was noted and unfavorably criticized by one of hi
Blair: "You are, I think, by much too favorable to Presbytery"
Blair to Adam Smith. Edinburgh, 3 April 1776, quoted in W
Manuscript Criticism of the Wealth of Nations," Economic H
p. 52). These remarks are not meant to prove that Adam Smith
in the sense of denominationalism, but to show how far he wa
Scottish brand of Puritanism.

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568 QUARTERLY JOURNAL OF ECONOMICS

hold of Aristotelianism, in Oxford, knew the Greek philos

Thus they were able to combine Puritan social philosophy w
traditional Aristotelian theory of value. This combination w
sible because Aristotle and the schoolmen had presented a v
cept with two sides: the subjective utility aspect, which was
by the Italo-French school, and the objective aspect, i.e., in
value and just price, which fitted into the Puritan social pat
The Puritan theologians claimed that business is not
morally acceptable, but also a divinely commanded, acti
condition that economic value is identical with the just pri
that just price is equal to the amount of labor in the comm
This harmony between just price, valuation, and the full sh
divinely commanded labor will be realized by free competi
Aristotelian and Thomistic idea of fair price was not dead i
British camp, but by weaving just price together with a hig
mate of this world and the glorification of labor, a new socia
phy was originated. The Puritan philosophy was at variance
social philosophy which was still dominant in Italy and Fra
Until the middle of the eighteenth century the future au
the Italo-French school were trained by professors of philoso
often were also members of religious orders (Carmelites, Do
and Jesuits). These teachers presented a combination of Aris
ism and Thomism which generally was not touched by any
"hereticism."4 The young students were not exposed at a

3. About English universities and their teachings in the seventeent

see Fraser, op. cit., pp. 10-11; in the eighteenth century: Leslie Ste
English Utilitarians (London, 1900), reprint of the London School, p. 4
Smith must have acquired a very thorough knowledge of Aristotle. Th
fragment of his inaugural dissertation, "de Origine idearum," is proof
Hirst, op. cit., p. 23.
4. Apparently Aristotelianism had a dominant position in the univ
of France and Italy until the middle of the eighteenth century. An
before that time to throw off the shackles of Aristotelian philosophy a
ire of religious orthodoxy and led to the persecution of the innovator.
was the only philosopher who could be taught according to the study p
Jesuits. ("Commentariolus" to the "ratio studiorum" of 1586.) See P
Geschichte der Erziehung (5th and 6th ed.; Leipsic, 1925), p. 333. The J
an essential influence on Spanish and Italian education. Although Fren
and the College Royal de France were not on the best of terms, they jo
against Descartes, Jansenism, and Quietism, and propagated the exclus
ing of Aristotelianism during the whole seventeenth century. See Bart
pp. 349, 515, 735; Ernst von Sallwtirk, "Bildung und Bildungswesen in
reich wahrend des 17. und 18. Jahrhunderts," Geschichte der Erzie
Anfang an bis auf unsere Zeit, ed. K. A. Schmid and Georg Schmid (
1896, Vol. IV, Part I, pp. 416; 431; 435; 437. A similar situation exist
Italy during the seventeenth and the first quarter of the eighteenth

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 MARGINAL UTILITY THEORY 569

glorification of labor. Work, according to the schoolm

followers, is not a divine vocation but is necessary in
tain one's place in the given natural order of society.
compulsion to integrate labor costs into the social orde
philosophy of economic value.5
Instead of work, moderate pleasure-seeking and hap
the center of economic actions, according to Aristotelia
tic philosophy. A certain balanced hedonism is an integ
the Aristotelian theory of the good life.6 If pleasure
form is the purpose of economics, then following th
concept of the final cause, all principles of economics i
tion must be derived from it.7 In this pattern of Ar
Thomistic thinking, valuation has the function of show
pleasure can be derived from economic goods.
In Italy and France, Aristotelian "Good Life" a
formed the background for the development of one th
whereas in Great Britain, moral recognition of econo
glorification of labor led to quite a different theory of
my opinion, is the final reason why John Locke and Adam
not interested in the work of their Italian and French
and vice versa. I am very well aware of the fact that th
is a conjecture, but it is a conjecture which does ac
opposing attitudes of the two camps.8

During the lifetime of Giambattista Vico, the great Neapolitan

inquisition tried to suppress Cartesians, Epicureans, and atheist
and 1744). Max Harold Fisch and Thomas Goddard Bergin, The
of Giambattista Vico (Ithaca, N. Y., 1944), p. 34. N. Cortese, "L
Storia della Universita di Napoli (Naples, 1924), pp. 428, 430.
break away from Aristotle were apparently successful only in th
the eighteenth century. In Pavia under Austrian domination, M
emphasized in a reform program of 1772 that philosophy should b
ing to Bacon, Locke, Condillac, and Bonnet. Baldo Perroni, "
Universita di Pavia ne settecento," Contributo alla Storia dell' Un
(Pavia, 1925), p. 147.
5. Kraus, op. cit., p. 72.
6. Leon Robin claims that the place for pleasure is not clearl
Aristotle's ethics. "Three main ideas are presented: (1) pleasure
(Speusippus); (2) some pleasures are good, but the majority a
which are neither true nor pure (Philebus); (3) even if all pleasu
still would be impossible that pleasure is the supreme good
Aristote (Paris, 1944), p. 215. (My translation.) It seems that
writers are interested in Aristotle's positive evaluation of pleasu
7. W. D. Ross, Aristotle (London, 1930), p. 190.
8. I presented this explanation for the first time in a paper
midwestern section of the American Economic Association (M
1951).

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 570 QUARTERLY JOURNAL OF ECONOMICS

III
My theory has, however, an important limitation. The bela
acceptance of marginal utility in the nineteenth century cann
explained by the Aristotelian-Calvinistic dichotomy. Other con
tions prevailed. Economists in general no longer thought in acc
ance with their religious backgrounds. Only a dwindling minor
were influenced by religious convictions. To this small group b
longed Alfred Marshall, to whom Talcott Parsons has drawn
attention.9 The Evangelicalism of his dominating father left a st
imprint on the thinking of Alfred Marshall.' Evangelicalism w
Calvinistic revival movement which gained a foothold in m
Protestant churches of America and Great Britain during the n
teenth century. The Evangelicals demanded the consecratio
Christians to valuable and zealous action and the condemnation of
luxury.2
Marshall, as a mature personality, became an agnostic yet he
retained a deep feeling for religious values,3 and his welfare policy
was patterned after the moral postulates of Evangelicalism. "Work
in its best sense, the healthy energetic exercise of faculties is the aim
of life, is life itself," comfort is "a mere increase of artificial wants."4
Transferring this Calvinistic appreciation of activity for its own sake
and depreciation of comfort into economic theory produces a dilemma
which has been ably analyzed by Professor Parsons. On the one hand,
Marshall was one of the independent discoverers of marginal utility.
On the other hand, his glorification of labor attracted him to the cost
problem. The result was the unbalanced character of his price and
value theory. He failed to make fullest use of the marginal utility
theory,5 and he defended valiantly Ricardo's objective value theory.
9. In recent correspondence.
1. His father was "cast in the mould of the strictest Evangelicals." John M.
Keynes, "Alfred Marshall, 1842-1924," Memorials of Alfred Marshall, ed. A. C.
Pigou (London, 1925), p. 1.
2. About Evangelicalism: A Dictionary of English Church History, ed. S. L.
Ollard and Gordon Crosse (London, 1921), pp. 211, 215; Encyclopaedia of Religion
and Ethics, ed. James Hastings (New York, 1920), Vol. V, p. 602.
3. Memorials, op. cit., p. 7.
4. Quoted from Memorials and from Marshall's Principles in Talcott
Parsons, The Structure of Social Action (Glencoe, Ill., 1949), p. 141, n. 1, and p. 140.
Marshall's remark on his beloved chess game is typical of his Puritan abstinence
from luxury. "We are not at liberty to play chess games, or exercise ourselves
upon subtleties that lead nowhere. It is well for the young to enjoy the mere
pleasure of action, physical or intellectual. But the time presses; the responsi-
bility on us is heavy." Memorials, op. cit., p. 2.
5. It is worthy of note that Marshall presents the whole marginal utility
theory on two and one half pages in his Principles, a book dedicated mainly to
the explanation of price theory. Alfred Marshall, Principles of Economics (8th ed.;
London, 1930), pp. 92-94.

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 MARGINAL UTILITY THEORY 571

Marshall stressed costs and supply rather than dem

famous explanation of price-equilibrium. Calvinism in
form was still strong enough to unbalance the system
powerful enough to eliminate the marginal utility appr
Even the son of an evangelical father no longer suppre
interest for the sake of religious postulates. Marshall's
rarely found.
Educational background was no longer a sufficient
of the trend in the nineteenth century. The tie betw
religious or philosophical convictions and a particul
economic thinking became weaker and weaker. For ex
of the outstanding analysts of subjective value theory
teenth century do not fit into the Aristotelian-Thom
Lloyd and Longfield were Protestants, Gossen was an
Anti-Catholic, Beccaria, Verri, and later Ferrara, who g
intellectual climate which was still influenced by C
showed outspoken sympathies for the British cost the
The reasons for the delayed acceptance of marginal u
nineteenth century can be found only in the history
science itself. This statement contradicts customary e
Sociologists, philosophers, and economists claimed tha
sualism (Northrop and Gunnar Myrdal),6 or the retur
ism (Stark),7 or the changed interests of the leading
(Nikolai Bukharin and Fritz Behrens)s helped margina
lish its dominant position in economics. It seems to me
explanations are insufficient.
Most plausible is the first interpretation connectin
with marginal utility. Marginal utility, according to
Myrdal, is a specific application of the hedonistic pain
calculus. It was when hedonism was adopted as a philo
ground by the majority of economists, Myrdal and No
that the marginal value system got its central positio

6. C. Northrop, The Meeting of East and West (New York

Gunnar Myrdal, Das Politische Element in der national-bkonom
bildung (Berlin, 1932), p. 125. See Canina, "Valore e rarita ne
Montanari," Istituto Lombardo di Scienze e Lettere (Milano, 19
p. 166, note 1.
7. W. Stark, The History of Economics (New York, 1944), p.
8. Nikolai Bukharin, The Economic Theory of the Leisure Cla
1927), pp. 8, 17. Fritz Behrens, "Hermann Heinrich Gossen oder
wissenschaftlichen Apologetik des Kapitalismus," Leipziger Schri
schaftswissenschaft, 1. Heft (Leipsic, 1949). Fritz Behrens,
approach as Bukharin, does not quote Bukharin at all.

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572 QUARTERLY JOURNAL OF ECONOMICS

thinking.9 This statement is an oversimplification. From

Ages until the end of the eighteenth century the contact
hedonism and marginal utility was rather infrequent and a
Not even the young abbe Galiani can be considered a hedon
only one of his followers, Condillac, bases the value-in-use
on the pain and pleasure principle.2 But in the nineteenth
the situation was somewhat different. Gossen and Jevons were strict
disciples of this philosophy. Yet Lloyd,3 Menger, and Walras4 were no
sensualists. So the acceptance of marginal utility cannot be explained
by the conversion of the majority of economists to sensualism.
Still less important than sensualism was the influence of the
Kant-revival in spite of Stark's interesting thesis. He claims that,
at least in Germany, both the acceptance of marginal utility and the
contemporary renaissance of Kantianism are phenomena of the
same kind, i.e., reaction to positivism and the reawakening of intro-
spection and theory.5 Yet Vienna, the center of the new theoretical
studies in the German language zone, was not touched by the new

9. "The marginal utility theory adopts the hedonistic and psychological

concept of valuation at a time in which the psychological experts all over the
world are trying to eliminate hedonistic formulas and to establish more realistic
methods." Gunnar Myrdal, Das politische Element..., op. cit., p. 127 (my
translation).
1. See p. 566, note 6.
2. On sensualism, materialism, and enlightenment the following works were
used: Friedrich Albert Lange, Geschichte des Materialismus (3d ed.; Iserlohn,
1876). Baron Cay von Brockdorff, Die englische Aufkidrungsphilosophie (Munich,
1924).
3. No documentary proof can be given that Bentham had influenced his
younger countryman, Lloyd. No doubt, Bentham and the Oxford professor of
economics had much in common; Bentham knew the law of diminishing utility and
so did Lloyd; Lloyd read the Westminster Review, the mouthpiece of the Bentha-
mites. He did not, however, quote Bentham at all. Lloyd is a rather meticulous
scholar; in his lectures he quotes each available source, even Daniel Defoe's
Robinson Crusoe and some anonymous writers.
In a letter of October 22, 1951, Professor Roy Harrod, Oxford, who is very
familiar with the local history, emphasizes that Lloyd cannot have been a Ben-
thamite. "Lloyd was a clergyman and brother of a famous divine, and the circles
in which he lived would hold Bentham in pretty good contempt...." (letter
addressed to author).
4. A fragmentary chapter intended for the second edition of his Principles
makes it quite clear that Menger was not a sensualist. He distinguishes between
physiological, egotistical, and altruistical wants. Carl Menger, Grundsdtze der
Volkswirtschaftslehre (2d ed., Vienna, 1923), pp. 4 ff., note.
About Walras' philosophy see Leon Walras, tlements d'Economie Pure
(Paris, 1926), p. 16. Walras was apparently strongly influenced by Descartes
and Comte.
5. Stark, op. cit., p. 3.

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 MARGINAL UTILITY THEORY 573

enthusiasm for Kant - instead of Kant, Aristotelianism

cially neo-positivism were taught.6
Neither was the marginal utility theory the expressio
geois economic interest, as the Marxians claimed. The th
been accepted not only by convinced defenders of exist
but also by socialists, including agricultural socialists (G
Walras), and even by anarchists. Only a theory without
could be used by such diversified political and economic g
Not hedonism, nor neo-Kantianism, nor the peculiariti
consciousness, but only the development of economic thin
the first seventy years of the nineteenth century can
belated acceptance of the marginal utility theory. First t
theory of value and later the historical school delayed th
of the subjective theory of value.

IV

At the beginning of the classical era Adam Smith, Dav

and their disciples had gained a political and scientific a
Defenders of the value-in-use theory lost their influen
forgotten. Even before 1800, the Italian and French w
already been drawn into the orbit of British classical th
attempted synthesis of utility theory and cost theory w
object of later Italian writers.8
6. Roy Wood Sellars, "Positivism in Contemporary Philosophic
American Sociological Review, Vol. IV (1939), p. 34.
Kant was not the leading Austrian philosopher, as Heinrich Ritte
has shown in his subtile analysis of the Austrian intellectual clima
Since that time, he writes, Austrian thinking, based on Catholic
opposed to the idealism of Kant and his followers. Leibniz' mo
ontological and not a transcendental logic, form the framework
Bolzano's logic, and of the writings of Bolzano's followers, Exne
Zimmermann. Traces of this attitude survive even after 1890. Heinrich Ritter
von Srbik, Geist und Geschichte. Vom Deutschen Humanismus bis zur Gegenwart.
Vol. II (Munich, 1951), p. 85. See Robert Miihlher, "Ontologie und Monadologie
in der 6sterreichischen Literatur des 19. Jahrhunderts," Die Osterreichische
Nationalbibliothek, Festschrift (Vienna, 1948), pp. 488 ff.
The connection between Menger, Bohm-Bawerk, and the Austrian intellec-
tual climate has not been completely investigated. Some relations have been
discovered by Manuel Gottlieb, The Ideological Influence in Schumpeter's Theory
of Capitalism (paper, not published, submitted for discussion at the midwestern
section of the American Economics Association, Cedar Rapids, 1953), p. 31,
note 109.
7. About the rising Ricardian influence see Schumpeter, "Review of the
Troops," this Journal, Vol. LXV (1951), p. 162.
8. Augusto Graziani, "Le idee economiche degli scrittori Emiliani e Romag-
noli sino al 1848," Memorie della Regia Accademia di Scienze, Lettere ed Arti in
Modena (Modena, 1893), Serie II, Vol. X, p. 478.

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574 QUARTERLY JOURNAL OF ECONOMICS

A number of authors bound neither by school nor leadership

were original and independent enough to avoid the well-worn tr
of classical thinking. Lauderdale saw as early as 1819 the inconsis
encies of the classical value concept: "After this philosopher's sto
[i.e., labor value as a form of objective measure] many have been
search; and not a few, distinguished for their knowledge and the
talents, have imagined that in labour they had discovered what co
stituted a real measure of value."9 Lauderdale's sarcastic remarks
were of no avail.
Ricardo, at least, knew that he had not found the invariable
yardstick, and that the "embodied" labor was nothing but a work-
able substitute for a perfect measure.' Yet he, his immediate follow-
ers, J. R. McCulloch and James Mill, and even his personal friend
and scientific opponent, Malthus, remained so absorbed in this
search, that no other approach found room in their pattern of think-
ing. I venture to say that Ricardo and his contemporaries believed
that economics could only reach the dignity of a science if it could be
based on objective measures like the Newtonian physics.2 When,
eleven years after the death of Ricardo, the writings of Lloyd and
Longfield were published, neither the students of Ricardo nor other
leading economists were able to see the new possibilities. The
Ricardian pattern of thinking prevented it.
Twenty-two years later Gossen published his work. This time
other circumstances prevented recognition and acceptance. Gossen
was a retired Prussian official without prestige and not a member of
the universities. Academic outsiders can nowhere count on a great
audience of scholars. Moreover, Gossen had the bad luck to write
and publish in the era of the emerging historical school, when would-be

9. James Maitland, the eighth Earl of Lauderdale, An Inquiry into the

Nature and Origin of Public Wealth.... (2d ed.; Edinburgh, 1819), p. 21 (italics
in original); cf. also p. viii.
1. Ricardo's letter to John Ramsay McCulloch (Aug. 21, 1823), The Works
and Correspondence of David Ricardo, ed. Piero Sraffa, Vol. IX (Cambridge, 1952),
p. 358. Ricardo's letter to Hutches Trower (Aug. 31, 1823). Ibid., p. 377. David
Ricardo, "Absolute Value and Exchangeable Value. A Rough Draft," ibid.,
Vol. IV (Cambridge, 1951), pp. 361 ff.
2. In this connection it is noteworthy that Ricardo from his early youth,
was very much interested in natural science, "mathematics, chemistry, geology,
and mineralogy." Jacob Hollander, "David Ricardo. A Centenary Estimate."
Johns Hopkins University Studies in Historical and Political Science. Series
XXVIII, No. 4 (Baltimore, 1910), p. 35. The search for an objective measure
may be a carry-over from Ricardo's scientific studies. Moreover the scholarly
conviction of that time was that any investigation of scientific character must
follow the pattern of the natural sciences.

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 MARGINAL UTILITY THEORY 575

readers could not be attracted by purely theoretical dis

double handicap must have kept the circle of attentive
small. Up to the present time only one writer who mentio
work before 1870 has been found: the Hungarian prof
Kautz.4
The successful triumvirate, Menger, Jevons, and Walras, worked
eighteen years later under much better social and intellectual condi-
tions than Gossen. Their words carried weight because they were
professors at well-established universities and not men without jobs
and out of luck, like Gossen. Their Austrian, French, and British
readers lived outside the very center of the historical school in Ger-
many, and were therefore not biased against theoretical studies.
Menger's Austria, although tied to the "Reich" by common language
and cultural tradition, was only slightly influenced by the historical
school.5 In these three countries, especially in France and in England,
the predilection for theoretical studies, so well-established by Adam
Smith, John Stuart Mill, Jean Baptiste Say, and others, was still
existent. The theoretical tradition was kept alive but not the objec-
tive value theory of Adam Smith and David Ricardo. Already the
last leaders of the classical school, Nassau Senior and John Stuart
Mill, had given up the rigid labor theory and had adopted an empirical
cost theory. The attempt to find an invariable unit of measurement
was abandoned. The question, "what are the principles of economic
valuation?" was put anew before the forum of economists. A new
answer was presented in 1870. The long period of delay had ended.
EMIL KAUDER.
ILLINOIS WESLEYAN UNIVERSITY
BLOOMINGTON, ILLINOIS.

3. Concerning the fate of Gossen's book, see F. A. Hayek, Hermann Heinrich

Gossen. Eine Darstellung seines Lebens und seiner Lehre (Berlin, 1928), p. 5.
4. Kautz read Gossen's work rather thoroughly but he was apparently not
aware of its importance. Julius (Gyula) Kautz, Theorie und Geschichte der
Nationalokonomik. I. Die National6konomik als Wissenschaft (Vienna, 1858),
p. 9, note 1; II. Die geschichtliche Entwicklung der Nationalokonomik und ihrer
Literatur (Vienna, 1860), p. 704. Cf. Hayek, op. cit.
5. See Menger's analysis of the intellectual situation in his preface to the
second edition of his Principles. Menger, op. cit., p. vii.

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