An Introduction to Value Theory

25 12 2006

With interest in the “Austrian School” of economics increasing, it may be helpful to indicate some of the aspects of the value-concept which is so central to the theories of this group. The term “School” as used here refers, not to any institution or corporate set of buildings, but to a body of economic theory developed largely in Austria during the 1870s and 1880s. This term can be misleading, however, because similar concepts of value had been developed earlier and other individuals were coming to similar views at the same time as the Austrians. Preceding the “Austrian” concept of marginal utility analysis — the basis for saying that price determines cost rather than vice versa or that they are mutually determined — much the same idea had been formulated in the 1600s and 1700s in an elementary form by some French and Italian economists. Subsequently, leading English economists wandered off on bypaths of theory until the “Austrian School” brought it back again.

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