This file is a single-author theoretical-polemical essay. Böhm-Bawerk intervenes in the late nineteenth-century controversy between the classical cost theory of value and the Austrian theory of marginal utility, responding especially to Heinrich Dietzel. Its scope is both methodological and doctrinal: it asks whether costs can be the final explanation of value, particularly for freely reproducible goods.
Böhm-Bawerk first rejects the charge that marginal utility theory is confined to “Robinsonades.” Robinson is only an analytic simplification, not the object of the theory.
Robinson ist uns ein „Probierbengel“, ein methodisches Werkzeug und nichts weiter.
English translation: Robinson is for us a "test dummy," a methodological tool and nothing more.
The real issue, he insists, is social-economic value formation. His main thesis is deliberately conciliatory at the surface and radical underneath: marginal utility theory does not deny the empirical force of costs, but denies that costs are ultimate. For reproducible goods, costs do “govern” value in ordinary practice; yet the value of cost-goods itself still requires explanation.
Auch wir erkennen die Geltung eines „Kostengesetzes“ für die beliebig reproduzierbaren Güter vollständig an.
English translation: We too fully recognize the validity of a "law of costs" for goods that are reproducible at will.
The decisive conceptual move is to turn the cost law from a rival to marginal utility into a subordinate moment within it. Costs are not an Archimedean foundation but an intermediate causal link.
Das Kostengesetz ist kein archimedischer Punkt, von dem aus die übrige Erklärung sich stützen ließe, ohne daß er selbst noch einer Stütze bedürfte.
English translation: The law of costs is no Archimedean point from which the rest of the explanation could be supported without itself requiring any support.
The essay’s structure follows this argumentative narrowing. After defining the dispute, Böhm-Bawerk distinguishes two forms of cost theory. If costs mean physical quantities of labor or sacrifice, the theory conflicts with facts: equal labor can yield unequal values when time, capital, wages, or scarce inputs differ. If costs mean sums of value embodied in productive goods, the theory avoids those facts only by becoming circular: product value is explained by cost-value, while cost-value still remains unexplained.
Hier droht als Charybdis der Kostentheorie der Zirkel in der Erklärung.
English translation: Here, as the Charybdis of the cost theory, the circular reasoning in the explanation looms.
Against this circularity Böhm-Bawerk sets the Austrian doctrine of “produktionsverwandte” goods. Goods made from the same productive means form a connected system; the value of the common productive good is governed by the marginal utility of the least important product still worth producing, the “Grenzprodukt.” Costs then transmit value from this marginal product to other products, but do not originate it.
A central section separates practical valuation from theoretical explanation. In ordinary life, once people know that a coat costs 40 florins, they value it accordingly; this is efficient practical abbreviation. But science cannot stop where the actor’s calculation stops, because the known cost is itself a value phenomenon needing explanation.
Schätzen und Schätzungen theoretisch erklären, ist also jedenfalls zweierlei.
English translation: To make valuations and to explain valuations theoretically are, at all events, two different things.
The discussion of Robinson deepens the point. Dietzel can make Robinson rank reproducible goods by hours of labor saved, but Böhm-Bawerk argues that this only gives relative rankings unless the value of labor-time itself is known. Whenever Robinson compares a reproducible good with a non-reproducible one, or decides whether a use is worthwhile, he must return to the marginal utility of the labor that would otherwise be available.
Böhm-Bawerk also answers the objection that marginal utility is too subjective or capricious. Cost figures look exact, but their exactness rests on market results formed from many subjective valuations. Costs do not eliminate “moods”; they aggregate them.
Die „Launen“ lassen sich also aus unseren Wertschätzungen nicht eliminieren; auch aus den „exakten“ Kostenwertschätzungen nicht.
English translation: The "whims," then, cannot be eliminated from our valuations—not even from the "exact" cost valuations.
The later sections refine causality. Technical production conditions may influence supply and thus marginal utility, but “costs” as value-sums cannot be more ultimate than the marginal utility that explains the value of the cost-goods. Likewise, product value and productive-good value cannot literally cause one another; such mutual causation is only a disguised circle.
The closing locomotive analogy gives the essay its memorable form. Needs and marginal utility are the engine; products and productive goods are linked cars. Costs may pull only when they are themselves being pulled by marginal utility elsewhere. The relevance of the essay lies in this systematic incorporation of the cost law into marginal utility theory: Böhm-Bawerk preserves the empirical insight of classical cost theory while denying its explanatory finality.
Die simple Wahrheit bleibt doch, daß es endgültig eine Lokomotive ist, die den letzten Wagen zieht, und nicht ein letzter Wagen, der die Lokomotive zieht!
English translation: The simple truth remains that in the end it is a locomotive that pulls the last carriage, and not a last carriage that pulls the locomotive!
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