Kauder’s history presents marginal utility theory as a long, uneven effort to explain valuation from the consumer’s standpoint. It is sympathetic to marginalism without treating it as either a sudden revolution or a simple ideological instrument:
Sympathy, I hope, does not mean partisanship.
His central correction is historical: marginal utility did not begin with Menger, Jevons, and Walras in the 1870s. It drew on earlier reflections about use, scarcity, household choice, wants, moral psychology, and calculation.
The architects of marginal utility took their building stones from philosophy, psychology, religion, mathematics, and morals.
The prehistory runs from Aristotle through scholastic, Italian, French, and utilitarian writers. Kauder stresses that utility-centered value theory appeared especially among Italian and French Catholic thinkers, while British political economy more often favored labor or cost accounts. He links this divergence to contrasting moral views of labor, welfare, and the good life, though he treats the explanation as suggestive rather than complete. Analytically, the story is the slow clarification of value-in-use: Aristotle anticipates utility, scarcity, diminishing want, and imputation; Buridanus distinguishes value from price and sees that demand must be backed by purchasing power; Galiani derives value from utility and scarcity, making labor secondary; Turgot and Condillac likewise give valuation priority over cost. Smith’s water-diamond paradox, in Kauder’s reading, interrupts rather than develops this tradition by discrediting value-in-use.
The decisive conceptual movement is from usefulness in general to marginal utility in particular. Bernoulli applies diminishing marginal utility to money and risk; Bentham makes utility a calculus of pleasure; Lloyd and others anticipate marginal allocation within the household. Yet these insights repeatedly fail to become a durable system. Gossen is therefore pivotal because he combines diminishing utility, equalization among uses, exchange, labor as pleasure-pain calculation, money, and imputation. His work reveals both the strength and the tension of early marginalism: it seeks mathematical equilibrium while still trying to derive costs causally from consumer valuation.
Kauder explains the success of marginal utility after 1870 less by class interest than by the internal breakdown of classical value theory. Labor, cost, abstinence, utility, and distribution no longer supplied a coherent foundation. Jevons and Walras use marginal utility chiefly for exchange and equilibrium, but Menger gives it its sharpest causal form by defining value as the importance of the satisfaction that would be lost if a good disappeared:
Value is marginal utility.
This is Kauder’s central theoretical claim. Value is not inherent in goods, labor, or cost; it is the significance of a marginal satisfaction within an ordered plan of wants and means. Menger also differs methodologically from Jevons and Walras. They emphasize mathematical interdependence, while he seeks causal-genetic explanation and essential relations. For Kauder, this helps explain why the Austrian school became the main systematic line of marginal utility analysis.
The later Austrian tradition refines the theory while exposing its limits. Böhm-Bawerk and Wieser develop accounts of total value, cost, imputation, and planning; Mayer, Mises, Rosenstein-Rodan, Schönfeld-Illy, Morgenstern, and von Neumann extend the issues to complementarity, uncertainty, time, strategy, and probability. Utility shifts from pleasure toward preference, but Kauder warns that a neutral preference concept can avoid questions about welfare and real needs. Diminishing marginal utility is weakened by psychological and empirical objections, yet survives through marginal substitution. Household planning remains one of neo-marginalism’s strongest achievements, especially in analyses of saturation, income periods, and uncertain future wants.
Cost and imputation show both the reach and the incompleteness of the doctrine. Against Marshall’s “scissors” of supply and demand, Böhm-Bawerk treats costs as intermediate causes, with final valuation rooted in utility. Wieser’s opportunity-cost theory translates cost into sacrificed alternatives. But the assignment of value to cooperating factors never receives a universal solution; loss, substitution, variation, simultaneous equations, price theory, and game theory each solve only part of the problem.
This work was divided into 37 sections when it entered the library's research corpus—an apparatus for search and citation, not necessarily the author's own table of contents. Each title opens its summary.
Put a question to this work; the Librarian answers from its 37 sections and cites the passage.
Ask the Librarian