Alexander Mahr, “Das Gesetz vom Grenznutzenniveau im Lichte der Kritik”

Mahr’s article examines the “Gesetz vom Grenznutzenniveau” as the contested extension of marginal-utility theory into a general law of consumer equilibrium. He accepts the ordinary marginalist premise that scarce means are allocated among ranked ends.

Im Wesen der Wirtschaft liegt es bekanntlich, über einen gegebenen Vorrat an Mitteln so zu disponieren, daß im ganzen ein Maximum an Bedürfnisbefriedigung oder Zielerreichung resultiert.

English translation: It lies, as is well known, in the essence of economizing to dispose of a given stock of means in such a way that, on the whole, a maximum of need-satisfaction or goal-attainment results.

But he denies that this premise warrants the stronger claim that all lines of expenditure are carried to an equal weighted marginal utility. That equality, central to Gossen’s second law and to mathematical price theory, is for Mahr not an observed fact but an aprioristic construction.

Dergestalt gelangt man in der modernen Werttheorie im wesentlichen auf aprioristischem Wege zur Vorstellung des Grenznutzens.

English translation: In this way one arrives in modern value theory, essentially by an aprioristic route, at the notion of marginal utility.

The importance of the issue is systematic. In the equilibrium schemes of Jevons, Walras, Pareto, and their successors, the law supplies a major set of equations needed for determinacy. If the law is empirically untenable, the formal apparatus loses more than a psychological assumption; it loses part of its mathematical closure.

Fällt das Gesetz vom Grenznutzenniveau, dann werden auch die n (m—1) Gleichungen — n repräsentiert dabei die Zahl der Individuen und m die Zahl der Waren —, in denen dieses Gesetz zum Ausdruck kommt, hinfällig.

English translation: If the law of the marginal-utility level falls, then the n(m−1) equations—where n represents the number of individuals and m the number of goods—in which this law is expressed, also become invalid.

Mahr’s main argument develops Hans Mayer’s critique. Consumption does not normally adjust by equal infinitesimal movements across all goods. With rising income, some quantities remain fixed, some goods vanish, inferior goods are replaced by better ones, and entirely new wants become relevant. With falling income, the reverse is not a smooth proportional contraction. The consumer’s field is structured by thresholds, priorities, qualitative substitutions, and sequences of activation. Hence an observed change in income does not reveal a common level of marginal utilities across all goods.

This is why Mahr rejects replies that merely posit a new equilibrium after each disturbance. The problem is not whether equilibrium language can be reasserted, but whether the assumed equality corresponds to actual behavior. If bread, potatoes, or other necessities remain unchanged while higher-quality or luxury goods expand, the unchanged goods cannot plausibly be treated as lying at the same marginal level as the newly enlarged expenditures. Fisher’s appeal to groups of complements and substitutes also fails to rescue the law, because real substitution is often qualitative and historically variable rather than reducible to clean commodity groups.

Mahr therefore presents Mayer’s achievement as decisive: the theory confuses a limited marginal tendency with a universal psychological simultaneity of wants.

Es ist das Verdienst Hans Mayers, mit aller Schärfe und wünschenswerten Klarheit gezeigt zu haben, daß das Gesetz vom Grenznutzenniveau durchaus im Widerspruch mit der Erfahrung steht¹.

English translation: It is Hans Mayer's merit to have shown, with all sharpness and desirable clarity, that the law of the marginal-utility level stands thoroughly in contradiction with experience¹.

The positive alternative is restrained. Mahr does not discard marginal utility altogether. He narrows the idea of a marginal-utility level to the marginal utility of money and to goods that are actually sensitive to small price changes. Goods whose demand changes with a slight price increase stand at the margin; goods whose demand remains unchanged are “overmarginal.” Many necessities, especially for higher-income consumers, occupy this latter zone. A broad leveling of marginal utilities may appear only in very poor budgets, where even subsistence goods are pressed into marginal calculation.

The article closes as a methodological warning. Mahr does not reject mathematics in economics, but he objects to reshaping economic facts to fit elegant equations. His criticism is therefore both theoretical and methodological: marginal utility remains useful, but the general law of a common marginal-utility level is too rigid for actual consumption and too weak a foundation for the determinacy claims of mathematical price theory.