Alfred Amonn, Der Stand der reinen Theorie

Alfred Amonn’s essay, originally published in 1925 and supplied here in a 2015 republication, critically surveys pure economic theory and develops a methodological programme for its renewal. Five sections examine classical economics, marginal utility, Cassel, Oppenheimer and Liefmann, and Engländer and Engliš; a concluding section draws together the conceptual requirements of an adequate theory. Amonn’s organizing claim is that economics must explain exchange ratios through a unified account of mutually dependent prices, rather than divide their explanation among disconnected principles or subordinate it to a general psychology of valuation.

The introduction distinguishes practical economic knowledge, historically directed toward increasing national wealth, from theoretical inquiry governed by a logical problem. Exchange, prices, and incomes become central because modern wealth formation depends on them. Smith recognized their importance, while Ricardo established their investigation as an autonomous theoretical task. For Amonn, the decisive question concerns the determination of exchange relations, not the definition of “economic” conduct or prescriptions for successful management.

Classical theory fails principally through explanatory fragmentation. Production costs supposedly determine natural prices, supply and demand explain market fluctuations, and consumer preferences account separately for scarce goods. Yet these are manifestations of the same phenomenon and demand a common explanation. Moreover, labour quantities oversimplify heterogeneous productive conditions, while costs understood as monetary values already presuppose prices. Marx gives the classical construction its most complete formal expression without overcoming these difficulties.

Marginal utility makes a genuine advance by bringing scarce and reproducible goods under one principle. Its formal unity, however, does not establish substantive adequacy. Amonn distinguishes Austrian explanations through marginal buyers from the simultaneous-equation approach represented especially by Wicksell. The former makes the identity and valuation of the last buyer determine price although both depend on the price being explained. Money without an independent use-value and the reciprocal dependence of product and factor prices intensify this difficulty. Wicksell better represents systemic interdependence, but Amonn rejects the assumption that psychic utility supplies measurable magnitudes from which quantitative exchange ratios can directly be derived.

Für die Preisbildung ist einzig maßgebend, wie die Tauschwertschätzung der Käufer (und eventuell Verkäufer) ist, nicht, wie sie geworden ist.

English translation: What alone matters for price formation is what the buyers’ (and possibly sellers’) exchange-value valuation is, not how it came into being.

The distinction separates a datum relevant to price formation from its psychological genesis. Cassel accordingly offers the most promising foundation: demand quantities depend on an entire price system, and prices must jointly reconcile those demands with supplies. Production extends the system through technical relations between outputs and productive resources. Amonn nevertheless treats this as a beginning. Determinate solutions require restrictions on the functions involved; merely matching the number of equations and unknowns does not establish uniqueness. Further development must address production conditions, monopoly, competition, taxes, and other institutional qualifications.

Oppenheimer and Liefmann illustrate the inadequacy of the opposition between “objective” and “subjective” theory. Despite their contrary labels, both seek an explanatory pivot in the equalization of producers’ incomes or returns. Oppenheimer’s clearer construction applies only under restrictive assumptions about reproducibility, occupational mobility, qualifications, and working time. It cannot explain prices generally, and its adjustment mechanism implicitly depends on buyers’ valuations. Liefmann’s shifting meanings of marginal return further obscure whether equalization concerns income or profit per unit. Engländer’s maximum-bid analysis and Engliš’s utility comparisons offer interesting restricted examples, but neither yet demonstrates general applicability.

The final methodological section explains why these limitations matter. Terminology must distinguish naming from conceptual definition. Amonn proposes using “value” for reciprocal exchange relations among goods and “price” for exchange relations with money. Relative goods ratios do not alone determine monetary prices, and money’s distinctive supply and demand cannot be ignored. Nor can an isolated two-good example constitute a solution to a system-wide problem.

Aufgabe der Theorie ist es gerade, alle gleichartigen Erscheinungen einheitlich zu erklären.

English translation: The task of theory is precisely to explain all phenomena of the same kind in a unified way.

Scarcity and reproducibility, monopoly and competition, and natural and market prices therefore mark different conditions of price formation, not independent explanatory domains. Static analysis likewise concerns a continuing state with unchanged determining factors. Its special importance lies in relating product prices to production costs across the time required for production.

Und es gilt eben, gerade diese subjektiven und objektiven Faktoren der Bestimmtheit der Preise in ihrer Wesenheit und in ihrem Verhältnis zueinander zu erfassen, was ja schon von anderen (Cassel, Zwiedineck) ganz richtig betont worden ist.

English translation: The task is precisely to grasp these subjective and objective factors determining prices in their essential character and in their relationship to one another, as others (Cassel, Zwiedineck) have already quite rightly emphasized.

Functional explanation captures simultaneous dependence; causal explanation concerns temporal succession. Neither excludes the other: changes in demand can alter prices, while imposed prices can alter demand and supply. Amonn also denies that universal utility or exchange-gain maximization must ground price theory. Explaining what determines prices differs from examining their economic purpose or contribution to provisioning.

Income theory finally returns to the same system: wages, interest, and rent concern the pricing of productive factors and cannot rest on an independent foundation.

Die Hauptaufgabe der Theorie liegt vorläufig noch immer in der Begründung bzw. Ausgestaltung einer in ihren Grundlagen und Einzelheiten haltbaren und befriedigenden allgemeinen Preistheorie.

English translation: For the time being, the main task of theory still lies in establishing or developing a general price theory that is tenable and satisfactory in its foundations and details.

The essay’s relevance lies in this research programme rather than a completed alternative model. Its closing defence of mathematics follows from the argument: verbal exposition can enumerate determinants, but simultaneous quantitative interdependence requires mathematical expression if theory is to explain rather than merely describe.