Joseph A. Schumpeter: Review of Johannes Leonhard’s Neue Feststellung des Wertbegriffes und ihre Bedeutung für die Volkswirtschaft

Schumpeter’s short review, originally published in 1906, examines Leonhard’s claim to offer a new concept of value and its implications for economic organization. Its two-part argument first questions the novelty of Leonhard’s utility-based account, then challenges his transition from economic explanation to ideals of justice.

Leonhard’s acknowledgment of Carey and Dühring prompts Schumpeter to ask:

Kennt er die Wertliteratur der letzten 30 Jahre nicht?

English translation: Is he unacquainted with the literature on value of the last 30 years?

The question establishes the review’s historical objection: grounding value in utility cannot count as an innovation after Jevons. Schumpeter nevertheless credits Leonhard’s definition of value through the consideration of utility’s absence and his attention to scarcity, understood as the relation between needs and available provision. His qualified recognition ends with a precise delimitation:

Das ist – soweit psychologische Werttheorie.

English translation: That is — thus far — psychological theory of value.

The qualification marks the boundary crossed in the pamphlet’s subsequent argument. Leonhard introduces justice and mutual accommodation, claiming that natural scarcity should determine correct value, production, and consumption independently of the distribution of natural resources. Under complete freedom and accommodation, workers would direct production and labor would become the economy’s guiding force. Monopolies and protective tariffs, treated as forms of coercion, would instead produce distorted values and economic activity, with poverty and wealth as symptoms.

Schumpeter’s objection is methodological, not simply a rejection of the initial utility account. Leonhard’s opening might suggest an affiliation with exact theory, but his prescriptions disqualify that affiliation:

Man könnte versucht sein, Leonhard nach der Art, wie er sich einführt, der Richtung der exakten Theorie zuzuzählen, wenn nicht die eben kurz angedeuteten Ausführungen ihn davon ausschliessen, denn die exakte Theorie will keine Werturteile abgeben und keine Gerechtigkeitsideale aufstellen, sondern nur Tatsachen untersuchen.

English translation: One might be tempted, from the manner in which he introduces himself, to reckon Leonhard among the direction of exact theory, were it not that the arguments just briefly indicated exclude him from it, for exact theory seeks to pronounce no value judgments and to set up no ideals of justice, but only to investigate facts.

The review’s significance lies in this distinction between explaining valuation and prescribing a just economic order. Schumpeter accepts recognizable elements of psychological value theory while refusing to let them authorize judgments about morally correct production, consumption, or distribution.