Friedrich August von Hayek, “[Rezension zu] L. V. Birck: The Theory of Marginal Value” (1923)

Hayek’s German review evaluates Birck’s contribution to value and price theory through a contrast between careful analysis of particular problems and insufficiently established theoretical foundations. Its intellectual positioning begins with the book’s acknowledged influences:

Das Buch ist Alfred Marshall, Horace Westergaard und Friedrich Wieser gewidmet, deren großer Einfluß auf den Autor, wenigstens soweit es der Referent rücksichtlich Marshalls und Wiesers beurteilen kann, unverkennbar ist.

English translation: The book is dedicated to Alfred Marshall, Horace Westergaard and Friedrich Wieser, whose great influence upon the author is unmistakable, at least so far as the reviewer is able to judge in respect of Marshall and Wieser.

Hayek places Birck closer to Marshall and modern English economics than to the Austrian marginal-utility school. He praises the detailed treatment of price-forming factors, including supply, demand, returns, and consumption elasticity, while finding inadequate engagement with recent German-language discussions of value and utility. The review thus distinguishes analytical accomplishment from command of the conceptual disputes underlying it.

The central criticism concerns Birck’s passage from ranking wants to measuring satisfaction. For Hayek, the ability to compare needs by urgency does not establish that utility or the disutility of labor can be measured numerically. He also challenges the psychological grounding attributed to diminishing utility:

Gossensche Gesetz wird, anscheinend in Unkenntnis der ausdrücklichen Ablehnung dieser Auffassung durch Wieser und Max Weber mit dem Fechnerischen Gesetz identifiziert.

English translation: Gossen's law is, apparently in ignorance of the express rejection of this view by Wieser and Max Weber, identified with Fechner's law.

This objection becomes more consequential when Birck extends comparison beyond a single person. Hayek questions the unsupported assumption that different individuals’ utilities can be expressed in comparable numbers and added together. Birck’s conclusion that equal income distribution maximizes aggregate utility therefore rests on an unsubstantiated transition from individual evaluation to interpersonal measurement. The objection targets the justification of the distributive conclusion, not merely its formulation.

Hayek likewise finds difficulties in Birck’s attempted reconciliation of objective and subjective value theory. The concept of technical costs remains unclear, while the account of money is insufficient for a theory centered on exchange. Figurative descriptions cannot replace an explanation of monetary operations. He also questions the claimed connection between a gold currency’s premium over its metallic value and a favorable trade balance when free coinage is suspended.

The assessment is more favorable toward the treatment of productive-factor prices. Birck’s discussion of imputation and proposed improvements to Wieser’s equations offers observations Hayek considers genuinely interesting, encouraging his interest in the announced continuation. Yet these strengths do not resolve the pedagogical problem: foundational weaknesses are especially serious in a textbook.

Hayek’s closing concerns join conceptual precision to intelligibility. Illustrative examples assist readers, but the mathematical apparatus often burdens the exposition. Treating economics as an equilibrium problem does not, in his view, require equally extensive mathematical notation. Requests for references, a bibliography, and an alphabetical index reinforce the review’s governing judgment: sophisticated analysis needs secure foundations and a presentation that enables readers to assess its claims.