Julius Friedrich Gans von Ludassy · 1889
Julius Friedrich Gans von Ludassy’s 1889 review situates Böhm-Bawerk’s study within the Austrian school founded by Menger. It combines a sympathetic reconstruction of value and price theory with criticism of the distinction between subjective value and objective exchange value. Its opening presents Austrian economics as an intellectually distinctive movement:
Die wissenschaftliche Bewegung auf dem Gebiete der National-ökonomie bietet in Oesterreich ein eigenartiges, fesselndes Bild.
English translation: The scientific movement in the field of economics presents in Austria a peculiar and captivating picture.
Ludassy credits this movement with explaining economic value through goods’ significance for human welfare. He praises Böhm-Bawerk’s exposition and advances in price theory, but argues that these achievements undermine the conceptual dualism announced at the outset. His criticism is internal to the theory, not a rejection of marginal utility.
The exposition begins with the distinction between usefulness and value. Usefulness denotes a good’s capacity to serve welfare; value arises when possession of that good becomes a condition of satisfying a need. Relative scarcity therefore matters: losing a useful object need not entail losing a satisfaction if an adequate substitute remains available.
Diese Unterscheidung zwischen Nützlichkeit und Werth ist eine der wichtigsten.
English translation: This distinction between usefulness and value is one of the most important.
Subjective value describes a relationship between persons and goods, not an intrinsic property of objects or a feeling independent of material circumstances. Its magnitude depends on the least important satisfaction that would be sacrificed without the good. The marginal-utility principle connects the ordering of needs with the available supply:
Die successiven Theilbefriedigungen, die sich durch gleiche Gütermengen gewinnen lassen, sind untereinander gewöhnlich von ungleicher, und zwar stufenweise bis zum Nullpunkte abnehmender Bedeutung.
English translation: The successive partial satisfactions that can be obtained by equal quantities of goods are usually of unequal importance among themselves, an importance indeed decreasing by degrees down to the zero point.
Ludassy follows this principle through alternative uses, exchange, complementary goods, and production. Subjective exchange value depends on the utility of goods obtainable through exchange. Complementary goods are valued through their joint contribution, separate uses, and possibilities of replacement. Production reverses the explanation assumed by autonomous cost theories: productive means derive their value from final products. Costs can explain particular value relationships, but are not the ultimate source of value. The review also identifies the temporal difference between productive means and finished goods as the setting for capital interest.
The reconstruction addresses objections to the theory’s psychological basis. Economic actors compare satisfactions and sacrifices even though feelings cannot be directly measured; practiced judgment need not involve explicit calculation. Against Dietzel’s exclusion of individual psychology from economics, Ludassy maintains that social regularities must be understood through individual actions and motives.
The account of price formation moves from isolated exchange through one-sided to bilateral competition. Mutually advantageous exchange requires divergent subjective valuations, rather than equal utility for both parties. Under competition, the valuations of marginal trading pairs delimit the possible price. Supply and demand thus receive an explanation through the numbers and valuations of buyers and sellers. Costs enter through valuations, not as a separate determining force.
This derivation supplies the basis of Ludassy’s concluding objection. Böhm-Bawerk’s introductory case for a distinct objective theory appeals to ordinary understandings of value:
Die Menschen verstehen jedoch unter dem Werth auch ein objectives Moment; dieses wird in den genannten Theorien nicht erklärt.
English translation: Men, however, understand by value also an objective element; this is not explained in the theories mentioned.
For Ludassy, the subsequent argument does not establish an independent objective principle. What is presented as a theory of objective exchange value becomes a theory of prices explained through subjective assessments. Recognizing external conditions of valuation does not itself justify dividing value into two autonomous categories.
His criticism extends to examples drawn from heating and nutritive value: these express usefulness relative to needs, rather than an independent economic property. Exchange power likewise refers to others’ prospective valuations, not to a physical force inherent in commodities. A comparison with Locke helps expose how a subject-mediated relationship can appear to belong to objects themselves.
Ludassy’s proposed correction preserves the substantive achievement while simplifying its conceptual framework. He recommends retaining the distinction between value theory and price theory but abandoning objective value as an independent explanatory principle. The review articulates an internal Austrian disagreement: Böhm-Bawerk’s explanation succeeds, in Ludassy’s judgment, precisely because subjective valuation carries the argument beyond its initial dualism.
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