Carl Menger (1840–1921)

Who They Were

Carl Menger (1840-1921) was an Austrian economist and the founder of the Austrian school of economics, which takes its name from Vienna, the city where he published his Principles of Economics in 1871. He was one of three economists -- with William Stanley Jevons in England and Leon Walras in Switzerland -- who independently arrived at the marginal-utility theory of value in the early 1870s, touching off the Marginal Revolution. Menger's 1871 book both contributed to that broad shift and launched a distinct tradition of its own, carried forward by Eugen von Bohm-Bawerk, Ludwig von Mises and Friedrich Hayek. His approach emphasised subjective valuation and the choices of individuals rather than aggregate cost.

Key Contributions

Menger's founding insight, set against the classical labour theory of value, was that the value of a good derives not from the labour used to make it but from its marginal utility -- the usefulness of one additional unit to a person, which declines as more is consumed. He developed this in his Principles of Economics (1871), published the same year as Jevons's Theory of Political Economy and three years before Walras's Elements. Together the three rebuilt value theory on marginal utility, dissolving the labour theory that Marx had just made central. Beyond the marginal revolution, Menger founded the Austrian school as a lasting tradition, distinguished by its focus on subjective value, the actions of individuals, and the role of knowledge and time -- themes his successors Bohm-Bawerk, Mises and Hayek would develop.

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