Marginalist Revolution
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The Marginalist Revolution refers to the establishment of what has been called Neoclassical economic theory. The dating of this "revolution" is commonly ascribed to 1871-74, when the concept of diminishing marginal utility was introduced, independently and almost simultaneoulsy, by William Stanley Jevons, Carl Mengerand Léon Walras, to analyse the character of demand -- thus the term "Marginalist". Actually the fundamental principles of marginalism had been discovered much earlier, in 1854, by the Prussian Hermann Heinrich Gossen [1] (1810-1858), a civil servant who first formulated, in a rare and unknown book, [2] the "Gossen second law" or "the law of diminishing marginal utility", which was his most original contribution and presaged the Marginalist Revolution of 1871-74. Gossen's work was utterly disparaged by scions of the all-powerful German Historical School (Schmoller dismissed him as an "ingenious idiot"). Gossen died bitter and unknown. His work was only uncovered and graciously acknowledged by Jevons in 1878.
The Marginalist Revolution set the foundations for the Neoclassical theory of value, which replaced the "Classical" theory of value of Adam Smith, David Ricardo, John Stuart Mill and Karl Marx. However, the task of establishing the Neoclassical theory as the dominant approach to economics took quite some time, it can be roughly divided in three steps:
References
- ↑ Hermann Heinrich Gossen (1810-1858)
- ↑ GOSSEN, Hermann Heinrich. The Laws of Human Relations and the Rules of Human Action Derived Therefrom.Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fließenden Regeln für menschliches Handeln. Translated by Rudolph C. Blitz; introduction by Nicholas Georgescu-Roegen. Cambridge, MA: MIT Press, 1983. ISBN 0262070901