THE AUSTRIAN SCHOOL represents a reaction within the limits of the classical economy The name Austrian School is used simply be cause the marginal utility theory of value, which constitutes the essence of this reaction. has been most thoroughly developed and most widely ap plied by a group of Austrian economists, includ ing Professors Nenger, Wieser, Sax, and Boehm von Bawerk; though the theory itself was propounded almost simultaneously in 1871 by Professor Jevons in England and Nenger in Austria, and is now used by a large majority of economists everywhere. The adherents of this school hold, in brief, that the utility (i.e. power of satisfying want) possessed by a commodity decreases per unit as the amount consumed in creases. and that value itself is. or expresses. the utility of the last or marginal increment of the commodity supplied for consumption. It cannot be doubted that they have transformed economic theory; the old unit of real value—the pain and sacrifice of labor—has given way to a unit of utility; and the cost-of-production theory of exchange has been replaced by a wider concep Lion whiell holds that value determines the ex penses of production rather than the expenses of production value, that capital receives its value from the finished product• and not rice etc. The whole tendency of this theory
u see VALUE) has been to shift. the centre of gravity in economies from the capitalist to the cousunce• and to block the MON eIlleIll to confine political reononly to a study of exellange value. It has undoubtedly chu•ified our general concep tions of wealth and exchange much in the same way that the theory of evolution has clarified our general conception of progress.