Menger, Carl (1840-1921)
Professor of Economics in the Faculty of Law at Vienna University from 1873-1903. His major work, in which he develops his marginal utility theory, Grundsiitze der Volkswirtschaftslehre, was published in 1871. He was one of the three economists in the 1870s who independently put forward the theory of value based on marginal utility and whoset work had profound influence on the subsequent evolution of economic thought. Exchange takes place, he argued, because individuals have different subjective valuations of the same commodity. Menger saw commodities in terms of their reverse order in the productive process, i.e. bread is prior to flour and flour is prior to wheat. The price of the first order of commodities, which is determined by their exchange for consumption, is imputed back through to the higher ordered commodities. The theory of diminishing utility was the catalyst which eventually unified the theories of production and consumption. Menger himself, however, overemphasized consumption demand in the theory of value, just as the classical economists had overemphasized production supply.
Reference: The Penguin Dictionary of Economics, 3rd edt.
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