Publisher's Preface

Photograph of Eugen von Böhm-Bawerk

Biographical Sketch of Eugen von Böhm-Bawerk by Hans F. Sennholz

Preface to the First Edition by Hans F. Sennholz


I. The Two Concepts of Value

    1. Economics Concerns Itself With Wirkungswert
    2. Value in the Subjective Sense
    3. Value in the Objective Sense
    4. Difference Between Subjective Value and Objective Value
    5. Special Importance of One Kind of Objective Value, viz., Objective Exchange Value
    6. More remarks on Subjective Value
    7. More Remarks on Objective Exchange Value
    8. Double Function of Economic Theory, Genuinely to Explain Subjective Value and Objective Exchange Value
    9. Dual Nature of Phenomena of Value
    10. Danger From Ambiguity of Terms

II. Nature and Origin of Subjective Value

    1. Mere Capability of Promoting Human Well-Being Versus Being an Indispensable Condition of It
    2. Economizing Man Is Careless of Goods Merely Useful
    3. Formal Definition of Value
    4. For There to Be Value, Usefulness Must be Paired With Scarcity
    5. Economic Goods Versus Free Foods
    6. Enigmatic Solution of Many Problems Depends on Exact Ratio Between Need and Supply
    7. Insignificance of the Idea of "Abstract Categorical Value"
    8. Significance of the Difference Between the Whole Quantity Combined and Every Fractional Part of It
    9. More on Abstract Categorical Valuations. Erroneous Identification of Value With Usefulness.

III. The Magnitude of Value. The General Principle. The Law of Marginal Utility.

    1. Simple Principle Governing the Value of Goods
    2. Apparent Paradoxes in Value Determinations
    3. Recourse to False Solutions
    4. Common Man's Solution is Simple; and, All Paradoxical Solutions Are False
    5. Specific Well-Being Depends on Satisfaction of Specific Wants
    6. Ranking of Wants, According to Importance
    7. Difference Between Ranking Categories of Wants, and Individual Concrete Feelings of Wants
    8. Different Results From Graduating Concrete Wants (Rather Than Categories of Wants)
    9. At First Fork in Road, the Old Economics Took Wrong Approach
    10. Where Crucial Significance of Marginal Utility Begins to Become Apparent
    11. Important Phenomenon of Diminishing Utility
    12. Perplexing Question: Which of Several Wants Depends on a Good?
    13. Answer to Question in Sideheading 12: The Least Important of All Wants Concerned
    14. Universal Principle Underlying Economics: Men Will Act (Surrender Satisfactions) According to the Ranking of Their Preferences
    15. Summary of the Grand Principle Determining Value
    16. Universality of the Significance, and Applicability, of Principle of Marginal Utility
    17. Principle of Marginal Utility Illustrated in a Case of Classic Simplicity
    18. Solution of Paradoxes of Value and Price That (So-Called) Classical Economics Never Attained
    19. To Determine Marginal Utility Two Calculations Must Be Made
    20. Simplicity of Marginal Utility Should Not Deceive Anyone Regarding Many Complexities
    21. A Big Complication Which Is Not Finally Real
    22. Serious Problems Arising From Accidental Cases of Total Utility, But Especially From Purposeful Cases
    23. On What the Magnitude of Marginal Utility Depends
    24. Difference in Marginal Utility For the Poor and the Rich

IV. The Magnitude of the Value Possessed by Goods Purchasable In Any Desired Quantity

    1. First Reference to Final Utility (Of All Goods) as Distinguished From Marginal Utility (Within Same Category of Goods)
    2. Illustration of Final Utility
    3. Most Marginal Utility Considerations Tend to Move Toward Final Utility Decisions
    4. Important Case When Quick Replacement of Supplies Is Possible
    5. While the Concept of Marginal Utility Is Basically Simple, Its Universal Application To All Goods Necessarily Becomes Complex
    6. Insufficiency of Goods to Supply Needs Are Universal, and Economic Problems Are Inescapable

V. Specific Considerations Affecting Value Where Alternative Uses Are Possible—Use Value and Subjective Exchange Value

    1. In Complex Situations, What Is the True Economic Marginal Utility?
    2. Of Several Marginal Utilities the Highest Is the True One
    3. Exclusion of Spurious Marginal Utilities
    4. Significant Valuation of a Good Based on Subjective Exchange Value
    5. Difference Between Subjective Exchange Value and Objective Exchange Value
    6. Basic Distinction, Between Objective Value and Subjective Value, With Further Subdivisions of the Second According To Use and Exchange

VI. The Value of Complementary Goods

    1. Meaning of Term, Complementary Goods
    2. Effect Which the Fact That Goods Are Complementary To Each Other Has on Their Value
    3. Marginal Utility When It Is Attained by Utilization in Common
    4. Case 1, Infrequent
    5. Case 2, More Frequent
    6. Case 3, Most Frequent
    7. Clarifying Summary for Case 3
    8. Value Determination When Several Combination Members Are Irreplaceable
    9. Correct Theory of Value of Complementary Goods Will Solve the Problem of the Contribution of Land, Capital and Labor, That Is, What Rent, Profit and Wages Should Be
    10. Adumbration of the Acute Problem of "Unearned Income," Also Called Originary Interest, But Designated "Net Interest"

VII. Value of Production Goods and of Goods "Of Higher Orders" Generally. Relation Between Value and Costs.

    1. Value of Goods Depends on Marginal Utility in Future Use, and Not on Value of Goods Consumed in Origination of Goods
    2. Making a Completely New Approach to Value of Production Goods, and Hence, Concerning Costs
    3. The Idea of Higher Orders of Goods
    4. Values in Higher Orders Depend on Their Utility Toward Producing Lower Orders
    5. General Principles for Valuing Means of Production
    6. Familiar Identity of Costs and Value of Goods Produced Involves Use of an Interpretation Contradictory of What Is Presented Here
    7. There Are Random Deviations in Value and Regular Deviations in Value Between Goods of Different Orders, Lower and Higher
    8. Egregious Heterogeneity of Production Goods Is According to the Higher Their Order
    9. How the Value of a Means of Production Depends on Least Marginal Utility of the Produced Goods
    10. A Timesaving Method By Which Costs of Higher Order Goods Rather Than Marginal Utilities Are Used; But the Basic Explanation Is Still (as Always) the Same, viz, Marginal Utility
    11. The Idea Under Sideheading No. 10 Is Not a Different Law for Value, Nor an Exception, But Is a "Particular Law" Perfectly Subordinate to the General Law of Marginal Utility

VIII. Value and the Onerousness of Work (Disutility of Labor)

    1. Exceptions, or Rather Pseudo-Exceptions, to the Basic Idea That Utility and Utility Alone (Not Costs at All) Is Determinative of Value
    2. Another Presumed Exception (Pertaining to Varieties of Onerousness Of Labor) Is Not Truly an Exception
    3. The Advantage Inherent in the Use of a Possible Substitute; Utility Still Determines How Much Onerousness Will Be Assumed

IX. Summary

    1. The Sole and Unrivalled Primacy of Utility (in the sense of Gain in Well-Being)
    2. Itemized Cases of the Primacy of Utility

X. Some Psychological Considerations Supplementing Our Theory of Value

    A. Hedonism and the Theory of Value
      1. Dubious Repute of Hedonism Is Irrelevant to Marginal Utility Economics
      2. The Popular Definition of Hedonism
      3. Böhm-Bawerk's Rejoinder to Any Imputation That His Economics is Tainted With Hedonism
      4. The Matter of Nomenclature
      5. Böhm-Bawerk Declares Motivations Which His Economics Implements Are, In Any Event, Not Restricted to Hedonism, But Are Broader
      6. The Questions of Trespassing Freely, Cautiously, or Not at All, Over the Border Between Economics and Psychology
      7. Examples of Economists Dabbling in Psychology, and Border-Raiding in Territory of Economists
      8. Along the Economics/Psychology Boundary, Böhm-Bawerk Favors Economists Carefully Trespassing Over the Line

    B. Degree of Value and Degree of Emotion

      9. Our Wants Are, in a Nonpedantic Way, Commensurable
      10. Examples of Practical Commensuration in Everyday Life
      11. Concessions on Commensuration which, However, Do Not Invalidate the Principle
      12. Nor Do Erroneous Estimates Themselves Invalidate the Principle

    C. The Intellectual Demands of the Process of Valuation


I. Problems Confronting a Theory of Price

    1. Are There Really Laws of Price?
    2. Over-Simplified Premise When Formulating a "Law" of Price, viz., Hypothesis of Self-Benefit in Exchange as Sole Motive
    3. Reality Is Otherwise; There Are Numerous Intercrossing Motives for Exchange
    4. First Step to Solve Laws of Price Is to Develop the Law of the Basic Phenomenon
    5. Most Basic Motive in Exchange Consists of a Quest of a Direct Benefit Through Exchange
    6. Böhm-Bawerk Lists Almost a Score of Secondary Factors Affecting Price; Two Approaches: General Law and Individual Cases
    7. Two Schools of Economists:
    (a) General Theorists, Exemplified by English Classicists, and (b) Researchers in Specific Cases, Exemplified by Historical School in Germany
    8. Böhm-Bawerk Opts to Follow British Classicists and Considers Price Determination Under the Circumstances That a Man Will Act in a Manner to Accomplish What He Prefers More to What He Prefers Less

II. The Basic Law of the Determination of Price

      1. Three Requisites to Exchange
      2. Necessity That There Be Inequality in Exchange
      3. Fortunate Prevalence of Inequality of Evaluation
      4. The Greater the Inequality, the Greater the Capability to Exchange

    A. Determination of Price in Isolated Exchange

    B. Determination of Price With One-Sided Competition Among Buyers

    C. Determination of Price With One-Sided Competition Among Sellers

    D. Determination of Price With Two-Sided Competition

      5. Wise Buyers Exercise Restraint and Do Not Reveal Their Real Positions Immediately
      6. Second Phase of Higgling on Price
      7. Four Crucial Questions
      8. Question and Answer No. 1
      9. Question and Answer No. 2
      10. Question and Answer No. 3
      11. Question and Answer No. 4
      12. Price Is Determined by Subjective Valuations
      13. Excluded Competitors Do Not Influence Price Except the Marginal Excluded Pair
      14. Neutralizing Effect of Non-Marginal Buyers and Sellers
      15. Crucial Price-Determining Pairs
      16. Only One Law Determines Price, Not Four
      17. Summary of Psychology of What Happens in Price Determination
      18. Extreme and Artificial Simplicity of Foregoing Exposition
      19. Advance, Step by Step, to Understand Variegated and Complex Situations: Increased Number of Participants Will Reduce Margins Between Prices
      20. Consequences of There Being Quantity Buyers With Decreasing Marginal Utility
      21. Any One Buyer May Have Different Ranking in Capability to Buy
      22. Confession of Basic Preference for Discursive Explanations Rather Than Mathematical Formulae
      23. Use of Term, Supply and Demand, Almost as a Meaningless Cliché
      24. Final Last-Word Summary of the Law of Price

III. The Individual Determinants of Price

    1. Extensiveness and Intensiveness of Demand and of Supply
    2. Böhm-Bawerk's "Theory of Relativity" As It Pertains to Price Determination
    3. Explanation of Price Movements When the Subjective Valuations of Money Decline
    4. The Six Price-Determining Factors
    5. First Determinant of Buyers: Mere Wishes Are Not Effective Demand
    6. Second Determinant of Buyers: A Man Will Buy If the Marginal Utility Exceeds His Lowest Final Utility Among All Extant Demands. His Demand is Not Finally Based on Price, But Utility
    7. Third Determinant of Buyers: Varying Marginal Utilities of Rich and Poor, etc.
    8. First Determinant of Sellers: Their Number Is as Variable as the Number of Buyers, for Parallel Reasons
    9. Second Determinant of Sellers: Sellers Subjective Valuations Are Usually Low, Making the Last Buyer the Significant Personage
    10. Third Determinant of Sellers: Varying Marginal Utilities of Sellers, Rich and Poor, etc.
    11. Potency of Subjective Exchange Value in Personal Needs Superseded in Many Cases by Objective Exchange Value of Money

IV. The Law of Costs

    1. It is a "Good Half of Economics" To Understand That Costs Do Not Necessarily Determine Prices!
    2. To the Contrary, Prices Are Finally Determined Solely by Consumers' Subjective Valuations of Finished Goods
    3. Examination of the True Causal Sequence of Prices
    4. Resultant Phenomena Which Can Seduce People to Have Erroneous Ideas Regarding "Costs" as Being Determinative of Prices
    5. Originary Productive Powers Are Forced Into Use in the Order of Profitability, and Receive Value and Price From the Last of Them. How Profitability and Demand in Lower Orders of Goods Suction-Pump From Higher Orders.
    6. There Are Two Factors Delaying Price Adjustments to Changed Circumstances
    7. One Factor Consists of "Frictional Obstacles"
    8. Second Factor Consists of Lapse of Time—Which Is the Explanation of "Originary Interest," the Comprehensive Term for the Three Categories of Unearned Income—Profit, Rent and Also Interest (in Narrow Sense) on Borrowed Money

Location of Definitions of New Terms by Böhm-Bawerk

Capital and Interest Contents Pages

Supplement I—Experiments with Matching Buy and Sell Orders in Different Ways
With Preliminary Reflections on the Problem of "Just Prices"

Supplement II—ABC Optimum Price Computator
For Attainment of Perfect Competition in Auction Markets of Stocks, Bonds, Foreign Exchange, Fungible Goods, Etc.

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