Austrian Economics

The origin of the Austrian School of economics is the publication of Carl Menger’s Principles of Economics in 1871. Menger, based in Austria, along with William Stanley Jevons in England, and Léon Walras in Switzerland, are considered the co-founders of the “marginal revolution” in economics. The marginal revolution was a paradigm shift from the established labour theory of value to the marginal utility theory of value. The labour theory of value held that the value of a commodity is a function of the labour required to produce the item. The marginal revolutionists, in contrast, argued that value is not based on the amount of labour expended, but rather reflects how useful people perceive the commodity to be in satisfying their ends.