Phil Geiger retweetledi
Carl Menger destroyed the labor theory of value in 1871 with a single insight: humans value goods based on their marginal utility, not the labor embedded in them. The same year, William Stanley Jevons in England and Léon Walras in France independently arrived at similar conclusions about marginal utility. Three economists, three countries, one revolutionary idea that shattered Marx's entire framework.
Menger's "Principles of Economics" went further than his contemporaries by building economics from individual human action rather than mathematical abstractions. While Jevons and Walras constructed elegant equations, Menger asked the fundamental question: why does anyone value anything at all? His answer traced value back to human needs and the decreasing satisfaction each additional unit provides. The tenth glass of water matters less than the first when you're dying of thirst.
The timing wasn't coincidental. By 1871, classical economics had painted itself into a corner with the labor theory of value. If labor determines value, why do diamonds cost more than water? Why do identical goods sell for different prices? Value exists only in the mind of the acting individual. No intrinsic value, no objective measurement, just human preferences ranking scarce goods according to their ability to satisfy wants.
Menger's approach created the foundation for the entire Austrian school tradition that followed. Böhm-Bawerk used marginal utility to explain interest rates. Mises extended it to money and the business cycle. Rothbard applied it to ethics and political theory. Every free market economist since 1871 stands on Menger's shoulders.
The establishment still teaches economics as if Menger never existed, preferring mathematical models to human action, aggregate demand curves to individual choice, and central planning to market processes.
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