Friedrich von WIESER, economist, an early member of the Austrian School of economics. Member of the Austrian School of economists, whose early interest in sociology was diverted towards economics by the publication of Menger’s Grundsätze.
Background
Wieser was born in in 1851 Vienna, Austro-Hungary of aristocratic parents, the son of a civil servant.
Wieser had a thorough knowledge of art and literature and was an accomplished piano player. He worked briefly for the government and then received a travel grant, traveling with Bohm-Bawerk to study economics at Heidelberg, Jena and Leipzig.
Education
At age 17 he entered University of Vienna and studied law and government science. He studied under and became follower of Menger, graduating in 1872. He was ranked lower than others on Menger’s list of followers, so had to wait longer to be placed in full professorship.
Career
Menger had known of Weiser’s writings on value for some time, but had great reservations about them so did not recommend them for publication. Menger did, however, urge him to submit his work to Univisity of Vienna to obtain his Habilitation, which he received in 1883. Professor, University Prague, 1884, University Vienna, 1903.
His early work was on the theory of cost. He later wrote on currency, taxation and social and economic policy.
In Social Economics he produced the only systematic treatise by any of the older Austrian School. His important economics works were On the Origin and Leading Laws of Economic Values (1884), Natural Value (1893). He became Minister of Commerce in 1917, but returned to teaching after WWI. Intellectually he moved from economics to sociology, publishing his Social Economics in 1914 and developed his ‘law of small numbers’ which described the action of élites.
Friedrich von Wieser built on Carl Menger's view of subjective value, coining the term "marginal utility" and developing the idea of "alternative cost" (later known as "opportunity cost"). In Wieser's model, the cost of a commodity depended neither on the amount of money nor the amount of labor required in its production, but rather on its subjective, or psychological, value. His notion of alternative cost took this even further, suggesting that cost depends on the value of an alternative opportunity lost when the resources were used for the chosen commodity. Such reasoning effectively served the purpose of repudiating the Marxist labor theory of value, and brought into play psychological rather than only material and monetary factors in economic discussions. However, his model does not account for all dimensions involved in economic and social exchange.
It was Wieser who coined the term "marginal utility" (Grenznutzen), a phrase which has come to be associated with all subjectivist theories of value since those of William Stanley Jevons, Leon Walras, and Carl Menger. Wieser interpreted costs in terms of sacrificed utility (or "opportunity costs" as they have since come to be known) incurred when a choice is made concerning where o employ resources.
Austrian Minister of Commerce, 1917.