Friedrich von Wieser

Friedrich Wieser was born on 10 July 1851 in Vienna. He studied law at the University of Vienna (doctorate, 1872), where he met Eugen von Böhm-Bawerk, his friend from youth and later his brother-in-law. Like Böhm-Bawerk, he turned to economic theory after reading Carl Menger’s Principles; the three are regarded as the first generation of the Austrian School.

From 1884 he taught at the University of Prague, and in 1903 he succeeded Menger in his chair in Vienna. The term Grenznutzen, which became “marginal utility” in English, is his. In Natural Value (Der natürliche Wert, 1889) he developed the theory of imputation: the means of production derive their value from the consumer goods they help to produce. In his theory the cost of a good is the value of the other uses given up to produce it, the idea now called opportunity cost.

He taught a whole generation of economists, among them Ludwig von Mises, Joseph Schumpeter and Friedrich A. Hayek. In 1914 he published Social Economics (Theorie der gesellschaftlichen Wirtschaft). In 1917 he became a member of the House of Lords and minister of commerce, a post he held until the end of the war in 1918.

Wieser did not follow the school he helped to found in everything. Social Economics starts from an ideal economy run by an all-knowing planner; Wieser accepted state intervention for “the protection of the common interest” and, unlike most Austrians, rejected classical liberalism; his last book, The Law of Power (1926), is a sociological study of power. Mises, in his memoirs, judged that Wieser had not absorbed the subjectivism of the Austrian School. He died on 22 July 1926.

Sources: Mises Institute — Friedrich von Wieser · Mises Institute — Eugen von Böhm-Bawerk (Roger W. Garrison) · Wikipedia — Friedrich von Wieser