Some notes on Gossen’s “submerged and forgotten” approach to consumption and time

Abstract

Hermann Heinrich Gossen has traditionally been considered a forerunner of the neoclassical theory of demand. With the long-awaited publication, in 1983, of the English translation of Gossen’s book, its editor, Nicholas Georgescu-Roegen, saw in The Laws of Human Relations and the Rules of Human Action Derived Therefrom the roots of a wholly different theory of consumption choices than that generally accepted, one in which the flow of time plays a non-trivial role. However, Georgescu-Roegen’s interpretation did not object to Gossen being a precursor of the subjective theory of value. The paper argues, with evidence from the works of Gossen, Jevons, Menger and Walras, that, contrary to this interpretation, the theoretical connection between Gossen and the marginalist school is unwarranted in that Gossen, contrary to the early marginalists, was not concerned with adding to the theory of exchange the demand side which the classical British tradition had neglected. In fact, Jevons and Walras, concerned with building a demand-and-supply theory of price and with their relative merits as discoverers of the new approach, “elected” Gossen as their common precursor, despite the fact that Gossen explicitly rejected the idea that his laws of pleasure could bear any implication for the theory of exchage.

Keywords:

• Gossen
• time
• consumption
• Neoclassical Demand Theory

JEL CODES:

• B13
• B31
• D10

Acknowledgement

I wish to thank two anonymous referees for their constructive criticism on a previous version of this paper. I am also indebted to Marina Bianchi and Neil De Marchi for spending a considerable amount of their time in reading and discussing with me the revised version of the manuscript that I first presented at the XIX ESHET Annual Conference in Rome. Responsibility for the opinions expressed lies entirely with the author.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Unlike Ricardo, Smith also explored the subjective dimension of the labour theory of value as a basis for converting nominal income into a reliable measure of well-being and for identifying a suitable numeraire to assess the “real” value of each commodity. In fact, despite the fact that in Smith relative prices are governed by cost of production (labour time alone in that early and rude state of society, all components of costs in more advanced states), according to the notion of “labour commanded,” “what every thing really costs to the man who has acquired it, and who wants to dispose of it or exchange it for something else, is the toil and trouble which it can save to himself, and which it can impose to other people” (Smith [1776] 1976, 34). Smith’s notion of labour commanded drew criticism from Marx ([1863] 1969) and, to some extent, also from Sraffa (1951, xxxv–xxxvii). For a defence of Smith’s theory of value, see Nisticò (1991a, 1991b, 2002).

2 There had been other “mathematical economists” in the early nineteenth century, especially in Germany. For a review of the pre-Gossen German economists inclined to use mathematics in economic theorizing, including Claus Krönke, Joseph Lang, Georg von Buquoy, Karl Heinrich Rau, Johann Heinrich von Thunen and Karl Heinrich Hagen, see Theocharis (1983, 1993).

3 The Introduction also contains a short biography of Gossen (Georgescu-Roegen 1983, xxvi–li). As Georgescu-Roegen explains, the scant information about Gossen’s life we are left with comes from a manuscript that in 1881 Hermann Kortum, the son of one of Gossen’s two sister with whom Gossen was living until his death in 1858, sent to Walras, who succeeded in getting in touch with Gossen’s nephew thanks to the cooperation of the Swiss Embassy in Berlin (Georgescu-Roegen 1983, xxiv). Another important source of information mentioned by Georgescu-Roegen is a study by Karl Robert Blum (1934), “an offshoot of Blum’s doctoral dissertation presented at the University of Giessen on July 8, 1931 and printed by the author for private circulation” (Georgescu-Roegen 1983, xxvi). Other accounts of Gossen’s life and work include Kraus (1910), Beyerhaus (1926) and, more recently, Kurz (2016).

4 On the other hand, Schumpeter shares the Gossen-neoclassical marginalists “continuity thesis,” which this paper aims to examine. The entire passage in Schumpeter’s History runs: “The historical alliance of utility theory with utilitarian philosophy was obvious. We cannot blame men who were no theorists for suspecting that there was also a logical one. Moreover, some of the most prominent exponents of marginal utility were in fact convinced utilitarians: Gossen was, and Jevons, and Edgeworth. They, and others too, had used language that was apt to create the impression that marginal utility theory depended upon utilitarian or hedonist premises —Bentham certainly thought so— and could be attacked successfully by attacking these. Jevons was the chief culprit: he even went so far as to call economic theory a ‘calculus of pleasure and pain’—Verri had done so before—and elicited from Marshall the rebuke that he was mixing up economics with ‘hedonics’” (Schumpeter [1954] 1987, 1022).

5 According to Georgescu-Roegen (1983, lxxvii–lxxviii) the only possible influence of the German translation of Bentham’s Principles of Legislation on Gossen might be found in rejection, common to Bentham and Gossen, of the moralists’ ascetism, according to which enjoyment is illicit per se. For an analysis of the similarities between Bentham’s and Gossen’s path-dependent approaches, see Nisticò (2017, 6–7).

6 In the Introduction to his recent book on nineteenth-century German contributions to utility theory, Chipman (2013) indicates Karl Heinrich Rau as the first German author to have introduced the notion of ‘concrete use value’ as a decreasing function of the available quantity, thus laying the groundwork for the development of marginal utility theory. After mentioning that Rau, in the fourth edition of his Principles (Rau [1826] 1841) used the notion of concrete use value as the foundation of the individual’s demand price, Chipman then adds “the question obviously arises where does Gossen fit into this development” (Chipman 2013, 3) and, in the section devoted to Gossen, (Chipman 2013, 57–61) he does not trace any possible connection between Rau and Gossen in relation to marginal utility as the foundation of the individual’s demand price. For an account of the influence that Rau might have had on Gossen, see also Georgescu-Roegen (1983, lxii–lxii).

7 For an appraisal of the optimality condition in Gossen’s approach, see Nisticò (2014, 288–91 and Nisticò 2015).

8 For a different interpretation, holding that the development of an axiomatic approach started with Pareto rather than with the eradication of time from economics, see Bruni and Sugden (2007).

9 Robert Adamson was a philosopher and a close friend of Jevons. He was appointed successor to Jevons’s chair of Logic at Owen’s College. Adamson had spent some time in Germany and was, therefore, a better reader than Jevons of the original German edition of Gossen’s book. In fact, Jevons admits to having never been able, “in spite of many attempts” to become “familiar enough with German to read a German book” (Bruni and Sugden 2007, xl).

10 In his discussion of the similarities between neoclassical economics and physics, Mirowski (1989, 213) expresses the view that Gossen’s approach “is not identical to the later neoclassical notion of diminishing marginal utility” and argues that “the widespread notion that Gossen anticipated modern neoclassical price theory is … fallacious”.

11 Menger shares the above mentioned opinion of Rau that “value is … nothing inherent in goods, no property of them, but merely the importance that we first attribute to the satisfaction of our needs” (Mirowski 1989, 116). It is precisely because of the possible misconception of value as an objective attribute of the goods that Menger avoids using the term utility (Mirowski 1989, 116–118).

12 Fourteen years later, Cournot (1877) was to publish the Revue Sommaire des Doctrines Économiques, “a final attempt to reach the ever elusive goal of wider recognition” (Theocharis, ibid.).

13 At the time of his Introduction, Georgescu-Roegen (1983, xxv) referred to the manuscript as “unfortunately lost.”

14 Walras’s article “Un économiste inconnu, Hermann-Henry Gossen, originally published in 1885 on the Journal des Economistes, was also included by Walras in his Etudes d’Economie Sociale published in the same year. Les Etudes have only recently been translated into English (Walras [1885] 2000, 250–268). Besides announcing (Walras [1885] 2000, 257) that he intended to translate the title of Gossen’s book “somewhat freely,” in the last pages of the article Walras provides a summary of Gossen’s life based on the manuscript, mentioned in footnote 3 above, by his nephew Hermann Kortum, “professor of Mathematics at the University of Cologne” who, upon Walras’s request, sent him a note “after having taken the time to delve into his uncle’s papers” (Walras [1885] 2000, 262–265).