The Austrian EconomistFriedrich von WieserHe was born in Vienna on July 10, 1851. He was the son of a high civil servant of the Ministry of War and trained first in sociology and law. He became a friend and later brother-in-law of another prominent Austrian School economist, Eugen von Böhm-Bawerk.
He was one of the first members of the Austrian School of Economics. He 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 the model ofWieser, the cost of a commodity depended neither on the amount of money nor on the amount of labor required in its production, but rather on its subjective or psychological value.
His notion of alternative cost took this further, suggesting that cost depends on the value of an alternative opportunity lost when resources were used for the chosen product. Such reasoning effectively served the purpose of repudiating the Marxist theory of the value of labor and brought into play psychological rather than only material and monetary factors in economic discussions. However, his model does not take into account all the dimensions involved in economic and social exchange.
The first job ofWieser(1889),Der natürliche Wert(Natural value, 1893) was based on the theory of cost; later he wrote about currency, taxes, and economic and social policy. In itsTheorie der gesellschaftlichen Wirtschaft(Social Economy, 1927) of 1914, produced the only systematic treatise of any of the older Austrian schools. After the First World War he returned to sociology and developed his “lhey of the little numbers“, which described the action of the elites.
He became Austrian Finance Minister in 1917. He died on July 22, 1926 in Vienna.