Hermann Heinrich Gossen
|Died||February 13, 1858 47) (aged|
|Alma mater||University of Bonn|
|Contributions||General theory of marginal utility |
Hermann Heinrich Gossen (7 September 1810 – 13 February 1858) was a Prussian economist who is often regarded as the first to elaborate a general theory of marginal utility.
Gossen studied in Bonn, then worked in the Prussian administration until retiring in 1847, after which he sold insurance until his death.
Prior to Gossen, a number of theorists, including Gabriel Cramer,Daniel Bernoulli, William Forster Lloyd, Nassau William Senior, and Jules Dupuit had employed or asserted the significance of some notion of marginal utility. But Cramer, Bernoulli, and Dupuit had focussed upon specific problems, Lloyd had not presented any application, and if Senior actually employed to the development of more general theory then he did so in language that caused the application to be missed by most readers.
Gossen's book Die Entwickelung der Gesetze des menschlichen Verkehrs, und der daraus fließenden Regeln für menschliches Handeln (The Development of the Laws of Human Intercourse and the Consequent Rules of Human Action), published in Braunschweig in 1854, very explicitly developed general theoretical implications from a theory of marginal utility, to the extent that William Stanley Jevons (one of the preceptors of the Marginal Revolution) was later to remark that
[I]t is quite apparent that Gossen has completely anticipated me as regards the general principles and method of the theory of Economics. So far as I can gather, his treatment of the fundamental theory is even more general and thorough than what I was able to scheme out.
However, Die Entwickelung was poorly received, as economic thought in Germany was then dominated by the Historical School and as Gossen wrote it in a dense, heavily mathematical style which was quite unpopular at the time. Although Gossen himself declared that his work was comparable in its significance to the innovations of Copernicus, few others agreed; most copies of the book were destroyed and, today, only a few original copies exist.
In the early 1870s, William Stanley Jevons William Stanley Jevons, Carl Menger, and Léon Walras each reintroduced the theory of marginal utility. During discussions of which of those three had been the first to formulate the theory, a colleague of Jevons discovered a copy of Die Entwicklung. However, the discovery (in 1878) came several years after the three principals in the Marginal Revolution had published their own books, and significant differences with Gossen’s original contributions were overlooked. A century later (1983) Gossen’s book was translated into English. In his introduction to the book, Nicholas Georgescu-Roegen, a prominent American economist (Distinguished Fellow of the American Economics Association), strongly supported Gossen’s vision, which stands in opposition to the neoclassical orthodoxy that utility (satisfaction) is properly identified with consumables in basic (utility) theory rather than consumption activity:
Given that the only certain fact is the intensity of pleasure felt at an instant of time, the only epistemologically sound approach is to take intensity as the primary concept. ( 1983, lxxxi [See "Further reading" below.])
Georgescu-Roegen also extended Gossen’s behavioral formulation by introducing leisure in addition to production and consumption activities.
Gossen was among the first economists to argue that a centrally planned economy was unworkable:
Original: " … nur durch Feststellung des Privateigenthums der Maßstab gefunden wird zur Bestimmung der Quantität, welche den Verhältnissen angemessen am Zweckmäßigsten von jeden Gegenstand zu produciren ist. Darum würde denn die von Communisten projectirte Centralbehörde zur Vertheilung der verschiedenen Arbeiten und ihrer Belohnung sehr bald die Erfahrung machen, daß sie sich eine Aufgabe gestellt habe, deren Lösung die Kräfte einzelner Menschen weit übersteigt."
Translation: " … only through the establishment of private property is to be found the measure for determining the quantity of each commodity which it would be best to produce under given conditions. Therefore, the central authority [that's] proposed by the communists for the distribution of the various tasks and their reward, would very soon find that it had undertaken a task the solution of which far exceeds the abilities of individual men."
William Stanley Jevons was an English economist and logician.
Friedrich Freiherr von Wieser was an early economist of the Austrian School of economics. Born in Vienna, the son of Privy Councillor Leopold von Wieser, a high official in the war ministry, he first trained in sociology and law. In 1872, the year he took his degree, he encountered Austrian-school founder Carl Menger's Grundsätze and switched his interest to economic theory. Wieser held posts at the universities of Vienna and Prague until succeeding Menger in Vienna in 1903, where along with his brother-in-law Eugen von Böhm-Bawerk he shaped the next generation of Austrian economists including Ludwig von Mises, Friedrich Hayek and Joseph Schumpeter in the late 1890s and early 20th century. He was the Austrian Minister of Commerce from August 30, 1917, to November 11, 1918.
Marginalism is a theory of economics that attempts to explain the discrepancy in the value of goods and services by reference to their secondary, or marginal, utility. It states that the reason why the price of diamonds is higher than that of water, for example, owes to the greater additional satisfaction of the diamonds over the water. Thus, while the water has greater total utility, the diamond has greater marginal utility.
The St. Petersburg paradox or St. Petersburg lottery is a paradox related to probability and decision theory in economics. It is based on a theoretical lottery game that leads to a random variable with infinite expected value but nevertheless seems to be worth only a very small amount to the participants. The St. Petersburg paradox is a situation where a naive decision criterion which takes only the expected value into account predicts a course of action that presumably no actual person would be willing to take. Several resolutions to the paradox have been proposed.
CarlWernicke was a German physician, anatomist, psychiatrist and neuropathologist. He is known for his influential research into the pathological effects of specific forms of encephalopathy and also the study of receptive aphasia, both of which are commonly associated with Wernicke's name and referred to as Wernicke encephalopathy and Wernicke's aphasia, respectively. His research, along with that of Paul Broca, led to groundbreaking realizations of the localization of brain function, specifically in speech. As such, Wernicke's area has been named after the scientist.
Richard Ludwig Heinrich Avenarius was a German-Swiss philosopher. He formulated the radical positivist doctrine of "empirical criticism" or empirio-criticism.
Criticism of socialism is any critique of socialist models of economic organization and their feasibility as well as the political and social implications of adopting such a system. Some critiques are not directed toward socialism as a system, but rather toward the socialist movement, parties or existing states. Some critics consider socialism to be a purely theoretical concept that should be criticized on theoretical grounds while others hold that certain historical examples exist and that they can be criticized on practical grounds. Because there are many models of socialism, most critiques are focused on a specific type of socialism and the experience of Soviet-type economies that may not apply to all forms of socialism as different models of socialism conflict with each other over questions of property ownership, economic coordination and how socialism is to be achieved. Critics of specific models of socialism might be advocates of a different type of socialism.
Samuel Thomas von Sömmerring was a German physician, anatomist, anthropologist, paleontologist and inventor. Sömmerring discovered the macula in the retina of the human eye. His investigations on the brain and the nervous system, on the sensory organs, on the embryo and its malformations, on the structure of the lungs, etc., made him one of the most important German anatomists.
Hermann Schaaffhausen was a German anatomist, anthropologist, and paleoanthropologist.
Carl von Voit was a German physiologist and dietitian.
Mathias Caspar Hubert Isenkrahe was a German mathematician, physicist and catholic philosopher of nature.
Adolf Zeising was a German psychologist, whose main interests were mathematics and philosophy.
Gossen's laws, named for Hermann Heinrich Gossen (1810–1858), are three laws of economics:
Gossen's Second “Law”, named for Hermann Heinrich Gossen (1810–1858), is the assertion that an economic agent will allocate his or her expenditures such that the ratio of the marginal utility of each good or service to its price is equal to that for every other good or service. Formally,
In economics, utility is the satisfaction or benefit derived by consuming a product; thus the marginal utility of a good or service describes how much pleasure or satisfaction is gained from an increase in consumption. It may be positive, negative, or zero. For example, purchasing more than one needs brings little satisfaction as the purchaser feels it is wasted money, hence zero marginal utility. If one is actually harmed by extra consumption then it is negative, and if some satisfaction is gained by extra consumption then it is positive.
CarlHeinrich Schultz, known as Carl Heinrich 'Schultzenstein' Schultz, was a German physician and botanist. The appellation "Schultzenstein" is a reference to his birthplace; this was necessary to distinguish him from his contemporary Carl Heinrich 'Bipontinus' Schultz, also a German botanist.
Joseph Ennemoser was a South Tyrolean physician and stubborn late proponent of Franz Mesmer's theories of animal magnetism. He became known to English readers through Mary Howitt's translation of his History of Magic.
Ernst Hallier was a German botanist and mycologist.
Johann Heinrich Kopp was a German physician and natural scientist. He was the father of chemist Hermann Franz Moritz Kopp (1817–1892).
Otto Eduard Vincenz Ule was a German writer, known for his popularization of natural sciences, and liberal politician. He was the father of botanist Ernst Heinrich Georg Ule (1854–1915) and geographer Wilhelm Ule (1861–1940).