Economics Dictionary of ArgumentsHome
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| Marginal utility: Marginal utility measures the additional satisfaction or benefit gained from consuming one more unit of a product or service. As consumption increases, the marginal utility often decreases due to diminishing returns—each additional unit provides less additional satisfaction. This concept is fundamental in understanding consumer choices, preferences, and demand for goods or services. See also Utility, Benefit, Marginal return._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Dictionary of Arguments. | |||
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John Kenneth Galbraith on Marginal Utility - Dictionary of Arguments
Rothbard III 975 Marginal utility/Galbraith: Galbraith makes much of his supposed discovery, suppressed by other economists, that the marginal utility of goods declines as one's income increases and that therefore a man's final $ 1,000 is not worth nearly as much to him as his first- the margin of subsistence. RothbardVsGalbraith: But this knowledge is familiar to most economists, and this book, for example, has included it. The marginal utility of goods certainly declines as our income rises; but the very fact that People continue to work for the final $ 1,000 and work for more money when the opportunity is available, demonstrates conclusively that the marginal utility of goods is still greater than the marginal disutility of leisure forgone. RothbardVsGalbraith: Galbraith's hidden fallacy is a quantitative assumption: from the mere fact that the marginal utility of goods falls as one's income and wealth rise, Galbraith has somehow concluded that it has already fallen to virtually, or really, zero. The fact of decline, however, tells us nothing whatever about the degree of this decline, which Galbraith arbitrarily assumes has been almost total. Leisure/labour/wealth: All economists, even the most "conventional," know that as incomes have risen in the modern world, workers have chosen to take more and more of that income in the form of leisure. And this should be proof enough that economists have long been familiar with the supposedly suppressed truth that the marginal utility of goods in general tends to decline as their supply increases. But, Galbraith retorts, economists admit that leisure is a consumers' good, but not that other goods decline in value as their supply increases. Yet this is surely an erroneous contention; what economists know is that, as civilization expands the supply of goods, the marginal utility of goods declines and the marginal utility of leisure forgone (the opportunity cost of labor) increases, so that more and more real income will be "taken" in the form of leisure. There is nothing at all startling, subversive, or revolutionary about this familiar fact. _____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. "Vs" indicates differences in content, not necessarily the chronological progression of a controversy. If a German edition is specified, the page numbers refer to this edition. |
Galbraith I John Kenneth Galbraith The Affluent Society London 1999 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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