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Aug 3, 2013

Bastiat and Subjective Marginal Utility


Frederic Bastiat really was a precursor of the Austrian school.
Menger was indeed a revolutionary, but that does not mean that no one before him glimpsed ideas that would later blossom into the Austrian school. As far back as Socrates, thinkers grasped the theory of subjective value in the praxeological sense, and we find a nearly complete subjectivist-marginalist framework 20 years before Menger took pen to paper — in the work of Frédéric Bastiat.
In Bastiat’s unfinished magnum opus, Economic Harmonies (1850), he, like Menger, put the spotlight on the choosing individual and what she tries to accomplish through exchange. Trade, for Bastiat, is an exchange of services that will render useful things: I’ll do something for you (furnish a useful thing, for example) if you do something for me. It’s up to each individual to evaluate the terms and decide if the exchange is worthwhile. Methodological individualism, marginalism, and subjectivism are all to be found in Bastiat.
Read about it here.

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