Books / Digital Text

4. On the Development of the Subjective Theory of Value

5. Economics and Technology

The system of economic theory is independent of all other sciences as well as of psychology. This is true also of its relationship to technology. By way of illustration we shall demonstrate this in the case of the law of returns.

Even historically the law of returns did not originate in technology, but in reflections on economics. One interpreted the fact that the farmer who wants to produce more also wants to extend the area under cultivation and that in doing so he even makes use of poorer soil. If the law of returns did not hold true, it could not be explained how there can be such a thing as "land hunger." Land would have to be a free good. The natural sciences, in developing a theory of agriculture, were unable either to substantiate or to confute these reflections "empirically." The experience that it took as its starting point was the fact that arable land is treated as an economic good.5 It is obvious that here too economics and the natural sciences must meet on common ground.

One could not help finally expanding the law of diminishing returns on the cultivation of land into a general law of returns. If a good of higher order is treated as an economic good, then the law of returns—increasing returns up to a certain point, and beyond that point diminishing returns—must hold true of this good. Simple reflection shows that a good of higher order of which the law of returns did not hold true could never be regarded as an economic good: it would be indifferent to us whether larger or smaller quantities of this good were available.

The law of population is a special case of the law of returns. If the increase in the number of workers were always to bring about a proportional increase in returns, then the increase in the means of support would keep pace with the increase in population.

Whoever maintains, like Henry George, Franz Oppenheimer, and others, that the law of population is without practical importance assumes that hand in hand with every increase in population beyond the optimum necessarily go changes in technology or in the social division of labor such that at least no decrease in returns takes place per capita of the total population and perhaps even an increase in returns is thereby brought about. There is no proof for this assumption.

  • 5. Cf. Böhm-Bawerk, Gesammelte Schriften, ed. by F. X. Weiss (Vienna, 1924), I, 193 ff.