Abstract

Diminishing Marginal Utility is widely accepted as a law of human action, and therefor has become one of the primary premises of ethics, economics, and politics. In popular parlance, “diminishing returns” has entered into the cliches of common sense; in philosophical argument, it has achieved the status of an axiomatic assumption; and indeed, in terms of personal experience or folk psychology, it seems to largely hold true for goods in general over a range of consumption. However, a theory of diminishing marginal utility rests on some assumptions that we ignore at our peril. The a priori and a posteriori proofs of diminishing marginal utility, as developed by the Austrian economists like Ludwig von Mises and Hermann Heinrich Gossen, should be reassessed and critiqued from their fundamental principles to illuminate the theory’s pitfalls. Once these premises and their conclusions are not taken for granted, a more comprehensive and conscientious theory of value can be proposed: Complex or Inflecting Marginal Utility.