Gossen, Hermann Heinrich
Gossen, Hermann Heinrich
Hermann Heinrich Gossen, German writer on economics, was born at Duren in the Rhineland in 1810 and died at Cologne in 1858. His claim to fame is based on a single publication: in 1854 he published a book that develops, with the help of mathematics, a comprehensive theory of the hedonistic calculus. In this work Gossen postulated the principle of diminishing marginal utility and from this derived the following theorem: to maxi mize utility, a given quantity of a good must be divided among different uses in such a manner that the marginal utilities are equal in all uses. In the Continental literature the postulate is usually referred to as Gossen’s First Law and the theorem as his Second Law.
Gossen pioneered in the development of the subjective theory of value on the basis of the marginal principle, but his work was neglected during his life, and he died a disappointed man, having withdrawn the unsold copies of his book from the publisher. His work was briefly mentioned in a history of economic thought published the year of his death and, more appreciatively, in 1870 in the second edition of a book on the labor problem by F. A. Lange, the famed historian of materialism. Gossen’s importance in the development of economic thought was first recognized in the late 1870s, when Jevons, Menger, and Walras had already published their own versions of the new theory of value. Gossen’s book was brought to the attention of Jevons by a colleague in August 1878, causing him to complain: “I am, therefore, in the unfortunate position that the greater number of people think the theory nonsense, and do not understand it, and the rest discover that it is not new” (Jevons 1886, pp. 387-388). Jevons found comfort, however, in the thought that “the theory in question has in fact been independently discovered three or four times over, and must be true” (ibid., p. 389).
The next month Jevons advised Walras of Gossen’s anticipation. Both men publicly recognized Gossen’s priority and did much to save his work from oblivion, Jevons in the preface to the second edition of his Theory of Political Economy in 1879 and Walras in an article in the Journal des economistes (1885). Walras even prepared a French translation of Gossen’s book, but this was never published. Much later, in 1950, an Italian translation was brought out.
An estranged Catholic, Gossen offered his work with the messianic fervor of the founder of a new religion: the laws of science were the dogma, the hedonistic calculus was the moral principle, instruction in the laws of science was the cult, experiments the sacraments, and scientists the priests. Some of Gossen’s thoughts echo ideas of Bentham, Saint-Simon, and Comte, but since Gossen did not cite authorities, it is uncertain whether, or to what extent, he was indebted to these writers. German translations of two of Bentham’s juridical works had appeared in the 1830s, and one of these had been published in Cologne, where Gossen spent many years of his life. He may have come under the influence of Bentham’s hedonistic philosophy, but the mathematical treatment was his own work, as probably was his statement of the principle of diminishing marginal utility. There had been other economists who developed the subjective theory of value and the marginal principle, but none of them carried either idea as far as Gossen did.
In matters of economic policy, Gossen’s pronounced individualism led him to a modified laissez-faire point of view. All that exists, he held, must by itself create the means to further existence; otherwise it does not deserve to continue to exist. On this basis he rejected government support of religion, art, and science. Public relief of the poor was to be given in the form of loans. A general system of government loans would be established to enable everyone to make the most of his opportunities. Private property was to be protected and freed from restrictions that hamper individual initiative, but land was to be nationalized (purchased by the government) and then auctioned off to the highest bidder in the form of a lifetime lease to facilitate its most productive use.
The reasons for the almost complete neglect of Gossen’s work for a quarter of a century are not difficult to trace. His book was the work of a lone outsider, unknown in academic circles. Obedient to his father’s wishes, but with great reluctance, Gossen had studied law to prepare himself for a career in the Prussian civil service. After a few years he had relinquished government service and started an unsuccessful venture in the insurance business. When he published his book, with high hopes of recognition, he gave it a forbiddingly pretentious title, which in English translation reads “Development of the Laws of Human Relations, and of the Rules of Human Action Derived There from” (1854). The presentation and style of the work are bizarre and cumbersome. The book is not divided into parts or chapters, and simple dash lines, rather than headings, separate the various topics. Gossen was presumptuous enough to make a favorable comparison, on the first page, of his own study of society with Copernicus’ study of the cosmos, and on the penultimate page to claim in enlarged print that the adoption of his system of thought would turn the earth into a paradise. Such claims were bound to appear preposterous to the followers of the historical school, who were beginning to fill the chairs of economics in Germany in Gossen’s time, and as late as 1929 Sombart referred to Gossen as a “brilliant idiot.” Moreover, Gossen’s book abounds with diagrams, formulas, and lengthy arithmetical illustrations. Half a century after its publication, Marshall, under much more favorable circumstances, still deemed it wise to take infinite care to make the mathematical treatment of economics palatable to his readers. Gossen’s book might have found some favor because of its polemics against communists and socialists and because the subjective theory of value could be used as a critique of the foundations of socialist economics. The German historical economists, however, had their own ways of coping with the threat of socialism, and several decades after the publication of Gossen’s book they were still inclined to deprecate rather than to make use of the ideological weapons available in the armory of the Austrian branch of the new theory of value. The Austrians themselves began to pay attention to Gossen only in 1889.
It is significant also that when Gossen was born, the Rhineland was part of the France of the Emperor Napoleon, in whose revenue service Gossen’s father was employed. Gossen’s thought was fundamentally un-German, and his fellow countrymen responded as little to his hedonism and utilitarian ism as to the idea of natural law. It is thus no accident that recognition eventually came from foreigners.
Henry W. Spiegel
[For discussion of the subsequent development of Gossen’s ideas, seeUtilityand biographies ofJevons; Menger; Walras.]
WORK BY GOSSEN
(1854) 1927 Entwickhing der Gesetzedes menschlichen Verkehrs und derdaraus fliessenden Regeln fϋr menschliches Handeln. 3d ed. Introduction by Friedrich A. Hayek. Berlin: Prager.
SUPPLEMENTARY BIBLIOGRAPHY
Bagiotti, Tullio 1955 Nel centennale dellibro di Gossen. Giornale degli economisti e annali di economia 14:236–253.
Bagiotti, Tullio 1957 Reminiszenzen anlasslich des hundertsten Jahrestages des Erscheinens des Buches von Gossen. Zeitschrift für Nationalökonomie 17:39–54.
Behrens, Fritz 1949 Hermann Heinrich Gossen. Leipzig: Bibliographisches Institut. → A Marxist interpretation of Gossen as the first scientific apologist of capitalism.
Bousquet, G. H. 1958 Uncentenaire: L’oeuvre de H. H. Gossen et saveritable structure. Revue d’économic politique 68:499–523.
Braeuer, Walter 1952 Handbuch zur Geschichte der Volkswirtschaftslehre. Frankfurt am Main (Germany): Klostermann.
Edgeworth, F. Y. 1896 H. H. Gossen. Volume 2, pages 231-233 in Robert H. Palgrave, Dictionary of Political Economy. London: Macmillan. → A good source on Gossen’s technical economics.
Hayek, Friedrich A. 1932 Herman Heinrich Gossen. Volume 7, page 3 in Encyclopaedia of the Social Sciences. New York: Macmillan.
Jevons, William S. (1871) 1879 The Theory of Political Economy. 2d ed. London: Macmillan.
Jevons, William S. 1886 Letters and Journal. London: Macmillan.
Lange, Friedrich albert (1865) 1870 Die Arbeiterfrage. 2d ed. Winterthur (Switzerland): Bleuler.
Pantaleoni, Maffeo (1889) 1957 Pure Economics. New York: Kelley & Millman. → See pages 28 ff. for the best source in English of Gossen’s technical economics.
Riedle, Hermann 1953 Hermann Heinrich Gossen 1810-1858: Ein Wegbereiter der modernen okono-mischen Theorie. Winterthur (Switzerland): Keller.
Stark, Werner 1943 The Ideal Foundations of Economic Thought. London: Routledge. → See pages 149 ff. for the best source in English of Gossen’s economic philosophy and policy proposals.
Walras, LÉon (1885) 1952 Walras on Gossen. Pages 470-488 in Henry W. Spiegel (editor), The Development of Economic Thought. New York: Wiley. → Originally published in Journal des économistes.