Against the high praise that Emil Kauder's work on utility theory is 
being accorded, may I point out some errors in his 1953 and 1965 
pieces.  Referring to Adam Smith, Kauder (1953, 650) claims that "the 
father of our economic science wrote that water has a great utility and 
a small value.  With these few words Adam Smith had made waste and 
rubbish out of the thinking of 2,000 years."  Kauder (1965, 28) also 
claims that Smith "wrote down his paradox of value in the /Wealth of 
Nations/, but it is less known that in his lectures he taught that 
scarcity and utility are the determinants of the market price!  He gave 
his students the right explanation, but in the /Wealth of Nations/ he 
misled several generations of readers."   Both of these claims are 
Kauder's misreadings of Adam Smith on the distinction between utility or 
value in use and value in exchange (market prices) and their 
determinants. Smith (/WN/, 1:191-93), indeed, writes:

"Increase the scarcity of gold to a certain degree, and the smallest bit 
of it may become more precious than a diamond, and exchange for a 
greater quantity of other goods.  The demand for those metals arises 
partly from their utility, and partly from their beauty ... The merit of 
their beauty is greatly enhanced by their scarcity ... these qualities 
of utility, beauty, and scarcity, are the original foundations of the 
high price of these metals, or of the great quantity of other goods 
which they can every-where be exchange."

Smith did use scarcity and utility (value in use) in explaining relative 
market prices.

Gilles CAMPAGNOLO wrote:
> Dear all,
>
> About Emil Kauder: Not only a very good article: Emil Kauder, the 
> emigrant from Austria to Illinois, and indefatigable researcher for 
> the sake of utility theories, was the seminal author in the 
> (re)discovery of Carl Menger's archives in Japan. See his other texts, 
> relating the origins of the Austrian school and Menger's reading of 
> Aristotle, based on his campaign of exploration of the archives at 
> Hitotsubashi University (Japan) in 1959-1960. However, Kauder had not 
> finished the job and a few Japanese scholars, as well as myself, have 
> completed this task in our publications respectively.
>
> The point is that, without that assessment of utility theory in 
> Menger's archives the history of utility theory would remain 
> incomplete. Kauder's work is to be praised for initiating that task.
>
> Regards to the whole community and a nice summer,
> Gilles Campagnolo
> Full Research Professor, French National Center for Scientific Research
> Senior Member, Aix-Marseilles School of Economics
>
>> ----------------------------------------
>> From: Lilia Costabile <[log in to unmask]>
>> Sent: Tue Jul 17 07:42:09 CEST 2012
>> To: <[log in to unmask]>
>> Subject: Re: [SHOE] History of microeconomics?
>>
>>
>> This is a very good article, I think.
>> Regards
>> Lilia Costabile
>>
>> E. Kauder, Genesis of the marginal utility theory: from Aristotele to 
>> the end of the eighteenth century, «Economic journal», 1953, 63, 251, 
>> pp. 638-50.
>>
>>
-- 
James C.W. Ahiakpor, Ph.D. Professor
Department of Economics
California State University, East Bay
Hayward, CA 94542
  (510) 885-3137 Work
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