Editing Marginalism (section)

==== Second generation ====
{{Austrian School sidebar |expanded=theory}}
Although the Marginal Revolution flowed from the work of Jevons, Menger, and Walras, their work might have failed to enter the mainstream were it not for a second generation of economists. In England, the second generation were exemplified by [[Philip Wicksteed]], by [[William Smart (economist)|William Smart]], and by [[Alfred Marshall]]; in Austria by [[Eugen Böhm von Bawerk]] and by [[Friedrich von Wieser]]; in Switzerland by [[Vilfredo Pareto]]; and in America by [[Herbert Joseph Davenport]] and by [[Frank Fetter|Frank A. Fetter]].

There were significant, distinguishing features amongst the approaches of Jevons, Menger, and Walras, but the second generation did not maintain distinctions along national or linguistic lines. The work of von Wieser was heavily influenced by that of Walras.  Wicksteed was heavily influenced by Menger. Fetter referred to himself and Davenport as part of "the American Psychological School", named in imitation of the [[Austrian School|Austrian "Psychological School"]]. Clark's work from this period onward similarly shows heavy influence by Menger. William Smart began as a conveyor of Austrian School theory to English-language readers, though he fell increasingly under the influence of Marshall.<ref name="salerno">Salerno, Joseph T. 1999; "The Place of Mises's Human Action in the Development of Modern Economic Thought". ''Quarterly Journal of Economic Thought'' v. 2 (1).</ref>

Böhm-Bawerk was perhaps the most able expositor of Menger's conception.<ref name="salerno" /><ref>Böhm-Bawerk, Eugen Ritter von. "Grundzüge der Theorie des wirtschaftlichen Güterwerthes", ''Jahrbüche für Nationalökonomie und Statistik'' v 13 (1886).  Translated as ''Basic Principles of Economic Value''.</ref> He was further noted for producing a theory of interest and of profit in equilibrium based upon the interaction of diminishing marginal utility with diminishing [[marginal product]]ivity of time and with [[time preference]].<ref name="bawerk_capital"/> (This theory was adopted in full and then further developed by [[Knut Wicksell]]<ref>Wicksell, Johan Gustaf Knut; ''Über Wert, Kapital unde Rente'' (1893). Translated as [https://mises.org/books/valuecapital.pdf ''Value, Capital and Rent''.]</ref> and with modifications including formal disregard for time-preference by Wicksell's American rival [[Irving Fisher]].<ref>Fisher, Irving; ''Theory of Interest'' (1930).</ref>)

Marshall was the second-generation marginalist whose work on marginal utility came most to inform the mainstream of neoclassical economics, especially by way of his ''Principles of Economics'', the first volume of which was published in 1890. Marshall constructed the demand curve with the aid of assumptions that utility was quantified, and that the marginal utility of money was constant, or nearly so. Like Jevons, Marshall did not see an explanation for supply in the theory of marginal utility, so he paired a marginal explanation of demand with a more [[Classical economics|classical]] explanation of supply, wherein costs were taken to be objectively determined. Marshall later actively mischaracterized the criticism that these costs were themselves ultimately determined by marginal utilities.<ref name="schumMarshScis" />