ABSTRACT
This chapter is about Herbert J.Davenport’s contribution to the Austrian theory of value and cost.1 The term “theory of value,” in today’s words, means “theory of price.”2 “Price” includes the prices of consumer goods and the prices of the factors of production. An all-inclusive theory of price would aim to discover every cause of prices in the market economy. No Austrian economist has tried to achieve this aim. The Austrians have excluded theft and deceit. Also, while being careful to recognize that money is not neutral, Austrians have presented the theory of price independently of the theory of money. By doing so, they have disregarded the demand for and supply of cash balances. Besides these, Austrian authors have typically excluded time preference as a cause in order to achieve simplicity. Finally, in this field, the Austrian theory has not tried to account for credit and the money based on credit.
