Austrian-born Carl Menger is commonly regarded as the founding father of the Austrian school of economic thought. In his work "Principles of Economics", published in 1871, he argued that the value of a good is in each case determined by the subjectively estimated value attached to that good’s final unit ("marginal unit"), a circumstance which he referred to as the "law of marginal utility".

Other economists including Eugen von Böhm-Bawerk, Friedrich von Wieser, Ludwig von Mises and Friedrich August von Hayek subsequently built on his hypotheses.