The Development and Application of the Disutility of Labor in Marginalist Theory

The historical background of an idea’s development is necessary for fruitful discussion and to further develop it in the present. This is why the development of the Austrian School of economics has been of academic interest to many great Austrian scholars and students (Hülsmann 2007; Schulak and Unterköfler 2011; Mises 1984; Salerno 1993, 1999; Boettke et al. 2022) and to academics in sibling fields (Andersson and Hudik 2021; Streissler 1988; Kauder 1958). One of the most recent discussions of the foundations of Austrian economics can be found in Fegley and Israel’s (2020) “The Disutility of Labor” and Salerno’s (2020) comments on it.

In their article, Fegley and Israel argue that the currently accepted view on the disutility of labor—that it is an additional empirical datum limiting the supply of labor—is redundant because leisure is an attendant and necessary complement of all consumption. Acting man, therefore, does not supply the full quantity of labor possible, since he must make the marginal choice to consume, which requires leisure. By contrast, Salerno defends the traditional Misesian view. What this exchange omits, however, is a critical look at the development of these concepts in the history of economic thought—both articles only cite economists who postdate the original debates surrounding this issue—so that both sides divorce the concepts of labor, leisure, and the disutility of labor from their original context.

This article seeks to provide that original context by exploring the development of the disutility of labor as a concept, revealing how it was used in different ways by distinct schools of thought and outlining the skepticism toward it expressed by early Austrian economists. We further explore how the Ricardian disutility of labor gradually diverged into a real cost theory supported by Jevons and Marshall and an opportunity cost theory supported by Green and Wicksteed—the latter view introduced to the Austrian school through the cost debates of the late nineteenth century. With the context established, we then analyze Mises’s own views, which appear to have moved from the Jevonsian to the Wicksteedian theory. Finally, we show how Mises’s treatment of labor and leisure as classes of goods contradicts marginalist theory while reintroducing marginal analysis to the subject. This article, therefore, as an exposition of the history of the disutility of labor, illustrates how errors from earlier economic schools have been carried over in some form to the Austrian school.

The reintroduction of marginal analysis gives Austrians new tools with which to understand and analyze the world, furthering efforts to develop a full theory of the supply and demand of labor at the individual and market levels and a coherent praxeological understanding of leisure. When both concepts are fully elucidated, the way becomes clear for Austrians to further contribute to fields that focus on labor and leisure, such as managerial motivation, entrepreneurship, and labor theory.

Literature Review

Fegley and Israel (2020) sparked a modern academic inquiry into the Austrian concept of the disutility of labor and its epistemological status—specifically questioning whether the assumption that leisure is a consumer good is a redundant claim if leisure, as they argue, is a necessary complement of all consumption. This was dismissed in the same issue by Salerno (2020), who defended the traditional Misesian view on the matter.

The argument made by Fegley and Israel centers around what will be referred to here as the opportunity cost conception of the disutility of labor. They argue that, since leisure is a necessary complement of all consumption, leisure must be a consumer good, and the disutility of labor must exist as a trade-off of bodily energies as either a means or an end. In response, Salerno defends the traditional account of the opportunity cost doctrine laid out by Mises (1998) and Rothbard (2009), employing various hypothetical scenarios to demonstrate how labor does not necessarily carry the opportunity cost of forgone leisure.

The exchange, however, does not explore how the opportunity cost doctrine of the disutility of labor arose in the first place. Salerno (2020, 187) briefly alludes to this in his response:

The same could be said of the opportunity cost doctrine itself, which Fegley and Israel make extensive use of. . . . On one side of this “battle of giants” were arrayed the opportunity-cost theorists led by Böhm-Bawerk, Wieser, Wicksteed, and Davenport; on the other, stood the British economists Marshall and Edgeworth, who upheld the real-cost doctrine. Robbins perceptively pointed out that the debate turned on the different forms of the supply functions for labor and capital assumed by each side. Böhm-Bawerk et al. made the simplifying empirical assumption that labor and capital supply curves were perfectly inelastic, while Marshall and Edgeworth, in a quest for greater “realism,” assumed upward-sloping supply curves.

Fegley and Israel (2020) also raise an issue related to the history of economic thought—specifically, that Mises appears to treat the disutility of labor in two conflicting ways: “The expenditure of labor is deemed painful. Not to work is considered a state of affairs more satisfactory than working. Leisure is, other things being equal, preferred to travail. People work only when they value the return of labor higher than the decrease in satisfaction brought about by the curtailment of leisure. To work involves disutility” (Mises 1998, 131–32). Fegley and Israel claim that Mises (1998, 65) conceived of the disutility of labor both psychologically and as an opportunity cost construct, straddling the concept between thymology and praxeology: “We see that men renounce advantages which they could get by working more-that is, that they are ready to make sacrifices for the attainment of leisure. We infer from this fact that leisure is valued as a good and that labor is regarded as a burden.”

Although it could shine light on the subject, the history of the concept of the disutility of labor has been eclipsed in the current discussion. A greater understanding of this history would facilitate greater academic inquiry and discussion on the topic and anything relating to it. In the following section, we provide a comprehensive historical overview of the development of the Austrian school—as well as of the aligned and opposing schools of thought—as it bears on the disutility of labor and its relation to leisure.

A Taxonomy of Historical Views

The disutility of labor, sometimes called toil in earlier works (Davenport 1908, 69), is a product of classical economics used to explain a natural limit to the supply of labor. Later, Jevons (Spencer 2003a), paralleling Gossen’s theory of the labor supply (Derobert 2001),^[1] reformulated labor theory in terms of subjective appraisal, in which positive benefits are balanced against disutility. This trade-off influences the workers’ marginal choices to continue working. Marshall supported Jevons’s view but criticized Jevons for failing to emphasize the importance of the intrinsic enjoyments of working (Spencer 2003a).

Early Austrian school economists—mainly, Böhm-Bawerk and Wieser—initially dismissed the disutility of labor as unimportant, arguing that workers do not usually choose their hours (Spencer 2003a). This subject became a point of contention during the cost debates of the late nineteenth century over whether cost should refer to pain endured or opportunity sacrificed. Green (1894),^[2] and later Wicksteed (1910, 524–26), developed a new opportunity cost theory of the disutility of labor to combat Jevons’s pain cost doctrine. In the opportunity cost theory of the disutility of labor, disutility is not a subjectively felt unpleasantness but rather the forgoing of nonlabor enjoyments, otherwise known as leisure (Spencer 2003a; Derobert 2001). Notably, Davenport (1894), despite supporting the opportunity cost faction in the cost debate, dissented from the Austrians during this time, claiming that workers limited their laboring not to engage in leisure but to avoid the disutility, or unpleasantness, accompanying labor.

Mises, in his earlier work Socialism (1951, 166), uses the Jevonsian pain cost concept of the disutility of labor when arguing against socialist central planning. But in his seminal treatise, Human Action (Mises 1998, 131–32), he uses the opportunity cost concept to analyze the labor market. Mises (1998, 585–87) relegates Jevons’s subjective unpleasantness of labor to the category of tedium but only discusses the term briefly. Crucially, Mises builds upon Green and Wicksteed’s opportunity cost doctrine by adding two additional propositions: (1) the disutility of labor is praxeologically equivalent to leisure’s (the absence of labor’s) value as a consumer good;^[3] and (2) the disutility of labor is not a categorical or an a priori truth but an a posteriori datum known through experience. Mises’s elaborated opportunity cost doctrine—later echoed by Rothbard (2009, 43)—has been generally accepted as orthodoxy in the Austrian school since the publication of Human Action.^[4]

The above history indicates two^[5] differing views on the concept of the disutility of labor within the Austrian school and other aligned and opposing schools: (1) the disutility of labor as a real cost resulting from the experience of unpleasantness, held by the classical economists and supported by Jevons, Gossen, McVane (Barbieri and Filho 2023), Edgeworth, Marshall (Spencer 2003a), Mises (1951, 166) in his earlier writing, and in modified forms by Keynes (1936, 5–6), Fetter (1904, 113),^[6] and Davenport (1894); and (2) the disutility of labor as the opportunity cost of forgone leisure, supported by Green, Wicksteed, Robbins, Becker, Knight (Spencer 2003a), Mises (1998, 131–32) in his later work, Rothbard (2009, 45), Salerno (2020), and most modern Austrian economists (Fegley and Israel 2020).

The premarginalist classical economists viewed the disutility of labor within a system of objective value arising from the labor expended in production (Davenport 1965, 6). Whitaker (1904, 19) observes that Smith, Malthus, and Ricardo often use the word labor to mean disutility in the colloquial sense, “X action cost me a great deal of labor.” Within the classical view, the utility of workers’ wages tends to equal the totality of unpleasantness that accompanies their labor. Davenport (1908, 69) identifies Ricardo and Cairnes as key to the development of this concept:

Ricardo had assumed without argument, that, as a general proposition and in broad averages, wages are paid in proportion to the painfulness of the employment: thus the entrepreneur outlays and the attendant market value become proportional to the pain costs of the real value. . . . Ricardo had said that the remuneration must be appropriate to the disutility—the pain—of labor, else the laborer would change to other lines of production, and thereby a readjustment to the supplies of product and the supplies of labor take place so as to bring the situation back into nearer approach to the normal.

The disutility of labor in this classical sense, then, is both a limiting and rebalancing force on wages and production. Ricardo specifically identifies the pain of labor as determining the value of the product, which must be distinguished from the riches produced by the sale of the product (Davenport 1908, 3).

During the marginalist revolution, Jevons incorporated the disutility of labor into his theory of the labor supply. In this model, the supply of labor is determined by the attractiveness of wages and intrinsic enjoyments of working, subjectively balanced by workers against the totality of subjectively unpleasant factors, or disutility (Spencer 2003a).

Böhm-Bawerk expressed extreme skepticism toward the concept of the disutility of labor (Spencer 2003b), criticizing Jevons and Gossen by name.

The well-known controversy that long monopolized the attention of the classical economists, whether the price of goods depends upon the quantity of labor expended, as Ricardo taught, or upon the amount of wages, as Mill correctingly [sic] suggested, afforded ample opportunity to correct this error. They failed, however, to do so. The old Smithian “toil and trouble” remained in a sort of scientific haziness, until, through Gossen, and especially through Jevons, it was brought to full and clear recognition. Then, for the first time under the name of the “disutility of labor,” it was raised to the rank of an elementary economic power, while its counterpart, the utility of the good, was set over against it. The old confusion, however, attached itself to the new names. If I am not greatly mistaken, not only the followers of the old classical school, but also many of the adherents of the newer theory, developed by Jevons, still stand under this ban. . . . I may remark that there is a rule which may be called the law of disutility, according to which the value of all goods that come under its influence tend to be in equilibrium with the amount of the pain involved in their production. But this is far from being the same as the great empirical law of cost. It depends upon quite different assumptions, and upon the play of other and intermediate motives. Finally, it has a different and much smaller field of operation. On the one side, it includes but a small part of the territory covered by the empirical law of cost, and on the other, it includes a certain portion of territory which is not covered by the law of cost. (Böhm-Bawerk 1894, 178–80)

It is plain from the tone and content of this quote that Böhm-Bawerk considers the disutility of labor to be an inferior repackaging of Smith and Ricardo’s law of cost in marginalist language.

Despite Böhm-Bawerk’s dismissal of the plainly antimarginalist “toil and trouble,” the disutility question was seriously engaged by Austrians as a part of the wider debate about whether cost should refer to pain endured or opportunity sacrificed. It was during a salvo in this theoretical debate—namely, an academic dialogue between several Austrian opportunity cost theorists and Canadian real cost theorist Silas Marcus MacVane (Barbieri and Filho 2023)—that Austrian economist David I. Green^[7] (1894) first adopted the disutility^[8] of labor into an Austrian framework. Green argues that the supply of labor is not determined by “pain costs” (unpleasant consequences of working) but rather by the forgoing of other ends, making him the first Austrian to bring the disutility of labor concept under a marginalist framework:^[9]

The laborer stops work at a certain hour, not simply because he is tired but because he wants some opportunity for pleasure and recreation. What gives a man strength in his demand for higher pay is his ability to secure higher pay elsewhere. By devoting our efforts to any one task, we necessarily give up the opportunity of doing other things which would yield us some return; and it is, in general, for this sacrifice of opportunity that we insist on being paid rather than for any pain which may be involved in the work performed (Green 1894).

Green goes on to detail how the availability of more remunerative labor increases the opportunity cost for workers and increases the wages they demand, as well as how the desire for leisure actions, beyond the rest physically necessary to continue work, is an opportunity cost of labor. All labor actions have an implicit second-best sacrifice. Sometimes this sacrifice is a directly satisfying leisure action, and other times it is another labor action marginally less rewarding—in terms of wages or other subjective criteria—than the labor action chosen. The embryonic form of Mises’s disutility of labor in Human Action can be seen here. Unlike Mises, however, Green does not seem interested in the epistemological status of the disutility of labor. Moreover, he does not appear to hold that leisure’s being a desirable good is in any way a unique limiting factor^[10] or postulate. Rather, he sees this as no different from the opportunity cost attendant on all action as a motive for economization: “But, when we once recognize the sacrifice of opportunity as an element in the cost of production, we find that the principle has a very wide application. Not only time and strength, but commodities, capital, and many of the free gifts of nature, such as mineral deposits and the use of fruitful land, must be economized if we are to act reasonably” (Green 1894).

Mises (1951, 165), in Socialism, uses the Jevonsian concept of the disutility of labor^[11] in arguing against the followers of the utopian socialist Fourier. In fact, the only graph in Mises’s published work (Fegley and Israel 2020)—a chart showing disutility increase as labor output increases—is remarkably similar to a graph in Jevons’s Theory of Political Economy.^[12] Mises (1951, 66) explains the graph as such: “The curve a, b, c, p represents labour disutility and immediate labour satisfaction in relation to the product. When labour commences it is found disagreeable. After the first difficulties have been overcome and body and mind are better adapted, then the disagreeableness declines. At b neither disagreeableness nor satisfaction predominates. Between b and c direct satisfaction prevails. After c disagreeableness recommences.” In this passage, Mises explicitly identifies the disutility of labor as synonymous with disagreeableness or pain cost. Disutility is not stated in terms of what has been forgone but rather what is subjectively experienced by the worker during the performance of labor. He continues: “Labour will be continued so long as the dissatisfaction which it arouses is counterbalanced by the pleasure derived from its product. Labour will only be discontinued at the point at which its continuation would give rise to more disutility than utility.” Again, disutility is contrasted with pleasure or satisfaction. Like Jevons, Mises sees the marginal choice to continue working as a subjective mental scale: the worker will continue only if the rewards—both intrinsic enjoyment and wages—outweigh the unpleasant disutility.

Later, in Human Action, Mises endorses Green and Wicksteed’s model, while never explicitly using the term opportunity cost. Mises’s apparent change of heart on these issues may stem from his criticisms of Jevons’s intellectual predecessor Gossen, as Gossen and Jevons (1957, 306) identify marginal utility with the physical phenomenon of satiation. Mises (1998, 65) vehemently disagrees with such a view:^[13]

Experience teaches that there is disutility of labor. But it does not teach it directly. There is no phenomenon that introduces itself as disutility of labor. There are only data of experience which are interpreted, on the ground of aprioristic knowledge, to mean that men consider leisure i.e., the absence of labor-other things being equal, as a more desirable condition than the expenditure of labor. We see that men renounce advantages which they could get by working more-that is, that they are ready to make sacrifices for the attainment of leisure. We infer from this fact that leisure is valued as a good and that labor is regarded as a burden.

This definition of disutility of labor makes no mention of pain costs or other unpleasantness aroused by performing labor.

Mises, and later Rothbard, claims that the disutility of labor and its necessary corollary datum, leisure—the absence of labor (Rothbard 2009, 43)—tends to be valued as a consumer good (Mises 1998, 65) and explains why acting man does not perform as much labor as physically possible. Crucially, Mises adds to Green’s opportunity cost model by stating that the disutility of labor is neither categorical nor a priori but known a posteriori and thus understood through experience. This model of the labor supply is now the predominant Austrian view.

Jevons’s Theory

As discussed in the earlier taxonomy, Mises (1951, 165–70), in Socialism, uses the Jevonsian real cost view of the disutility of labor to disprove Fourier’s claim that work will become a pleasure in a utopic society and that one would perform it only to stave off boredom and to signal one’s social status. Mises responds by drawing from Jevons and claiming that labor has an inherent toilsome or disutilitous quality preventing man from laboring as much as society’s productive processes require without being compensated.

While this analysis is empirically viable^[14] and could present an intuitive counter to utopian socialism in the early twentieth century, the point is lost in the modern West. Compared to when Jevons and Mises were writing, the nature of the labor involved in work seems to have progressively decreased in physical intensity.^[15] Even demanding physical labor has followed this progression as miners and farmers have gained all manner of amenities and capital to alleviate any disagreeableness that arises in the course of their work.

If the disutility or discomfort of labor is a real limiting factor on the present supply of labor, then one should expect to see in the modern age the available supply of labor—adjusted for population—continually expand toward the maximum amount physically possible as the unpleasant disutility decreases. But this trend has not been observed. Mises and other Austrians have an explanation for this: labor carries the opportunity cost of forgone leisure. It is this statement which must be tested.

The Classical Fallacy

Mises (1998, 131–32), when he supports the opportunity cost doctrine, places two distinct limitations on the supply of labor: (1) the human body has limited energy, both in terms of total lifespan and energy available at any given moment; and (2) labor carries disutility, now defined as the opportunity cost of forgone leisure.^[16]

What exactly does the second proposition mean? Opportunity cost refers to the best alternative given up when an individual chooses between multiple employments of scarce means (Buchanan 1991, 520–25).^[17] For example, Mr. Jones buys a sandwich for lunch and so must forgo a hotdog, which is the second-best alternative by his own subjective valuation. But Mises, Rothbard, and the other opportunity cost theorists of the disutility of labor do not use opportunity cost in their analysis. Instead, they claim that the class^[18] of labor, as a producer good, tends to carry the opportunity cost of the class of leisure, as a consumer good—not that all or most individual labor actions carry the opportunity cost of specific leisure actions (the best alternative forgone). There are many times in the real world when the opportunity cost of a specific labor action is a less valuable labor action.^[19]

Analyzing opportunity cost in terms of classes of goods is highly dubious because it cuts against the entire Mengerian system of marginal utility; however, most Austrian economists, such as Rothbard (2009, 43), have implicitly defined leisure as time not spent in labor or the state of not laboring. This categorization is equivalent to the following: Mr. Jones values sandwiches. He values nonsandwiches as consumer goods. He does not consume as many sandwiches as possible, because the opportunity cost of sandwiches is forgone nonsandwiches. The fact that Mr. Jones values nonsandwiches as a consumer good is a necessary empirical postulate to explain why he does not eat as many sandwiches as his body is capable of eating.

The above statements obfuscate the action by homogenizing goods into classes. Homogenizing labor and leisure into classes instead of discrete actions is no more appropriate than homogenizing all sandwiches into the class sandwiches and all other consumer goods into the class nonsandwiches. Acting man values discrete units of goods, and opportunity cost is only meaningful in terms of a marginal choice between employments of discrete quantities. It cannot be observed that all discrete labor actions necessarily, or even probably, carry the opportunity cost of a leisure action. One might just as plausibly carry the cost of another labor action, whose expected future product the acting man values less than the product of the labor action he chooses. Even under the vague definition of leisure as the time spent not laboring or the state of not laboring, one cannot know for sure that, for any given use of an acting individual’s bodily energies as means, the most valuable satisfaction forgone was not laboring.^[20]

Thus, the term disutility of labor—insofar as it refers to labor carrying the opportunity cost of forgone leisure—is spurious. It confuses the science of praxeology by homogenizing classes of goods in such a way as to annul Carl Menger’s theory of marginal utility in the specific case of labor and leisure. “All costs are opportunity costs” is a useful and praxeologically valid proposition. “The class of good X has the opportunity cost of the class of goods not X” is neither useful nor praxeologically sound. Even if this term is applied to individual actions and not classes of actions, it cannot be externally observed.^[21]

The Current Theoretical Dispute

Now that the issue with the opportunity cost of the disutility of labor has been revealed, we will address the dialogue between Salerno (2020) and Fegley and Israel (2020) since this debate illustrates how the misuse of opportunity cost in Austrian labor analysis has led to misunderstandings.

Fegley and Israel come close to the core issue when they write, “If, as Rothbard (1957, 316) states, the proposition that leisure is a good is so generally true as to be self-evident, why do we not resort to an assumption about the ‘disutility of leisure’ to explain why individuals ever start to labor in the first place? Indeed, why not assume that every action involves ‘disutility’ to explain why people ever stop doing anything” (Fegley and Israel 2020).

They, however, do not identify the key problem the disutility of labor creates. Their framework accepts that labor as a class contains the forgone opportunity cost of leisure as a class but, contra Mises, argues for the a priori status of leisure as always inherently desirable. The argument that leisure must always be desired by acting man as a complement to consumption is fascinating but does not remedy the issue with Fegley and Israel’s reformulated labor supply. Their error comes from homogenizing labor and leisure into classes instead of discrete actions. Even if, as Fegley and Israel are suggesting, it is possible to know a priori that leisure is always a consumer good, it does not follow that all labor actions carry the opportunity cost of a forgone leisure action any more than the fact that sandwiches are a consumer good means that all other consumer goods carry the opportunity cost of forgone sandwiches.

Salerno (2020), in response, provides the classic Misesian imaginary world^[22] in which acting man expends all the energy he can during a labor period to increase the quantity of consumer goods, which are only enjoyed in a separate leisure period. Salerno’s example effectively demonstrates the issue with Fegley and Israel’s model. In this imaginary world, the energy available for labor is limited: labor is a scarce factor and not a general condition of production—meaning that it exhibits Mises’s (1951, 156) first empirical limit on the supply of labor—but energy for consumptive leisure is superabundant during the predetermined leisure time. A leisure action is not the second-best alternative forgone during the predetermined labor time; however, for the reasons explained above, it is not correct to say that, in the real world, labor carries the opportunity cost of leisure. Therefore, Salerno’s, and by extension Mises’s, defense of the disutility of labor as an empirical datum is conceptually flawed insofar as it misuses opportunity cost.

The Marginalist Limit on the Supply of Labor

Because Austrian analyses of labor since Mises hinge on a theory at odds with the Mengerian analysis of rank-ordered ends, one of the following theories must be rejected: (1) that man acts according to value scales is a praxeological truth; (2) that man values goods, in this case labor and leisure, as whole classes, each of which carries the opportunity cost of the other class. However, any claim of man valuing entire classes of goods is directly at odds with the praxeological truth of marginal analysis. The physiological nature of labor as perceived by humans is not the economic explanation for the limit on the supply of labor any more than the natural occurrence of a metal is the economic explanation for the limit on its supply in the market. In both instances, the marginal valuation and economization of discrete units of either good, rather than the data of thymology or geology, ultimately determines any given supply and demand for those goods.

To demonstrate the marginal economizing of labor and leisure and thus resolve the classical fallacy, we provide an example^[23] here involving the value scale of an employee at a firm. For a specific duration of time the employee works, his value scale is as follows:

1. Complete a project (energy expended for remuneration for future consumption—labor).

2. Answer emails (energy expended for remuneration for future consumption—labor).

3. Browse social media (energy expended for immediate psychic remuneration—leisure).

4. Eat a snack (energy expended for immediate psychic remuneration—leisure).

Here we can see that our employee’s most valued end in the moment of choosing is to complete a project, which is subjectively classified as labor. The employee thus supplies the amount of labor needed to fulfill the specific end complete a project. The opportunity cost is to answer emails, a project that would also have the employee supply labor, but in a different amount for the different project (assuming that complete a project and answer emails require different amounts of energy). Notably, the employee’s opportunity cost, in terms of allocating his energy, is not a leisure activity but another labor activity.

When the employee supplies labor for the firm in completing a project, the use of energy fits the praxeological definition of labor given by Mises (1998, 131) and Rothbard (2009, 10). But it is important to recognize that the possible uses of the energy were discrete activities with different valuations by the employee, which demonstrates the personal side of valuing discrete actions classified economically as labor or leisure.

The labor supplied by a worker is limited not necessarily by the passage of time or because he finds the work to be disutilitous—though that may affect the employee’s valuation of that discrete activity—but because he more urgently prefers to allocate his energy to a specific action. To demonstrate the point, let us say that the employee only has enough time to complete two ends. Here is the employee’s value scale:

1. Complete a project (energy expended for remuneration for future consumption—labor).

2. Browse social media (energy expended for immediate psychic remuneration—leisure).

3. Eat a snack (energy expended for immediate psychic remuneration—leisure).

4. Answer emails (energy expended for remuneration for future consumption—labor).

In this value scale, the employee supplies labor to complete a project—a labor activity—and then expends his energy for direct satisfaction on the leisure activity of browsing social media. In contrast to all formulations of the disutility of labor, here it is strictly the discrete valuation of the uses of energy in time which provides a limit on labor. The reasons for the specific valuation are merely incidental.

The above examples are crafted to illustrate two ways in which marginal analysis accounts for limiting the total supply of labor at any given moment. Given the empirical fact that humans produce for consumptive ends and desire to engage in leisure actions, both these ends on a man’s value scale necessarily limit the amount of labor provided at any point, which is not necessarily tied to the psychological or physiological disutility of the labor. In the first example, the amount of labor supplied depends on the specific action taken by the employee. In the second example, the employee values expending only so much energy as labor before he will expend it as directly satisfying leisure.

As for the opportunity cost doctrine of the disutility of labor, we see in the employee’s economizing that labor and leisure do not carry the opportunity cost of the whole other class. Rather, discrete, heterogenous units of time are allocated in different ways for varying ends. In the first example, the opportunity cost of the energy spent completing a project is not the class of goods leisure but rather the use of energy to answer emails (another labor action). If our employee did not value completing a project, the opportunity cost would only then become a discrete leisure action—namely, browsing social media. This scenario is completely unaccountable when labor and leisure are considered classes of goods that carry each other as opportunity costs. To quote Davenport (1896, 51) on this issue,

If a man desired only one sort of satisfactions, only one sacrifice would be required of him, the sacrifice attendant upon effort. But when exertion is certain in one direction or another, and when therefore nonexertion is not the alternative in the choice, and when therefore the sacrifice involved in obtaining one thing is the deprivation of another thing obtainable by the same labour, the measure of the value of the first is in the sacrifice of the unobtained thing, and not in the sacrifice of mere effort.

That is, if the only choices available to a given man are to labor for one specific end or not to do so, the labor carries the opportunity cost of nonlabor. But as soon as multiple ends are accounted for, specific labor actions can carry the opportunity cost of other specific labor actions rather than the class of goods leisure. Acting man in the world, therefore, marginally economizes the use of discrete, heterogenous units of time, energies, effort, or any other applicable unit of measurement between distinct actions, and any chosen action carries the opportunity cost of discrete, heterogenous units of those measures that could have been used for the second-best alternative, whether that specific action is labor or leisure.

As a final note, while the concepts of labor and leisure have been economically misapplied, they are still useful for modern economic analysis because, as words, they are short and readily understood—especially as compared with phrasing everything in terms of means and ends on a value scale.

Future Research Directions

This article sheds light on the history of the disutility of labor in Austrian theory and its flawed theoretical basis in the Austrian model of the labor supply. But we have also indicated the potential for future Austrian contributions to the fields of entrepreneurship, managerial motivation, and labor theory.

Modern Austrian academics have made valuable contributions to entrepreneurship theory (e.g., Klein et al. 2010; Bylund and McCaffrey 2017), but competing schools, such as the nonprofit entrepreneurship theorists (Wasserman 2004; Benz 2009), have used labor utility models to argue for a self-rewarding entrepreneurship. An Austrian labor theory which incorporates the marginal valuation of discrete units of labor—time, energy, or any other measure—could provide novel answers to these critics by replacing the cardinal utility functions their models rely on with a causal realist explanation of the nonpecuniary rewards and costs associated with entrepreneurship—possibly even incorporating and refitting arguments from these competing entrepreneurship schools into a proper praxeological framework.

Similarly, this article provides a basis for a praxeologically rooted theory of managerial motivation which analyzes labor and leisure actions through marginal analysis and tries to lay the groundwork for an overarching theory of how managers estimate the opportunity costs and subjective valuations of their employees. As Green (1894) observed, the level of wages demanded by workers arises from the opportunity costs of other, more remunerative employment. An entrepreneurial manager cannot observe his employees’ opportunity costs directly, but he can infer from observed employee behavior that nonpecuniary opportunity costs exist when employees forgo more remunerative job positions or career paths for less remunerative ones. Such observations do not allow the manager to make intersubjective utility comparisons between different employees, but, provided the employees’ valuations continue to follow the same general pattern, they do allow for entrepreneurial guesses about the marginal effectiveness of pecuniary incentives versus nonpecuniary incentives in successfully promoting qualified employees to positions where they will be effective and in retaining desired employees who may otherwise leave the firm. Future Austrian contributions may be able to form a full Austrian motivation theory which, unlike the existing psychological and trait analysis theories, will be grounded in the certainty of praxeological reasoning.

Finally, this article provides a substructure for more sophisticated criticisms of neoclassical labor theory, which conceives of the disutility of labor as a differentiable trade-off curve between labor and leisure (Vercherand 2014, 54–59). Such future investigation, while outside the scope of this current article, will be a necessary extension of our research, specifically as it relates to the slope of the general labor supply curve and how a subjectivist understanding of labor and leisure can be integrated into a broader economic philosophy. This article also opens a new line of critique against Keynes’s (1936, 6) theory of frictional unemployment, which relies on similar assumptions. Since the Austrian school is consistent in applying marginal analysis, remedying the issues with its labor foundations requires minimal effort: neoclassical and Keynesian models explicitly treat labor and leisure as classes of goods, committing the classical fallacy and exposing themselves to praxeological criticism. Since opportunity cost cannot apply to classes of goods, any model that does so—whether neoclassical, Keynesian, or any other genus—is unfit for economic science.

Conclusion

The assumption of the disutility of labor has been a part of the Austrian school since the days of Mises. Its importance has attracted recent attempts to explain and elucidate both the concept and its implications, but the history of the idea remained unexplored. This article unearths the history of the disutility of labor and recontextualizes the concept. In its historical examination, we have also introduced a taxonomy of the disutility of labor, bifurcating the doctrine into two subdoctrines: one of opportunity cost and one of real cost.

As shown above, Jevons, needing a way to ground his analysis of the labor supply, relied on a Ricardian real cost theory of the disutility of labor. Claiming labor must necessarily come with a real psychological cost, he drew the conclusion that labor always carries the disutility associated with that psychological burden. Wicksteed and Green, on the other hand, introduced an opportunity cost theory which claimed that labor carries disutility not because of an associated real cost but because it carries the opportunity cost of forgone leisure.

Proceeding from this taxonomy, we analyzed the evolution of strictly Austrian perspectives. In tracking Mises’s writing specifically, the conflicting influences of both Jevons and Wicksteed became visible as we saw Mises shift from real cost theory (Mises 1951, 165–70) to opportunity cost theory (Mises 1998, 65). Since Mises’s writing on the subject, there has been little theoretical development on the economic grounding of the disutility of labor. Modern discussion has instead considered the epistemological foundations of the assumption—specifically, Fegley and Israel’s 2020 article and Salerno’s comment on it debate whether knowledge of the disutility of labor is a priori or a posteriori.

This article focuses on the economic grounding of the disutility of labor and demonstrates the problem with debating its epistemological status—namely, that both the opportunity cost and real cost explanations are faulty. Real costs are not a sufficient explanation for disutility, since Austrians reject the existence of objective costs. Nor can opportunity costs serve as the explanation, since these never involve classes of goods such as labor and leisure.

This article proposes a replacement not for the opportunity cost or real cost doctrines but for the entire disutility of labor postulate. Noticing that labor and leisure are not special classes of goods leads to the conclusion that no unique assumption about their disutility is necessary—standard marginal analysis is sufficient.